Revenue Regulations No. 21-2018 issued by Finance Secretary Carlos G. Dominguez III and Internal Revenue Commissioner Caesar R. Dulay on Sept. 14 noted that under Republic Act No. 10963 or the TRAIN law, unpaid taxes were to be slapped interest “double the effective legal interest rate for loans or forbearance of any money in the absence of an express stipulation as set by the Bangko Sentral ng Pilipinas from the date prescribed for payment until the amount is fully paid.”
BIR Deputy Commissioner Marissa O. Cabreros told reporters that prior to the TRAIN law, the interest on unpaid taxes was at 20 percent a year.
The BIR defined the deficiency interest as that “imposed on any deficiency tax due, which interest shall be assessed and collected from the date prescribed for its payment until: full payment thereof, or upon issuance of a notice and demand by the commissioner or his authorized representative, whichever comes first.”
Delinquency interest is that imposed on a taxpayer for failure to pay the amount of the tax due on any return to be filed, or for which no return is required.
Also, a delinquency interest is imposed on “a deficiency tax, or any surcharge or interest thereon on the due date appearing in the notice and demand of the [BIR] commissioner or his authorized representative until the amount is fully paid, which interest shall form part of the tax.”
Under the TRAIN law, there must be no double imposition of interest, the BIR said.
Cabreros said that while the TRAIN law kept both the deficiency and delinquency interests, they must be slapped separately and not simultaneously.