Recently the Bureau of Internal Revenue (BIR) issued the Revenue Regulation no. 21-2018 to impose the new interest rate on deficiency tax due. This regulation was issued on September 14, 2018. Learn this train tax laws updates 2018.
This rate is imposed on any tax deficiency due. Interest shall be assessed and collected from the due date prescribed for its payment until the date it is fully paid and upon issuance of a notice and demand by the authorized representative or Commissioner whichever comes first
This new interest rate of 12% is effective on beginning January 1, 2018. Any deficiency for the period up to December 31, 2017 shall apply the old interest rate of 20%.
Which interest rate if the Deficiency tax due involves 2017 and 2018?
If a certain taxpayer was assessed prior the effectively of this regulation, the 20% interest will be used to compute the total amount due. However, if the assessed deficiency tax is still unpaid after the amendment of this article, there will be a double imposition of both deficiency and delinquency interest will still apply up to December 31, 2017. Any remaining days or months shall use the new interest rate up to the date of full payment.
What is Double Imposition?
Double imposition take place if there is a transition of rates. Prior to this regulation, the interest rate on tax deficiency was 20% and 12% on this year.
There is a double imposition if the tax due is still unpaid up to the date of imposition of new interest rate. For example, if taxpayer A was assessed deficiency income tax for taxable year of 2016. The tax liability was still unpaid on December 2017 which is the deadline for payment stated in the notice and demand issued by the Commissioner. The full payment was made on March 2018.
In this case, there is a double imposition of interest rate for 2017 and 2018. The old interest rate of 20% will be based from April 2017 to December 2017 and the rest will be 12% up the full payment of delinquent tax due.
When to imposed Delinquency Interest?
Interest is imposed on the failure to pay the amount of the tax due on any return to be filed, or amount of the tax due for which no return is required and a deficiency tax, or any surcharge or interest thereon on the due date appearing in the notice and demand of the Commissioner or his authorized representative until the amount is fully paid, which interest shall be form part of the Learn more train tax laws updates in the Philippines.