THE BUREAU of Internal Revenue (BIR) has released implementing rules and regulations for the interest rate imposed on unpaid taxes, as well as guidelines on how the charges are to be computed.
The BIR published Revenue Regulation (RR) 21-2018 yesterday reducing the interest charged on unpaid taxes to 12%, from 20% previously.
The Tax Reform for Acceleration and Inclusion (TRAIN) law requires that the unpaid interest rate should be “double the legal interest rate for loans or forbearance of any money in the absence of an express stipulation as set by BSP,” which is currently at 6%.
Although the BIR has been applying the 12% rate since the law became effective in January through memorandum orders, it has not consistently applied the rate for delinquencies and deficiencies.
It clarified the difference of tax treatment between delinquency interest and deficiency interest, noting that it shall “in no case be imposed simultaneously.”
“The RR was made with an illustration to show how it is going to be computed, because deficiency interest is different from delinquency,” BIR Deputy Commissioner Marissa O. Cabreros told reporters yesterday in a chance interview at the House of Representatives.
The regulation defines the deficiency charge as the “interest 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.”
A delinquency charge is the interest imposed on the failure to pay tax due on any return to be filed; tax due for which no return is required; a deficiency tax or “any surcharge or interest thereon on the due date appearing in the notice and demand” of the BIR until the amount is fully paid, which interest shall form part of the tax.
“Before, the interest was imposed simultaneously, and was doubled up,” said Ms. Cabreros.
Asked for comment, Isla Lipana & Co. Tax Managing Partner Maria Lourdes P. Lim welcomed the move as the issuance “while long overdue, considering that the TRAIN law became effective last Jan. 1, 2018, clarifies the proper application of the 12% deficiency interest rate.”
“There was confusion on the implementation as the BIR revenue district offices are not consistent in the application of the 12% interest rate particularly on settlement of tax assessment cases involving 2017 and prior years as there are no prescribed guidelines,” she said in an e-mail.
This is because some revenue officers have ruled that the rate only applies to assessment cases beginning 2018 as the guidelines only pertain to amendment of returns. — Elijah Joseph C. Tubayan
