Penalties for Late Filing of Tax Returns

A. For late filing of Tax Returns with Tax Due to be paid, the following penalties will be imposed upon filing, in addition to the tax due:

1. Surcharge

NIRC SEC. 248. - Civil Penalties.

(A) There shall be imposed, in addition to the tax required to be paid, a penalty equivalent to twenty-five percent (25%) of the amount due, in the following cases:

(1) Failure to file any return and pay the tax due thereon as required under the provisions of this Code or rules and regulations on the date prescribed; or

(2) Unless otherwise authorized by the Commissioner, filing a return with an internal revenue officer other than those with whom the return is required to be filed; or

(3) Failure to pay the deficiency tax within the time prescribed for its payment in the notice of assessment; or

(4) Failure to pay the full or part of the amount of tax shown on any return required to be filed under the provisions of this Code or rules and regulations, or the full amount of tax due for which no return is required to be filed, on or before the date prescribed for its payment.

2. Interest

NIRC SEC. 249. Interest. -

(A) In General. - There shall be assessed and collected on any unpaid amount of tax, interest at the rate of twenty percent (20%) per annum, or such higher rate as may be prescribed by rules and regulations, from the date prescribed for payment until the amount is fully paid.

3. Compromise

NIRC SEC. 255. Failure to File Return, Supply Correct and Accurate Information, Pay Tax Withhold and Remit Tax and Refund Excess Taxes Withheld on Compensation. - Any person required under this Code or by rules and regulations promulgated thereunder to pay any tax make a return, keep any record, or supply correct the accurate information, who willfully fails to pay such tax, make such return, keep such record, or supply correct and accurate information, or withhold or remit taxes withheld, or refund excess taxes withheld on compensation, at the time or times required by law or rules and regulations shall, in addition to other penalties provided by law, upon conviction thereof, be punished by a fine of not less than Ten Thousand Pesos (P 10,000) and suffer imprisonment of not less than one (1) year but not more than ten (10) years.

Any person who attempts to make it appear for any reason that he or another has in fact filed a return or statement, or actually files a return or statement and subsequently withdraws the same return or statement after securing the official receiving seal or stamp of receipt of internal revenue office wherein the same was actually filed shall, upon conviction therefor, be punished by a fine of not less than Ten Thousand Pesos (P10,000) but not more than Twenty Thousand Pesos (P 20,000) and suffer imprisonment of not less than one (1) year but not more than three (3) years.

In addition, Annex A of Revenue Memorandum Order (RMO) No. 7-2015 provides for the Revised Consolidated Schedule of Compromise Penalties for Violations of the National Internal Revenue Code (NIRC), which can be accessed via this link: Annex

From page 5 of Annex A of RMO No. 7-2015

TAX CODE SEC	NATURE OF VIOLATION	CRIMINAL PENALTY IMPOSED	AMOUNT OF COMPROMISE
255	Failure to file and/or pay any internal revenue tax at the time or times required by law or regulation	Fine of not less than P10,000 and imprisonment of not less than one (1) year but not more than 10 years	If the amount of tax unpaid
			Exceeds	But does not exceed	Compromise is
			P     x x x	P   5,000	P   1,000
			5,000	10,000	3,000
			10,000	20,000	5,000
			20,000	50,000	10,000
			50,000	100,000	15,000
			100,000	500,000	20,000
			500,000	1,000,000	30,000
			1,000,000	5,000,000	40,000
			5,000,000	x x x	50,000

B. For late filing of Tax Returns with NO Tax Due to be paid, the compromise penalty will be imposed upon filing of the Tax Return based on the following:

1. For violations of the NIRC provisions which are subject to compromise, the reference is found in page 4 of Annex A of RMO No. 7-2015.

TAX CODE SEC	NATURE OF VIOLATION	CRIMINAL PENALTY IMPOSED	AMOUNT OF COMPROMISE
255	Failure to make/file/submit any return or supply correct information at the time or times required by law or regulation	Fine of not less than P10,000 and imprisonment of not less than one (1) year but not more than ten (10) years	If gross sales, earnings or receipts; or gross estate or gift (based on the subject returns/information for filing/submission)
			Exceeds	But does not exceed	Compromise is
			P     x x x	P   50,000	P   1,000
			50,000	100,000	3,000
			100,000	500,000	5,000
			500,000	5,000,000	10,000
			5,000,000	10,000,000	15,000
			10,000,000	25,000,000	20,000
			25,000,000	x x x	25,000

2. For violations of the NIRC provisions which may be the subject of criminal actions, Section 250 of the NIRC will apply as follows: 

NIRC SEC. 250. Failure to File Certain Information Returns. - In the case of each failure to file an information return, statement or list, or keep any record, or supply any information required by this Code or by the Commissioner on the date prescribed therefor, unless it is shown that such failure is due to reasonable cause and not to willful neglect, there shall, upon notice and demand by the Commissioner, be paid by the person failing to file, keep or supply the same, One Thousand Pesos (P 1,000) for each failure: Provided, however, That the aggregate amount to be imposed for all such failures during a calendar year shall not exceed Twenty-Five Thousand Pesos (P 25,000).

C. For late filing of Statements/Reports required to be filed with NO Tax Due to be paid, the compromise penalty will be imposed upon filing of the Tax Return based on the following:

NIRC SEC. 275. Violation of Other Provisions of this Code or Rules and Regulations in General.- Any person who violates any provision of this Code or any rule or regulation promulgated by the Department of Finance, for which no specific penalty is provided by law, shall, upon conviction for each act or omission, be punished by a fine of not more than One Thousand Pesos (P 1,000) or suffer imprisonment of not more than six (6) months, or both. both.

SOURCE: http://www.bir.gov.ph/index.php/penalties.html

Observance of the "NO GIFT POLICY"

Revenue Memorandum Order (RMO) No. 40-2016 dated July 4, 2016 has issued by the bureau relative to the Observance of the "NO GIFT POLICY".

 

It is stated in the RMO that as public servants and professionals, the BIR officials and employees adhere to the principle that public office is a public trust and promote a high standard of ethics in public service.

 

With this, they are expected to perform their duties and responsibilities without expectation of any favor or material reward. In this connection, the BIR officials and employees are not allowed to accept nor solicit gifts, whether from the public or the private sectors.

 

This Gift Policy is issued pursuant to the following:

 

- Section 25, Article II of the 1987 Constitution

- Section 1, Article XI of the 1987 Constitution

- Republic Act No. 3019 (Anti-Graft and Corrupt Practices Act)

- Presidential Decree No. 46 s. 1972 (Making it Punishable for Public Officials and Employees to Receive, and for Private Persons to Give Gifts on Any Occasion, including Christmas)

- Republic Act No. 6713 (Code of Conduct and Ethical Standards for Public Officials and Employees).

 

In order to enforce this policy, the BIR officials and employees are directed to immediately and politely return any gift that may be given.

 

SOURCE: http://www.bir.gov.ph/images/bir_files/internal_communications_3/Full%20Text%20of%20RMO%202016/RMO%20No.%2040-2016.pdf of the full text of RMO No. 40-2016.

Assumption to duty of Caesar R. Dulay as Commissioner of Internal Revenue

Revenue Memorandum Order (RMO) No. 39-2016 refers to the Assumption to duty of Ceasar R. Dulay as Commissioner of Internal Revenue (CIR).

In view of his assumption of the duties of CIR effective July 1, 2016, all papers and correspondence prepared for the signature of the CIR pursuant to the provisions of RMO No. 65075 dated November 28, 1975 and other subsequent Orders, shall be prepared in the following maner:

CEASAR R. DULAY
Commissioner of Internal Revenue

SOURCE: http://www.bir.gov.ph/images/bir_files/internal_communications_3/Full%20Text%20of%20RMO%202016/RMO%20No.%2039-2016.pdf

"SMART" PVC TIN Card for Seniors and Registered Professionals

The BIR just recently launched the “SMART” PVC TIN Card for Seniors and Registered Professionals last June 20, 2016.

The event was favored by Department of Finance (DOF) Secretary Cesar V. Purisima and BIR Officials led by Commissioner Kim S. Jacinto-Henares, DCIRs Nelson M. Aspe, Lilia C. Guillermo and Celia C. King, and other officials and employees of the BIR. Initially, the production and distribution of state of the art “smart” PVC TIN Card for Senior Citizens, including BIR employees at the National Office registered with Revenue District Office (RDO) 39- South Quezon City and registered professionals of all RDOs under Revenue Region No. 8 – Makati City was prioritized.

The smart TIN card is made of PVC material, equipped with a radio frequency identification (RFID) magnetic electronic microchip with duplicate “ghost” photo print, pre-printed security micro-printing and a QR code where the taxpayer’s information could be stored, similar to those found in credit or debit cards. 

The TIN Card Production Facility is located at the 4th Floor BIR Command Center.

The project was duly supported by the Millennium Challenge Account-Philippines (MCA-P) which donated the TIN Card printing machines and laptops, Pilipinas Micromatrix Technologies Inc. (PMTI) which developed the RFID SMART TIN cards and the Registration System, while Allcard Plastics Philippines Inc., provided the needed contactless card readers/writers. (mldn) 

SOURCE: http://www.bir.gov.ph/images/bir_files/public_information_and_education/PR96JUNE3016.pdf

Withholding Tax Calculator

The Bureau of Internal Revenue's (BIR) Withholding Tax Calculator has restrictions/limitations on the use of the application and it is not downloadable.

Besides, the application is simply an automated computation of the withholding tax due based only on the information entered into by the user in the applicable boxes. Accordingly, the withholding tax due computed by the calculator cannot be used as basis of complaints of employees against their employers.

No validation process is being performed on the following information:
Basic Salary/Statutory Minimum Wage Earner (whether or not the basic salary is more than or less than the statutory minimum wage in the National Capital Region or in other regions);

De Minimis Benefits (whether or not the total de minimis benefits received by the employee is more than or less than the total threshold);

The Cumulative Average Method in computing withholding taxes (where the total supplementary compensation is equal or greater than the total regular compensation) cannot be accommodated in the calculator.

To access Withholding Tax Calculator click here.

SOURCE: http://www.bir.gov.ph/index.php/withholding-tax-calculator.html 

Suspension of Effectivity of All Issuances

The CIR has issued Revenue Memorandum Circular (RMC) No. 69-2016 dated July 1, 2016 relative to the suspension of effectivity of all Issuances Promulgated with the Period Covering June 1-30, 2016.

The effectivity of all revenue issuances issued stated above is hereby suspended until further notice and the circular shall take effect immediately.

Please refer: http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No%2069-2016.pdf

Suspension of Audit of the BIR and Submission of Inventory of Pending Letters of Authority/Letter Notices

The Commissioner of Internal Revenue, Caesar R. Dulay has issued Revenue Memorandum Circular (RMC) No. 70-2016 for the suspension of all field audit and other field operations of the Bureau of Internal Revenue (BIR) relative to the examinations and verifications of taxpayers' books of accounts, records and other transactions effective July 1, 2016.

The inventory of outstanding  Letters of Authority/Audit Notices, and Letter Notices as of June 30, 2016, shall be submitted to the Office of the Commissioner in Excel format, both in softcopy in CD/DVD and hardcopy, on or before July 16, 2016. 

Moreover, no written orders to audit and/or investigate taxpayers' internal revenue tax liabilities shall be issued and/or served except in the following cases:

- Investigation of cases prescribing on or before October 31, 2016; 

- Processing and verification of estate tax returns, donor's tax returns, capital gains tax returns and withholding tax returns on the sale of real properties or shares of stocks together with the documentary stamp tax returns related thereto;

- Examination and/or verification of internal revenue tax liabilities of taxpayers retiring from business;

- Audit of National Government Agencies (NGAs), Local Government Units (LGUs) and Government Owned and Controlled Corporations (GOCCs) including subsidiaries and affiliates; and

- Other matters/concerns where deadlines have been imposed or under orders of the Commissioner of Internal Revenue.

But, services of Assessment Notices, Warrants and Seizure Notices should still be effected. Taxpayers may voluntarily pay their known deficiency taxes without the need to secure authority from concerned Revenue Officials.

SOURCE: http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No%2070-2016.pdf

Pag-IBIG Fund and the BIR agreed to work together in Electronic Filing of Tax Returns thru eBIRForms and Issuance of eCAR

The BIR has issued Revenue Memorandum Order (RMO) No. 28-2016 dated June 21, 2016 with regards to the Policies, Guidelines and Procedures Implementing the Memorandum of Understanding (MOU) between the Home Development Mutual Fund (HDMF) and the Bureau of Internal Revenue (BIR) in Electronic Filing of Tax Returns thru Electronic Bureau of Internal Revenue Form (eBIRForms) and the Issuance of Electronic Certificate Authorizing Registration (eCAR).

The HDMF or Pag-IBIG Fund and the BIR has agreed to provide the necessary support for the use of eBIRForms in the Pag-IBIG Fund's provident and housing loan program and issuance of eCAR.

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_3/Full%20Text%20of%20RMO%202016/RMO%20No.%2028-2016.pdf to know more about the OBJECTIVES, GENERAL POLICIES, GUIDELINES AND PROCEDURES and the full text of RMO No. 28-2016.

Clarification on Proper Due dates for Filing of Returns and Payment of Taxes for the Purpose of Imposition of Penalties for Late Filing and/or Late Payment

Revenue Memorandum Circular (RMC) No. 65-2016 dated June 23, 2016 has issued by the Bureau for the Clarification on Proper Due dates for Filing of Returns and Payment of Taxes for the Purpose of Imposition of Penalties for Late Filing and/or Late Payment.

 

This Circular is being issued to clarify the rules on appropriate due date of filing of return and payment of taxes when the exact due dates fall on a Saturday, Sunday, or a holiday both for electronic and manual filers and payers of taxes., for the purpose of imposition of penalties for Late Filing and/or Late Payment.

 

A. For Taxpayers under the Electronic Filing and Payment System (EFPS)

 

For taxpayers mandatorily covered by the EFPS rules and those taxpayers registered and enrolled under the EFPS, the due date of , filing of return and the payment of taxes shall be the exact dates stated in the law or regulations for filing or payment. However, if the deadline falls on a Saturday, Sunday or a holiday, the appropriate deadline for the electronic filing and payment shall fall on the next business day.

 

Transmission of electronic returns and electronic payment must be completed/made on and actually received by the Bureau of Internal Revenue on or before 12 midnight of the defined statutory or regulatory due date for the filing and payment of the relevant return. Otherwise, the same shall be considered to have been filed late or paid late, and thus shall be subject to the appropriate penalty for late filing/late payment.

 

In case of dispute, the taxpayer shall present the written advice of the BIR that its electronic system for filing and payment of taxes is down or unavailable, which shall be issued by the BIR everytime its electronic system for filing and payment of taxes is down or unavailable. Said advice will also include instruction of appropriate deadline for manual filing and thereafter an instruction for the due date of electronic filing of tax returns initially filed manually. Failure to file the returns and/or pay the taxes on or before the deadline stated in the said written advice shall warrant the imposition of penalties for failure to file the returns and/or pay the taxes, or for late filing/late payment whichever is applicable.

 

B. For Taxpayers under the Online eBlR Form System

 

For those taxpayers covered by eFiling of Return under the Online eBlR Forms System and those taxpayers registered and enrolled under the Online eBlR Forms System, the due date of filing of return shall be the exact dates stated in the law or regulations for filing of said return. However, if the deadline falls on a Saturday, Sunday or a holiday, the appropriate deadline for the electronic filing shall fall on the next business day.

 

Transmission of electronic returns must be completed/made on and actually received by the Bureau of Internal Revenue on or before 12 midnight of the defined statutory or regulatory due date for the filing of the relevant return. Otherwise, the same shall be considered to have been filed late and thus shall be subject to the appropriate penalty for late filing.

 

In case of dispute, the taxpayer shall present the written advice of the BIR that its online eBlR Forms System is down or unavailable, which shall be issued by the BIR everytime its Online eBlR Forms System is down or unavailable. Said advice will also include instruction of appropriate deadline for manual filing and ' thereafter an instruction for the due date of electronic filing of tax returns initially filed manually. Failure to file the returns on or before the deadline stated in the said written advice shall warrant the imposition of penalties for failure to file the returns or for late filing whichever is applicable.

 

The due date for the payment of taxes due for the returns filed under the Online eBlR Forms System shall be made on the exact dates stated in the law or regulations for payment thereof. However, if the deadline falls on a Saturday, Sunday or a holiday, the appropriate deadline for the payment thereof shall fall on the next business day, or on the same deadline for the filing of the returns under the Online eBlR Forms System.

 

C. For Taxpayers who are Manual Filers or are using the Offline eBlR Forms Package

 

Taxpayers not mandatorily covered or enrolled under either the EFPS or the Online eBlR Form System or are users of the Offline eBlR Form Package are classified as Manual Filers.

 

Manual filers are required to file and pay on or before the due date stated in the law or regulation for filing returns and/or payment of taxes due thereon, however, if such due date falls on a Saturday, Sunday or a holiday the act of filing and payment shall be done on the next business day. Any returns filed and/or tax paid beyond the dates stated in this paragraph, shall be subject to the appropriate penalty for none filing/payment, or late filing/payment, whichever is applicable.

 

SOURCE: http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No.%2065-2016_copy.pdf of the full text of RMC No. 65-2016.

Proper Tax Treatment of Passed-on Gross Receipts Tax

Revenue Memorandum Circular (RMC) No. 62-2016 has issued by the Bureau to clarify the Proper Tax Treatment of Passed-on Gross Receipts Tax under Sections 121 and 122 of the National Internal Revenue Code, as amended (Tax Code).

It was mentioned in the memorandum that all banks, non-bank financial intermediaries performing quasi-banking functions, financing companies and other financial intermediaries not performing quasi-banking functions doing business in the Philippines are directly liable for GRT pursuant to Sections 121 and 122 of the Tax Code.

"SEC. 121. Tax on Banks and Non-Bank Financial Intermediaries Performing Quasi-Banking Functions. - There ,shall be collected a tax on gross receipts derive from sources within the Philippines by all banks and non-bank financial intermediaries in accordance with the following schedule: xxx" 

"SEC. 122. Tax on Other Non-Bank Financial Intermediaries. - There shall be collected a tax of five percent (5%) on the gross receipts derived by other non-honk financial intermediaries doing business in the Philippines, from interest, commissions, discounts and all other items treated as gross income under this Code: xxx" 

The "passed-on" GRT should form part of the tax base upon which the GRT is based for gross receipts tax purposes, based on the definition of "gross receipts", that is based on "actual or constructive receipt" of income. Since banks, non-bank financial intermediaries, financing companies and other financial intermediaries not performing quasi-banking functions doing business in the Philippines are directly liable for GRT on gross receipts derived by them from business operations, the "passed-on" GRT shall be considered as receipt of gross income specified under Section 32(A) of the Tax Code.

Banks and non-bank financial intermediaries can claim the GRT paid as a deductible expense for income tax purposes pursuant to Section 34 (C) of the Tax Code subject to the actual remittance of the GRT as provided under Section 128 of the Tax Code. The "passed-on" GRT shall be considered as receipt of income as specified under Section 32 of the Tax Code.

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No%2062-2016.pdf of other concerns, illustration and full text of RMC No. 62-2016