RR No. 21-2018: Implements Section 249 (Interest) of the National Internal Revenue Code of 1997, as amended under Section 75 of RA No. 10963 (TRAIN Law)

Summary

RR No. 21-2018 implements Section 249 (Interest) of the NIRC of 1997, as amended under Section 75 of RA No. 10963 (TRAIN Law).

Key points

1. Interest rate. Interest on any unpaid tax is double the effective legal interest rate set by the Bangko Sentral ng Pilipinas. Under BSP Memorandum No. 799 series of 2013 that rate is six percent (6%), so the interest under Section 249 is twelve percent (12%). The Commissioner issues a Circular if BSP sets a new rate.
2. When deficiency interest runs. Interest on a deficiency tax runs from the date prescribed for payment until full payment, or until a notice and demand is issued, whichever comes first.
3. What attracts interest. Interest applies to failure to pay the tax due on a return, the tax due where no return is required, and a deficiency tax, surcharge or interest on the due date in the notice and demand. Interest on those amounts forms part of the tax.
4. No simultaneous interest. From January 1, 2018, deficiency and delinquency interest are not imposed at the same time.
5. Liabilities due before January 1, 2018. For liabilities due before the TRAIN Law but paid after it took effect, deficiency and/or delinquency interest is 20% for the period up to December 31, 2017. It is 12% from January 1, 2018 until full payment. Double imposition under the old Section 249 still applies for the period from the payment date until December 31, 2017.

Who is affected

• Taxpayers with unpaid or deficiency taxes

Deadlines and effectivity

• TRAIN Law effectivity: January 1, 2018
• 20% interest for the period up to December 31, 2017
• 12% interest from January 1, 2018 until full payment

Summary by Tax Resources PH. It is not a substitute for the full text of the issuance or professional advice.