Question & AnswerQ&A (BIR REVENUE REGULATIONS NO. 3-91)
The main purpose is to implement Section 249 of the Tax Code by prescribing a deficiency or delinquency rate of interest higher than twenty percent (20%) per annum on unpaid taxes.
The applicable interest rate is either twenty percent (20%) per annum or the prevailing Manila Reference Rate (MRR) fixed and published by the Central Bank on the first Monday of each month, whichever is higher.
The MRR at the time of payment is applied. If payment occurs after the end of the month but before the first Monday of the next month, the MRR of the previous month is used.
Deficiency interest is interest assessed and collected on unpaid amounts of tax or installments not paid on or before the prescribed date, computed from the payment due date until fully paid at the prescribed interest rate.
Delinquency interest applies when there is failure to pay on the due date stated in the Commissioner's notice and demand, and is assessed on the tax due, deficiency tax, surcharge, or interest until fully paid.
Interest is assessed and collected on any unpaid amount or installment from the date of notice and demand until fully paid, at the prescribed interest rate.
The basis includes the basic tax due plus the surcharge (usually 25% of the tax due). Interest is then computed on this total amount.
Delinquency interest is applied starting from the date after the due date until final payment, computed at the higher of 20% or the MRR.
Whichever is higher between the 20% per annum and the prevailing MRR is used for interest computation.
Interest accrues from April 16, 1990 (per examples) or from the date prescribed for payment until fully paid.
The regulations took effect on March 4, 1991.
All regulations, rulings, orders, or portions thereof inconsistent with its provisions are revoked.
The regulations were signed by Jesus P. Estanislao, Secretary of Finance, and Jose U. Ong, Commissioner of Internal Revenue.