Interest Rate on Unpaid Taxes
- Interest shall be assessed from the tax payment due date until full payment.
- The interest rate shall be the higher of 20% per annum or the prevailing Manila Reference Rate (MRR), updated monthly by the Central Bank.
- The applicable MRR is determined at the time of payment; if payment is between months, the previous month's MRR applies.
Deficiency Interest
- Applies when any tax amount, installment, or part thereof is unpaid by the prescribed date.
- Interest accrues from the prescribed payment date until paid, at the rate specified (20% or prevailing MRR).
Delinquency Interest
- Assessed when failure to pay occurs on the due date stated in the Commissioner’s notice and demand.
- Covers tax due on returns, taxes with no required returns, deficiency taxes, surcharges, and interest.
- Interest accrues at the prescribed rate until full payment is made.
Interest on Extended or Installment Payments
- When taxpayers pay under installment or are granted payment extensions but fail to pay on time, interest is imposed.
- Interest accrues from the Commissioner’s notice and demand date until full payment at the prescribed rates.
Computation Examples of Deficiency Interest
- Deficiency tax example: P100,000 basic tax plus 25% surcharge, total basis for interest computation is P125,000.
- Interest calculated using either 20% or prevailing MRR, whichever is higher, applied for specific periods.
- Illustrative cases show interest computations varying by payment dates and MRR values.
- Interest rates may exceed 20%; when MRR is lower, interest defaults to 20%, otherwise MRR is used.
Delinquency Interest Computation Example
- If deficiency tax is unpaid on the due date, delinquency interest applies on the total amount due including surcharge.
- Interest is computed at the MRR prevailing after the due date until payment.
Repealing Clause
- All prior inconsistent regulations, rulings, or orders are revoked.
Effectivity
- These regulations became effective on March 4, 1991.