A Closer Look at Tax Penalties

What are the tax penalties imposed by the BIR?

As you know, failure to comply with tax requirements would result in penalties that are punishable by law and might lead you to unwanted liabilities.


Below is a set of tax penalties that you, as the taxpayer, have to avoid:

Surcharge

  • According to Section 248 of the Tax Code, there shall be imposed a penalty equivalent to twenty-five percent (25%) of the amount due, along with other provisions such as the following:

  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.

There are also instances wherein a taxpayer needs to pay a surcharge, which is 50% of the basic tax due in the case of:

  • Willful neglect to file the return

  • A false or fraudulent return is willfully made

Interest

  • Section 249 states that there's an interest at the rate of twenty percent (20%) per annum, or such higher rate as may be prescribed by rules and regulations, on any unpaid amount of tax, from the date prescribed for the payment until it is fully paid.

Compromise

  • Failure to pay taxes in the Philippines would result to compromise penalties ranging from two hundred pesos (200.00) to fifty thousand pesos (50,000).

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