INTEREST RATE FOR UNPAID TAX SHALL BE DOUBLE THE EFFECTIVE LEGAL RATE AS SET BY THE BANGKO SENTRAL NG PILIPINAS

Interest rate double the effective legal interest rate for loans or forbearance of any money shall be assessed and collected on any unpaid amount of tax at the rate set by the Bangko Sentral ng Pilipinas (BSP) for loans or forbearance of any money in the absence of an express stipulation from the date prescribed for payment until the amount is fully paid.

Tax Solutions on Employee Compensation and Benefits Second Edition (TRAIN Law) to be released soon! 

Under Section 249 of the Tax Code, 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.

RR 21-2018 issued on September 11, 2018 provides that there shall be assessed and collected on any unpaid amount of tax, interest at the rate of double the effective legal interest rate for loans or forbearance of any money in the absence of an express stipulation as set by the Bangko Sentral ng Pilipinas (BSP) from the date prescribed for payment until the amount is fully paid.

The rate of interest per BSP Memorandum No. 799 series of 2013 for loans or forbearance of any money in the absence of an express stipulation is six percent (6%). Thus, the BIR declared that the rate of legal interest imposable under Section 249 of the Tax Code, as amended, shall be twelve percent (12%).

As to the possible changes in rates in the future, the BIR states that a Circular shall be issued by the Commissioner in case BSP prescribes new rate of interest.

Interest imposed on any deficiency tax due, which interest shall be assessed and collected from the dati prescribed for its payment until:

(1) full payment thereof, or

(2) upon issuance of a notice and demand by the commissioner or his authorized representative, whichever comes first.

Interest imposed on the failure to pay:

(1) The amount of the tax due on any return to be filed; or

(2) The amount of the tax due for which no return is required; or

(3) A deficiency tax, or any surcharge or interest thereon on the due date appearing in the notice and demand of the Commissioner or his authorized representative until the amount is fully paid, which interest shall form part of the tax.

The Labor Code of the Philippines 2018 Edition (re-numbered and updated)

According to said regulation, upon the effectivity of the TRAIN Law, in no case shall the deficiency and delinquency interest prescribed herein be imposed simultaneously.