Abatement of Penalties and Interest, When applicable?

Revenue Regulations No. 4-2012 dated March 28, 2012 (RR 4-12)  and entitled “Amending Revenue Regulations No. 13-2001, Regarding Abatement or Cancellation of Internal Revenue Tax Liabilities” now provides an updated list of instances of abatement on the ground that the imposition thereof is unjust or excessive.

Under RR 4-12, Section 2.6.1 of Revenue Regulations No. 13-2001 providing for abatement or cancellation of penalties and/or interest on the ground of one day late filing and remittance due to failure to beat the bank cut-off time  has been deleted. This in effect is saying that a one-day late payment because the taxpayer failed to catch up with the  bank’s cut-off time is not subject for cancellation of 25% surcharge, 20% interest and compromise penalties ranging from P200 to P25,000 depending on the amount of basic tax due.

Section 2 of Revenue Regulations No. 13-2001 shall now read as follows:

Section 2. Instances When The Penalties and/or Interest Imposed on the Taxpayer May Be Abated Or Cancelled On the Ground That The Imposition Thereof is Unjust or Excessive –

X x x

2.6. Late payment of the tax under meritorious circumstances such as those provided hereunder:

  • 2.6.1 Use of wrong tax form but correct amount of tax was remitted;
  • 2.6.2 Filing an amended return under meritorious circumstances, provided, however, that abatement shall cover only the penalties and not the interest;
  • 2.6.3 Surcharge erroneously imposed;
  • 2.6.4 Late filing of return due to unresolved issue on classification/valuation of real property (for capital gains tax cases, etc.);
  • 2.6.5 Offsetting of taxes of the same kind, i.e. overpayment in one quarter/month is offset against underpayment in another quarter/month;
  • 2.6.6 Automatic offsetting of overpayment of one kind of withholding tax against the underpayment in another kind;
  • 2.6.7 Late remittance of withholding tax on compensation of expatriates for services rendered in the Philippines pending the issuance of Securities and Exchange Commission of the license to the Philippine branch office or subsidiary, provided, however, that the abatement shall only cover the surcharge and the compromise penalty and not the interest;
  • 2.6.8 Wrong use of Tax Credit Certificates (TCC) where Tax Debit Memo  was not properly applied for; and,
  • 2.6.9 Such other instances which the Commissioner may deem analogous to the enumeration above.

The above instances are normally subject to penalties and interest, but with the above regulations, the same could be abated or cancelled upon coordination with the Revenue District Office of location or with the Office of the Commissioner of Internal Revenue. Upon abatement, the taxpayer will no longer be held liable for the penalties and/or interest.


Revenue Regulations No. 4-2012 dated March 28, 2012


Disclaimer: This article is for general conceptual guidance only and is not a substitute for an expert opinion. Please consult your preferred tax and/or legal consultant for the specific details applicable to your circumstances. For comments, you may also please send mail at info(@)taxacctgcenter.ph, or you may post a question at Tax and Accounting Center Forum and participate therein.

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