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September 8, 1999 99-45

Philippines BIR Circular Clarifies Surcharge and Interest Penalties
by Remigio Noval and Teresita Lasala, KPMG Manila
One of the amendments introduced by the Tax Reform Act of 1997 relates to the imposition of the 25 percent surcharge under Section 248. On June 18, 1999, the Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular No. 46-99 (the Circular), which clarifies the bases and means for levying the surcharge penalty and related interest. The surcharge and any related penalties are incurred in the following scenarios, according to the Circular: • For late filing and late payment of the tax, the taxpayer shall be liable for delinquency penalties consisting of a 25 percent surcharge, plus 20 percent interest per annum computed on the basis of the tax due (excluding the 25 percent surcharge) from the due date of the tax until the date of payment. Only one 25 percent surcharge shall be imposed for late filing of the return and late payment of the tax. Filing the return on time but not with the proper (and BIR-authorized) officer will incur a 25 percent surcharge. For late filing and late payment due to the taxpayer’s willful neglect, a 50 percent surcharge will be imposed plus 20 percent interest per annum computed on the tax due (excluding the 50 percent surcharge). Insufficient income tax payments shall be subject to an interest rate of 20 percent per annum. Furthermore, in cases where insufficient tax payments are associated with a false or fraudulent return, the taxpayer will be assessed a 50 percent surcharge plus 20 percent interest per annum on the amount deemed insufficient.

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The information contained in this newsletter was submitted by KPMG Manila. The information is general in nature and subject to change. Applicability to specific situations should be determined through consultation with your tax advisor. Flash International Executive Alert is an IES publication of KPMG Washington National Tax. To view this publication or prior issues online, please visit http://www.us.kpmg.com/ies and click on ‘Publications’.

• In the event that the taxpayer fails to pay the insufficient tax assessed within the time prescribed in the notice and demand. To view this publication or prior issues online. the 20 percent interest per annum was computed on the insufficient tax assessed plus the 25 percent surcharge. . Prior to this amendment. The information is general in nature and subject to change. The information contained in this newsletter was submitted by KPMG Manila. Applicability to specific situations should be determined through consultation with your tax advisor. please visit http://www.com/ies and click on ‘Publications’. he or she will incur a 25 percent surcharge plus 20 percent interest per annum computed on the basis of the insufficient tax assessed (excluding the 25 percent surcharge).kpmg. Flash International Executive Alert is an IES publication of KPMG Washington National Tax.us.