18 July 2013
The Supreme Court in “SC GR No. 197117 dated 10 April 2013” [“SC Case”] confirmed the imposition of a “20% delinquency interest” on a deficiency tax assessment that remains unpaid after the deadline set forth in the formal assessment notice (FAN) pursuant to Section 249(c)(3) of the Tax Code.
The delinquency interest is in addition to the interest set forth in the FAN as a result of the taxpayer’s failure to pay the deficiency tax assessed within the time prescribed for its payment.
Illustrated below is a comparison of the imposition of delinquency interest and deficiency interest.
|Deficiency Interest||Delinquency Interest|
|Imposed On||Shortage of the taxes that should have been paid||Imposed on the delay in payment of taxes due as provided in the FAN|
|Computed From||From the date prescribed for its payment until full payment of the tax due.||From the due date appearing in the FAN until full payment of the tax due, surcharge and deficiency interest.|