Abatement or cancellation of penalties

THE Bureau of Internal Revenue (BIR) issued Revenue Regulations No. 4-2012 amending Section 2.6 of Revenue Regulations No. 13-2001 by deleting Section 2.6.1 thereof, which provides that the penalties and/or interest imposed on the taxpayer may be abated or cancelled on the ground of one day late filing and remittance due to failure to beat the bank cut-off time.

Thus, with regard to late payment of taxes, only the following instances would merit the abatement or cancellation of the penalties and/or interest imposed on the taxpayer as they will be considered as not unjust and excessive:

a. use of wrong tax form but correct amount of tax was remitted;

b. filing an amended return under meritorious circumstances provided, however, that abatement shall cover only the penalties and not the interest;

c. surcharge erroneously imposed;

d. late filing of return due to unresolved issue on classification/valuation of real property for capital gains tax cases;

e. offsetting of taxes of the same kind such as when overpayment in one quarter/month is offset against underpayment in another quarter/month;

f. automatic offsetting of overpayment of one kind of withholding tax against the underpayment in another kind;

g. late remittance of withholding tax on compensation of expatriates for services rendered in the Philippines pending the issuance by the Securities and Exchange Commission of the license to the Philippine branch or subsidiary, provided, however, that the abatement shall only cover the surcharge and the compromise penalty and not the interest;

h. wrong use of tax credit certificate where tax debit memo was not properly applied for; and

i. such other instances which the Commissioner of Internal Revenue may deem analogous to the enumeration above.

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