Computation of Penalties for Late Payment or Late Filing in the Philippines
A practitioner-oriented guide as of 20 June 2025
1. Why penalties exist
Under Philippine law, every mandatory return or remittance—taxes, statutory contributions, regulatory filings—has a due date fixed by statute or regulation. Failure to comply on time triggers additions to the basic amount to:
- deter delinquency;
- compensate the State or fund for the time-value of money; and
- sanction fraud or willful neglect.
Penalties fall into four broad clusters:
| Cluster | Typical Legal Label | Basis for Imposition |
|---|---|---|
| Surcharge | “Add-on” percentage (25 % or 50 %) | Late filing or late payment of national & local taxes |
| Interest | “Deficiency/delinquency interest” | Time-value of money from day after due date until payment |
| Compromise or fixed penalty | Flat pesos (₱) or graduated matrix | Administrative expediency where criminal prosecution is waived |
| Criminal penalty | Fine and/or imprisonment | Willfulness, fraud, repeated or large-scale violations |
All four can coexist. The rules below tell you when and how to compute each.
2. National taxes (BIR)
| Component | Statutory anchor (NIRC) | Core rule | How to compute |
|---|---|---|---|
| Surcharge | § 248 | 25 % of basic tax for late filing or late payment; 50 % if the return is fraudulent, fictitious or filed to evade tax. | Surcharge = Basic Tax × 25 % (or 50 %) |
| Interest | § 249 (as amended by CREATE, R.A. 11534) | “Double the legal interest rate” p.a. (6 % civil code rate × 2 = 12 % p.a.). Runs from statutory due date until fully paid. | Interest = Basic Tax × 12 % × (No. of days late ÷ 365) |
| Compromise | § 204 (B) + BIR RMO No. 19-2007 (matrix) | Allowed in lieu of criminal prosecution. Amount depends on tax due (or revenue loss) and nature of offense (late filing vs. failure to file). | Look up “Failure to File & Pay” row in RMO 19-2007 and pick the ₱ amount matching the tax due bracket. |
| Criminal | § 255 et seq. | Fine ₱10 000 – ₱1 000 000 + imprisonment 1–10 years. | Prosecuted by DOJ upon BIR complaint; courts decide. |
Illustrative computation—Late VAT return Facts: Basic VAT payable ₱500 000. Filed & paid 45 days late; no fraud.
- Surcharge = ₱500 000 × 25 % = ₱125 000
- Interest = ₱500 000 × 12 % × (45/365) = ₱7 397
- Compromise = Per RMO 19-2007, revenue loss ₱500 k → fixed ₱10 000 Total payable: ₱642 397
Quick reference: common BIR due dates
| Return | Normal deadline |
|---|---|
| Income tax (ITR) | 15 April following taxable year |
| VAT (monthly) | 20th of following month (non-eFPS); 25th for eFPS Tier I |
| VAT (quarterly) | 25th following quarter |
| Percentage tax | 25th following quarter |
| Expanded/Final WHT remittance (Form 0619-E/F) | 10th following month (eFPS deadlines vary) |
3. Local Government Unit (LGU) taxes
a. Real Property Tax (RPT) Local Government Code (LGC) § 255
- Penalty–interest 2 % per month on the unpaid amount, maximum 36 months (i.e., 72 %).
- No separate surcharge; interest caps total penalty.
- Discounts for prompt/advance payment (up to 20 %) do not apply once delinquent.
b. Business taxes & fees LGUs may impose:
- Surcharge up to 25 % of tax due; plus
- Interest up to 2 % per month, capped at 36 months. Rates are fixed by city/municipal ordinance, so check the local Revenue Code.
4. Social contributions
| Agency | Legal basis | Penalty for late remittance |
|---|---|---|
| SSS | Social Security Act of 2018 (R.A. 11199) § 22 (a) | 3 % per month (not per annum) on unpaid contributions; fraction of a month treated as full month. |
| PhilHealth | PhilHealth Circular 32-2002 | 3 % per month on missed premium; computed monthly until paid. |
| Pag-IBIG (HDMF) | HDMF Circular No. 407-2019 | 2 % per month on unremitted contributions, compounded. |
Tip: These penalties are straightforward—there are no surcharges or interest rates to juggle; simply multiply the principal contribution by the monthly rate and number of months late.
5. Securities & Exchange Commission (SEC) filings
| Filing | Primary rule | Penalty scheme | Practical notes |
|---|---|---|---|
| Annual Financial Statements (AFS) | Revised Corporation Code § 177 & SEC Memorandum Circular (MC) 6-2006 (as updated) | Graduated fines per day of delay plus base fine tiered by total assets or authorized capital stock. Typical SME < ₱100 M assets: ₱1 000/day after due date. | Deadlines depend on fiscal year-end and whether audited. |
| General Information Sheet (GIS) | RCC § 177; SEC MC 16-2006 | Flat ₱1 000 per day of delay. | |
| Other reports (17-A/Q, 20-IS, etc.) | SRC & MC 4-2016 | From ₱5 000 upward, per calendar day. |
Failure to pay fines can lead to revocation of license or suspension of primary franchise.
6. Customs duties & import VAT
Under the Customs Modernization and Tariff Act (CMTA, R.A. 10863) § 1430:
- Late payment of duties, taxes and other charges → interest at the legal rate (currently 6 % p.a.) from final assessment date until payment.
- Separate surcharges may be issued under Customs Administrative Orders for specific offenses (mis-declaration, late lodgement, abandonment).
7. Documentary Stamp Tax (DST) on loan documents
BIR RR 9-2021 reiterates the general NIRC rules: 25 % surcharge + 12 % p.a. interest. Where electronic DS forms are used (eDST), the system automatically tags late payment and imposes the additions.
8. Department of Trade & Industry (DTI) business names
DTI BN Law (Act 3883) & 2019 IRR
- Renewal grace period: 90 days after expiration.
- Filing within grace but after expiry → surcharge ₱— (nil) but a ₱100 penalty.
- After 90 days → business name deemed expired; must file a new application.
9. How to actually compute—step-by-step template
- Identify the governing law/agency and locate the normal due date.
- Determine number of late units (days or months, depending on rule).
- Compute surcharge first, if applicable.
- Compute interest on basic tax only (never on surcharge or compromise).
- Add compromise/fixed penalties where the matrix so requires.
- Check caps (2 % per month × 36 months for LGUs, etc.).
- Confirm if criminal exposure exists; if yes, consider voluntary disclosure or compromise to avoid prosecution.
- Document the computation in a working paper; retain as defense in audit.
10. Prescriptive periods & waivers
| Tax/agency | Assessment window | Collection window |
|---|---|---|
| BIR (ordinary) | 3 years from last day to file return | 5 years after assessment becomes final |
| BIR (fraud/none filed) | 10 years from discovery | 5 years after assessment |
| LGU taxes | 5 years (ordinary) / 10 years (fraud) from due date | 5 years after assessment |
| SSS/PhilHealth/Pag-IBIG | 20 years to assess & collect contributions | |
| SEC fines | No fixed prescriptive period; treated as administrative liabilities |
Taxpayers may sign BIR waivers (Form 1965) extending the assessment period; an invalid waiver voids any subsequent assessment.
11. Common compliance strategies
- eFPS/eBIRForms—electronic filing logs the timestamp; if system downtime prevented filing, keep BIR advisory screenshots to seek abatement under § 204.
- Partial payments—interest applies only to remaining balance.
- Tax Amnesty or Voluntary Assessment Programs (VAPs)—when offered (last in 2023), they wipe surcharge and interest in exchange for a fixed rate payment.
- Request for Compromise or Abatement—Rule II, BIR RMO 20-2007; granted for reasonable causes such as calamity, destruction of records, or system failures.
- Calendar management—align due dates with legal holidays (if the deadline falls on a Saturday, Sunday or legal holiday, it moves to the next working day).
12. Key take-aways
- Surcharge vs. interest: Surcharge is a one-time penalty; interest keeps growing until settlement.
- Different agencies, different math: BIR uses 12 % per year; SSS and PhilHealth use 3 % per month—a far steeper burden.
- Cap awareness saves money: LGU interest stops after 36 months; if you pay in month 37, the interest is the same as month 36.
- Documentation is defense: Keep stamped returns, proof of bank payment, and electronic acknowledgments.
- Stay vigilant on law changes: When the BSP resets the civil code interest rate, BIR deficiency interest automatically adjusts (double the new rate).
Appendix—Quick computation cheat sheet
| Scenario | Formula |
|---|---|
| BIR late filing (no fraud) | Amount due × 25 % + Amount due × 12 % × (days late ÷ 365) |
| BIR late payment, fraudulent | Amount due × 50 % + Amount due × 12 % × (days late ÷ 365) |
| SSS late contribution | Contribution × 3 % × months late |
| RPT late | Basic RPT × 2 % × months late (cap 36 months) |
| PhilHealth late premium | Premium × 3 % × months late |
| Pag-IBIG late | Contribution × 2 % × months late |
Bottom line: Computing penalties in the Philippines is largely mechanical once you know (1) the applicable statute, (2) the lateness interval, and (3) the correct percentage or interest rate. The true art lies in preventing the penalty through timely filing—or, when that fails, minimizing it via compromise, abatement, or amnesty.