A practical legal guide for individuals, professionals, and corporations

Snapshot (TL;DR)

If you file your annual income tax return (ITR) late but you owe no tax, the usual 25% surcharge and interest compute to ₱0 because they’re applied on the amount due.
However, the BIR can and routinely does impose a fixed “compromise penalty” for late filing—even when no tax is due. This is an administrative amount from the BIR’s schedule (varies by taxpayer type, offense, size, and timing) and is negotiated/consented to by the taxpayer.
Criminal liability for failure to file exists in law, but is rarely pursued for simple late filings with no revenue loss and cured by compliance + compromise.

1) What counts as “no tax due”?

You have no basic income tax payable on the annual ITR if, for example:

You incurred a net loss or zero taxable income;
Your income was fully covered by final taxes (e.g., certain passive income);
Your tax due is fully offset by credits (e.g., withholding on compensation/professional income, quarterly payments);
You’re exempt for the year (e.g., registered activity with relief properly applied).

You still need to file if you are required to file by law (e.g., self-employed/professional, corporation, mixed income earner, employee not qualified for substituted filing, etc.).

2) Statutory civil penalties vs. administrative compromise

A) Statutory civil penalties (from the Tax Code)

Surcharge (25% or 50%) – computed on the tax due. If tax due = ₱0, surcharge = ₱0.
Interest – computed on any unpaid tax (a percentage per annum). If unpaid tax = ₱0, interest = ₱0.

Bottom line: If there is truly no tax due, statutory surcharge and interest do not bite.

B) Compromise penalty (administrative)

The BIR maintains a schedule of compromise penalties for violations like late filing.
It is not a tax and not automatically collectible without your consent; it’s an offer to compromise the administrative/criminal aspect of the violation.
In practice, RDOs/cashiers ask you to pay the scheduled amount to close out the late filing even when the return is “no-payment.”
The amount varies (by taxpayer class—individual/corporate, by offense—late filing vs. failure to file, and sometimes by size/period). Expect a fixed peso amount (often in the low thousands for first-time, simple late filings) unless there are aggravating circumstances.

If you disagree with the proposed amount, you may seek reduction or abatement (see §6).

3) Due dates (for context)

Individuals (calendar year): on or before April 15 following the close of the year (e.g., 1701/1701A).
Corporations/partnerships: on or before the 15th day of the fourth month following the close of the taxable year (1702 series).
Employees under substituted filing: generally no ITR filing if all conditions are met (employer’s BIR Form 2316 substituted filing applies). If not qualified, you must file—and late filing rules apply.

4) Practical outcomes in common scenarios

Scenario	Tax Due	Surcharge	Interest	Compromise Penalty	Notes
Annual ITR filed late; net loss year	₱0	₱0	₱0	Yes (fixed)	File return + pay compromise to close.
Annual ITR late; tax due fully covered by credits (₱0 net due)	₱0	₱0	₱0	Yes (fixed)	Keep proof of credits/2307/2306/2305, etc.
Annual ITR late; small amount due but paid upon filing	>₱0	25% of tax due	Interest on unpaid days	Plus compromise (often)	You’ll usually owe all three.
Late, but amended return shows truly ₱0 due	₱0	₱0	₱0	Yes (fixed)	Late filing is still an “offense” even if no tax loss.

5) How BIR handles a late “no-payment” return

eBIRForms/eFPS filing is still required. Your proof is the submission confirmation/ref no.
The RDO will ordinarily assess a compromise penalty for late filing per schedule.
You pay the compromise using the appropriate payment form/channel (even if the ITR is no-payment).
Keep the ITR, confirmation, OR for compromise, and any explanation letter in your tax file.

6) Reduction/Abatement options

The Tax Code allows the BIR to abate or cancel penalties (and sometimes interest) in meritorious cases, e.g.:

Reasonable cause and no willful neglect (serious illness, calamity, system outage substantiated by advisories, force majeure);
Penalties are excessive or unwarranted (e.g., clear “no tax due,” first offense, immediate compliance).

How: Submit a written request to your RDO with supporting evidence (timelines, screenshots of system issues, hospital records, calamity certifications, etc.). Approval is discretionary and can take time; pay if you need immediate closure, then pursue refund/credit if applicable and allowed.

7) Pitfalls when “no tax due”

Refund exposure: If your zero payable comes from excess creditable withholding and you intend to claim a cash refund, timely filing and proper documentation are critical. Late filing can jeopardize refund claims even if carry-over remains available.
Carry-over vs. refund election: Once you carry over excess credits instead of refund, the election is generally irrevocable for that excess—late filing complicates this; document your choice on the original return.
Alphalist/attachments: Late or missing attachments (e.g., SAWT/alpha lists, audited FS for corporations) can trigger separate penalties even if the ITR itself shows no tax due.
Wrong form or channel: Certain taxpayers are mandated to e-file; paper filing when you’re required to e-file can be treated as failure to file, exposing you to penalties.

8) Step-by-step cure if you’ve missed the deadline

Prepare and file the ITR immediately through the required channel (eFPS/eBIRForms).
Compute statutory amounts: if truly ₱0 tax due, then surcharge = ₱0 and interest = ₱0.
Secure the compromise assessment at your RDO (or follow the RDO’s posted schedule).
Pay the compromise through authorized banks/e-payment and keep the OR.
Consider an abatement request if you have strong grounds (optional).
Fix supporting filings (e.g., SAWT, alphalists, AFS) to avoid separate penalties.
Create a compliance calendar for next year; enroll in reminders and verify due dates early.

9) Worked examples (illustrative)

Example 1 (no tax due; late):
- Tax due: ₱0 (loss year).
- Surcharge (25% of ₱0): ₱0.
- Interest: ₱0.
- Compromise penalty: Fixed amount per BIR schedule (pay to close).
Example 2 (tax due but credits erase it; late):
- Basic tax computed: ₱50,000; credits: ₱50,000 ⇒ Net payable: ₱0.
- Surcharge/interest: ₱0 (no unpaid amount).
- Compromise penalty: applicable for late filing.
Example 3 (tax due remains; late):
- Net tax payable: ₱10,000.
- Surcharge (25%): ₱2,500.
- Interest: apply per-annum rate pro-rated for days late until payment.
- Compromise: add fixed amount per schedule.

10) Frequently asked questions

Q1: If I pay the compromise, am I admitting a crime? No. You’re accepting an administrative settlement to dispose of the violation. It does not create a criminal record and is standard for late filings.

Q2: Can I refuse the compromise? Legally, yes (it’s consensual). Practically, the alternative is for BIR to pursue administrative/criminal action. Most taxpayers settle unless they have strong abatement grounds.

Q3: I’m an employee with substituted filing—am I even required to file? If you qualify for substituted filing, you don’t file an ITR. If any condition fails (e.g., two employers, mixed income), you must file and late rules apply.

Q4: We filed on paper but we’re mandated e-filers. Are we late? BIR treats wrong-channel submissions (paper instead of e) as non-filing, exposing you to the same late-filing exposure and compromise.

Q5: Will I get audited for late filing with no tax due? Late filing alone doesn’t guarantee an audit, but it’s a risk flag. Clean up quickly, keep complete documentation, and consider a preventive tax review.

11) Compliance checklist

Validate if you were actually required to file an annual ITR.
File the late return via the correct channel and retain the confirmation.
Document why tax due is ₱0 (working papers, 2307s, QAPs, FS).
Pay the compromise penalty assessed.
Cure any missing attachments/alphalists/AFS.
If applicable, lodge an abatement request with evidence.
Implement a calendar and responsibility matrix for future filings.

Bottom line

If you file your annual ITR late and owe nothing, the surcharge and interest are zero, but expect a fixed compromise penalty to settle the violation. File promptly, document why your net payable is zero, pay (or seek abatement of) the compromise, and tighten your compliance process to avoid repeat exposure.