Penalty for Late Filing BIR Form 0605 in the Philippines A comprehensive guide for taxpayers, accountants, and counsel
1. What BIR Form 0605 Is For
BIR Form 0605 (“Payment Form”) is the universal payment slip of the Bureau of Internal Revenue (BIR). It is filed without any accompanying tax return when a taxpayer needs to:
- pay the ₱500 Annual Registration Fee (ARF) under §236 (I) of the National Internal Revenue Code (NIRC);
- settle deficiency taxes, delinquency, compromise, surcharge or interest assessed through BIR notices;
- make voluntary payments (e.g., understatement of prior‐year income); or
- pay penalties for late registration, retirement of business, or late filing of other returns.
Because the form itself carries no due date (the due date depends on the underlying obligation), most late-filing issues center on the ARF, which must be paid on or before 31 January of every year.
2. Legal Basis of Monetary Penalties
| Penalty | Statutory Provision | When Imposed | Amount / Rate |
|---|---|---|---|
| Surcharge | §248 (A) & (B), NIRC | Failure to file and pay any return (ordinary); fraudulent filing | 25 % of basic tax (ordinary) or 50 % (fraudulent or willful attempt) |
| Interest | §249 (A) & (B), NIRC as amended by TRAIN (RA 10963) | From original due date until full payment | Rate = double the legal interest rate on loans or forbearance. BSP Circular 799 fixed legal interest at 6 % p.a.; therefore interest is currently 12 % per annum, computed daily (Basic Tax × 12 % × days⁄365). |
| Compromise | §204 (A), NIRC; schedules in RMO 19-2015, RMO 7-2015 (updated from time to time) | BIR may accept in lieu of criminal prosecution | Fixed pesos per violation (e.g., ₱1,000 for late ARF of individuals, ₱5,000/₱10,000 for corporations depending on gross sales bracket). |
| Criminal fine & imprisonment | §255, NIRC | Willful failure to file or pay | ₱10,000 – ₱1,000,000 fine and imprisonment of 1 – 10 years; court imposes in addition to civil penalties above. |
Note on interest cap (CREATE Law). §249 (B), as modified by RA 11534 (CREATE), provides that total deficiency and delinquency interest shall not exceed the amount of the basic tax. This is a ceiling, not a formula; surcharge and compromise are not capped.
3. Illustrative Computation (Late ARF)
Scenario: A corporation paid its 2025 Annual Registration Fee only on 10 March 2025.
| Calculation | |
|---|---|
| Basic Tax | ₱500 |
| Surcharge (25 %) | ₱500 × 25 % = ₱125 |
| Interest | ₱500 × 12 % × (38 days ÷ 365) = ₱6.26 (round to ₱6.25) |
| Compromise (per RMO 19-2015, late filing/payment, Corp. w/ gross sales ≤ ₱10 M) | ₱5,000 |
| Total to Pay | ₱5,631.25 |
Because interest is computed daily, small delays quickly pale beside the fixed compromise penalty.
4. Prescriptive Periods
- Civil penalties (surcharge, interest, compromise) prescribe after three (3) years from the last day prescribed for filing, extendible to ten (10) years in cases of fraud or filing of a false return (§203–§222, NIRC).
- Criminal prosecution must be commenced within five (5) years from the commission of the offense (§281). Running of prescription is tolled while the taxpayer is abroad or if a waiver of the statute of limitations was executed.
5. Common Compliance Pitfalls
- Assuming zero tax = zero liability. Even if the only amount due is the ₱500 ARF, late filing still attracts the full surcharge, interest, and compromise penalties.
- Paying through eFPS/eBIRForms but not printing the 0605. The electronic acknowledgment and the bank confirmation together constitute proof; failure to keep them may invite a penalty notice.
- Misclassification of payment codes. Using code MC (miscellaneous) instead of RF (registration fee) can result in the payment being mis-posted and treated as unpaid.
- Overlooking compromise schedules. Many taxpayers pay only the 25 % + interest, then receive a demand for compromise months later.
6. Remedies and Possible Relief
| Remedy | Basis | Practical Use |
|---|---|---|
| Abatement of Penalties | §204 (B), NIRC; RR 13-2001 | Commissioner may cancel surcharge/interest if (i) the assessment is erroneous, or (ii) collection is unjust/excessive. Requires a formal written request and proof of mitigating circumstances (e.g., force majeure, error by BIR). |
| Compromise Settlement | §204 (A); RMO 19-2015 | If taxpayer is (a) financially incapable or (b) doubtful validity of assessment. Offer compromises ≥ 40 %/10 % of basic tax depending on grounds. |
| Voluntary Assessment & Payment (VAP) | Special amnesty programs (e.g., RR 21-2020) | From time to time BIR issues VAP/Tax Amnesty on Delinquencies (TAD) allowing payment of a fixed rate in lieu of regular penalties. |
| Judicial Challenge (CTA) | §§ 7 & 11, RA 1125 | File within 30 days of denial or inaction on protest; expensive and used only for large assessments or novel questions. |
7. Non-Monetary Consequences
- “Open cases” block on eFPS/eBIRForms that prevents subsequent filings.
- Non-issuance of BIR Certification of Registration (COR) or Tax Clearance.
- Refusal of LGUs to renew business permits absent proof of ARF payment.
- In extreme or repeated violations, closure of establishment under §115, NIRC (rare for mere ARF lapses but possible when combined with other offenses).
8. Best-Practice Checklist
- Calendar critical dates – 31 January (ARF), last day of the month following issuance of assessment, or dates stated in demand letters.
- Enroll in electronic channels (eFPS or eBIRForms plus online payment partners) to avoid queuing and late-cutoff issues.
- Validate payment codes: Alphanumeric Tax Code MC 200 for annual registration; use correct ATCs for deficiency and delinquency payments.
- Secure proof immediately – save payment confirmation and BIR-stamped 0605 (if over-the-counter) or eFPS Filing Reference Number (FRN).
- Monitor BIR Revenue Memorandum Orders (RMOs) for updated compromise schedules.
- Act on notices promptly. The 30-day protest window under §228 applies even to penalty assessments. Silence waives your right to contest.
- Consider early voluntary disclosure. Paying before receipt of a formal assessment avoids the higher delinquency interest that starts once the notice of assessment (NoA) becomes final.
9. Key Takeaways
- Three components—surcharge, interest, and compromise—are computed independently and all apply to late-filed BIR Form 0605.
- After TRAIN, interest is 12 % p.a. but now subject to a ceiling equal to the basic tax (CREATE).
- Compromise penalties, not percentages, usually account for the bulk of the amount due, especially on the ARF.
- Relief exists (abatement, compromise, amnesties) but is never automatic; a written application, full disclosure, and supporting proof are required.
- Repeated or willful non-compliance risks criminal prosecution and operational disruptions.
Keeping a tight compliance calendar—and understanding how the three layers of penalties interplay—prevents minor oversights with Form 0605 from snowballing into major liabilities.