Deficiency Interest vs Delinquency Interest Under Section 249 and RR No. 21-2018
Under Revenue Regulations (RR) No. 21-2018, interest on unpaid tax under Section 249 of the NIRC is twelve percent (12%) per annum — double the Bangko Sentral ng Pilipinas (BSP) 6% legal interest rate — and TRAIN ended the old practice of stacking deficiency and delinquency interest for the same post-2018 period. Deficiency interest covers the stretch from the original payment deadline to payment or notice and demand; delinquency interest covers failure to pay by the due date on that notice.
This guide is the interest deep-dive companion to BIR Late Filing Penalties (which covers surcharge, interest, and compromise together). For how interest sits beside criminal exposure, see Civil vs Criminal BIR Tax Liability.
File and Remit on Time — Cut Interest Accrual FREE →What rate does RR No. 21-2018 prescribe? #
RR No. 21-2018 implements the TRAIN Law amendment to Section 249: interest on any unpaid amount of tax is double the effective legal interest rate set by the BSP for loans or forbearance without an express stipulation. Citing BSP Memorandum No. 799, series of 2013 (6%), the regulation fixes the Tax Code rate at 12% per annum and states that a circular will issue if the BSP changes the underlying rate.
Key practical points:
- The 12% framework applies beginning January 1, 2018 (TRAIN effectivity), replacing the former 20% regime for periods from that date forward
- Interest is assessed and collected until the amount is fully paid
- Qualifying micro and small taxpayers may face a reduced interest rate (50% of the normal Section 249 rate) under the EOPT Act as implemented by RR No. 6-2024 — still computed under the same deficiency/delinquency structure
How does deficiency interest differ from delinquency interest? #
RR No. 21-2018 defines two labels for when the 12% clock runs — they are sequential concepts after TRAIN, not simultaneous add-ons for the same days.
| Type | Runs from | Runs until |
|---|---|---|
| Deficiency interest | Date prescribed for payment of the deficiency tax | Full payment or issuance of notice and demand — whichever comes first |
| Delinquency interest | Due date appearing in the notice and demand (for tax on a return, tax with no return required, or deficiency tax / surcharge / interest thereon) | Full payment |
Grant Thornton’s digest of RR No. 21-2018 notes an important collection detail: deficiency interest that has already accumulated as of the notice and demand can itself form part of the amount that then draws delinquency interest after the demand due date — without re-imposing a second deficiency interest on the same days.
What does “no double imposition” mean after TRAIN? #
Section 5 of RR No. 21-2018 states that upon TRAIN’s effectivity, deficiency and delinquency interest shall not be imposed simultaneously. That overturns the pre-TRAIN pattern of stacking both interests over overlapping periods.
Transitory rule: If the liability became due before January 1, 2018 and is paid after that date, RR No. 21-2018 applies the old 20% rules (including possible double imposition) through December 31, 2017, and the new 12% / no-simultaneous rule from January 1, 2018 until payment.
Worked timeline (illustrative) #
Facts (post-2018 assessment, ordinary taxpayer): Deficiency income tax of ₱1,000,000 for a year whose original return/payment deadline was 15 April 2019. The BIR issues a notice and demand on 30 June 2020 requiring payment by that same date. The taxpayer pays in full on 10 February 2021. No micro/small reduction applies.
| Period | Interest type under RR No. 21-2018 |
|---|---|
| 15 April 2019 → 30 June 2020 (notice and demand) | Deficiency interest at 12% on ₱1,000,000 |
| 30 June 2020 → 10 February 2021 | Delinquency interest at 12% on the unpaid amount stated in the demand (which can include the deficiency tax and civil additions as of demand) — not a second simultaneous deficiency interest for the same days |
Exact peso totals depend on how the FLD itemizes basic tax, surcharge, and interest as of the demand date; the point of the timeline is the handoff from deficiency to delinquency after TRAIN, not a second 12% stacked on the same calendar days.
Frequently asked questions #
What is the Section 249 interest rate after TRAIN? #
Revenue Regulations No. 21-2018 sets the legal interest imposable under Section 249 at twelve percent (12%) per annum — double the six percent (6%) BSP legal interest rate for loans or forbearance under BSP Memorandum No. 799, series of 2013 — unless the BSP later prescribes a new rate and the Commissioner issues a circular.
What is deficiency interest? #
Under RR No. 21-2018, deficiency interest is interest on any deficiency tax due, assessed from the date prescribed for its payment until full payment or until issuance of a notice and demand by the Commissioner or authorized representative, whichever comes first.
What is delinquency interest? #
Delinquency interest under RR No. 21-2018 applies to failure to pay tax shown on a return, tax for which no return is required, or a deficiency tax (including surcharge or interest thereon) by the due date appearing in the BIR’s notice and demand, until the amount is fully paid.
Can the BIR charge deficiency and delinquency interest at the same time? #
No, not for periods after the TRAIN Law took effect. RR No. 21-2018 Section 5 states that upon TRAIN’s effectivity, deficiency and delinquency interest shall not be imposed simultaneously. Pre-2018 periods can still reflect the old double-imposition rules under the regulation’s transitory provisions.
How is Section 249 interest different from the Section 248 surcharge? #
Section 248 surcharge is a percentage penalty (generally 25%, or 50% for willful neglect or fraud) added to the tax due. Section 249 interest is a time-based charge that runs while the tax remains unpaid, at the RR No. 21-2018 rate. Both can appear on the same assessment, but they measure different things.
Summary #
After TRAIN, Section 249 interest is a 12% clock with two labels: deficiency until demand (or earlier payment), then delinquency from the demand due date — not both for the same days. Read every FLD interest line against RR No. 21-2018 before you assume the BIR is “double charging” the post-2018 period the old way.