Total amount due (excluding suggested compromisep e n a l t y f o r l a t e p a y m e n t ) P 3 8 6 , 0 4 4 . 1 3 =========5 .6 C o m p u ta t i o n o f 2 0 % i n te r e s t p e r a n n u m i n ca se o f p a r ti a l o r i n s ta l l m e n t p a y m e n t of a tax liability. Illustration No.

. 1: In case extended payment of the tax is dulyauthorized. DEF CORPORATION, due to financial incapacity, requested that it beallowed to pay its income tax liability per return for calendar year 1998, in the amount of P1,000,000.00, in four (4) monthly installments, starting April 15, 1999. Its request hasbeen duly approved pursuant to Sec. 53 of the Tax Code.In this case, no 25% surcharge shall be imposed for late payment of the tax since itsdeadline for payment has been duly extended. However, 20% interest per annum for theextended payment shall be imposed, computed based on the diminishing balance of the"unpaid amount", pursuant to the provisions of Section 249 (D) of the Code.No 25% surcharge on extended payment shall be imposed provided, however, that thetaxpayer's request for extension of the period within which to pay is made on or beforethe deadline prescribed for payment of the tax due. Conversely, if such request is madeafter the deadline prescribed for payment, the taxpayer shall already be treated late inpayment, in which case, the 25% surcharge shall be imposed, even if payment of thedelinquency be allowed in partial amortization. cdasiaExample:Calendar Year 1998I n c o m e t a x d u e p e r r e t u r n P 1 , 0 0 0 , 0 0 0 . 0 0 Less: 1st installment of the tax on or before 4-1599P250,000.00 B a l a n c e a s o f 4 - 1 5 - 9 9 P7 5 0 ,0 0 0 . 0 0 Add: 20% int. p.a. from 4-15-99 to 5-1599( P 7 5 0 , 0 0 0 . 0 0 t i m e s . 0 1 6 6 6 6 7 ) P 1 2 , 5 0 0 . 0 3 A m o u n t d u e o n 5 - 1 5 - 9 9 P 7 6 2 , 5 0 0 . 0 3 Less: 2nd installment on 5-15-99 (P250,000.00 plusP1 2 ,5 0 0 . 0 3 i n te r e s t) P2 6 2 ,5 0 0 . 0 3 Ba l a n c e a s o f 5 - 1 5 - 9 9 P5 0 0 ,0 0 0 .0 0 Add: 20% int. p.a. from 5-15-99 to 6-15-99( P 5 0 0 , 0 0 0 . 0 0 t i m e s . 0 1 6 6 6 6 7 ) P 8 , 3 3 3 . 3 5 A m o u n t d u e o n 6 - 1 5 - 9 9 P 5 0 8 , 3 3 3 . 3 5 Less: 3rd installment on 6-15-99 (P250,000.00 plusP 8 , 3 3 3 . 3 5 i n t e r e s t ) P 2 5 8 , 3 3 3 . 3 5 B a l a n c e a s o f 6 - 1 5 - 9 9 P2 5 0 ,0 0 0 . 0 0 Add: 20% int. p.a. from 6-1599 to 7-15-99( P 2 5 0 , 0 0 0 . 0 0 t i m e s . 0 1 6 6 6 6 7 ) P 4 , 1 6 6 . 6 8 4th and final installment on 7-1599 P254,166.68=========== Illustration No. 2: Computation of tax delinquency in case of partial payment of the taxdue without prior BIR authorization for extended payment. Example: GHI CORPORATION did not file its final adjustment income tax return for thecalendar year 1998 which was due on April 15, 1999. The BIR informed the corporationof its failure to file its said tax return and required that it file the same, inclusive of the25% surcharge and 20% interest per annum penalties incident to the said omission. OnMay 15, 1999 it advised that its income tax due for the said year amounts toP1,000,000.00 but, however, due to its adverse financial condition at the moment, it willbe unable to pay the entire amount, inclusive of the delinquency penalties. Hence, onMay 15, 1999, it made a partial payment of P400,000.00. Assuming that the BIR demanded payment of the unpaid balance of its tax obligation payable by June 15, 1999,the unpaid balance of the corporation's delinquent income tax shall be computed asfollows:Calendar Year 1998I n c o m e t a x d u e p e r r e t u r n P 1 , 0 0 0 , 0 0 0 . 0 0 Add: 25% surcharge for late filing andl a te p a y m e n t P2 5 0 ,0 0 0 . 0 0 20% interest per annum from 4-15-99to 5-15-99 (P1,000,000.00t i m e s . 0 1 6 6 6 6 7 ) P 1 6 , 6 6 6 . 7 0 P 2 6 6 , 6 6 6 . 7 0 A m o u n t d u e a s o f 5 - 1 5 - 9 9 P 1 , 2 6 6 , 6 6 6 . 7 0 L e s s : P a r t i a l p a y m e n t o n 5 - 1 5 - 9 9 P 4 0 0 , 0 0 0 . 0 0 B a l a n c e a s o f 5 - 1 5 - 9 9 P8 6 6 ,6 6 6 .7 0 Add: 20% interest per annum from 5-15-99to 6 - 1 5 9 9 ( P8 6 6 ,6 6 6 .7 0 t i m e s .0 1 6 6 6 6 7 ) P1 4 ,4 4 4 . 4 7 Amount still due (exclusive of the suggested compromisep e n a l t y f o r l a t e f i l i n g a n d l a t e p a y m e n t P 8 1 1 , 1 1 1 . 1 7 =========If the said taxpayer fails to pay the amount of P811,111.17 by June 15, 1999, no further 25% surcharge for late payment of the tax shall be imposed. Instead, only the 20%interest per annum shall be imposed against the taxpayer against the taxpayer, computedfrom due date thereof (i.e., June 15, 1999) until paid. If said taxpayer pays the same onpartial payment basis, the 20% interest per annum shall be computed on the diminishingbalance thereof, pursuant to the procedures in the preceding Illustration No. 1, Section6.6 hereof.SECTION 6. Suggested Compromise Penalty in Extra-judicial Settlement of aTaxpayer's Criminal Violation. Section 204 of the Tax Code of 1997 provides that"All criminal violations may be compromised except: (a) those already filed in court, or (b) those involving fraud." This means that, in general, the taxpayer's criminal liabilityarising from his violation of the pertinent provision of the Code may be settled extra-judicially instead of the BIR instituting against the taxpayer a criminal action in Court. Acompromise in extra-judicial

settlement of the taxpayer's criminal liability for hisviolation is consensual in character, hence, may not be imposed on the taxpayer without his consent. Hence, the BIR may only suggest settlement of the taxpayer's liabilitythrough a compromise. prLLThe extra-judicial settlement of the taxpayer's criminal liability and the amount of thesuggested compromise penalty shall conform with the schedule of compromise penaltiesprovided under Revenue Memorandum Order No. 1-90 or as hereafter revised.SECTION 7. Repealing Clause. Any revenue issuance which is inconsistent herewithshall be considered repealed, amended, or modified accordingly.S EC T I ON 8 . E ff e c ti v i ty . 8 .1 G e n e r a l R u l e . In g e n e r a l , th e p r o v i si o n s o f t h e s e R e g u l a t i o n s s h a l l b e e f fe c ti v e beginning January 1, 1998 pursuant to the provisions of Section 8 of R.A. No. 8424,otherwise known as the National Internal Revenue Code of 1997.8 .2 C o m p u ta t i o n o f S u r c h a r g e a n d In te r e s t o n D e f i c i e n c y T a x As s e s s m e n t. An y deficiency tax assessment issued beginning January 1, 1998 shall be governed by therules prescribed in these Regulations. cda8 .3 O th e r Pr o v i s i o n s . A n y p r o v i s i o n o f t h e s e R e g u l a t i o n s n o t o th e r w i se specifically provided in the National Internal Revenue Code of 1997 shall take effectfifteen (15) days after publication in any newspaper of general circulation.