Key Benefits:
DIVISION I
CIVIL PENALTIES (ss 116-119)
The penalties imposed by this Division of this Part may be imposed by the Commissioner General at his or her discretion, and shall be in addition to any right to institute criminal proceedings against any person for an offence under this Act, and any fine payable on conviction for an offence shall be in addition to the penalties provided herein.
117. Penalties: failure to furnish tax return
(1) Where any person who is required to furnish a tax return including a witholding return for any tax year fails to do so within the prescribed time or any extended time allowed under section 77, he or she shall be liable to-
(a) interest at the rate of one and a half per cent for each month or part of a month during which it remains unpaid, compounded monthly on the amount of tax charged-
(i) commencing 30 days after the date on which the return should have been lodged; and
(ii) ending on the date on which the tax becomes due and payable under the assessment made for that tax year under section 78, or 30 days after the day when the return was furnished; and
(b) a penalty not exceeding the amount of tax chargeable for that tax year.
(2) Without prejudice to the provisions of subsection (1), if a person on whom a notice has been served in accordance with section 78(8), requiring him or her to furnish a tax return, fails to do so within the time specified in the notice, the Commissioner General may, if he or she considers it appropriate in the circumstances to do so, impose on such person a penalty not exceeding P2,000 at any time after the date on which the tax return is due to be furnished, and such penalty shall be in addition to any amount of interest and penalty to which he or she is liable in accordance with subsection (1):
Provided that, upon submission of the tax return, a penalty imposed under this subsection may be mitigated, in whole or in part, without the application of the provisions of section 129.
118. Penalties: failure to furnish correct tax return or estimate of taxable income
(1) Where any person has failed to lodge a correct tax return for any tax year by reason of-
(a) his or her failure to disclose any gross income accrued to him or her from any source;
(b) the deduction or set off by him or her of any amount which is not allowable as a deduction;
(c) the claim by him or her of an expenditure or loss of an amount which was not expended or lost; or
(d) his or her failure to disclose any fact, the disclosure of which would result in an increase in his or her taxable income,
he or she shall be liable to a penalty in accordance with subsection (2).
(2) Where the incorrectness of the tax return, statement or information was attributable to-
(a) neglect or carelessness, he or she shall be liable to a penalty not exceeding the amount of tax which would have been lost if he or she had been assessed on the basis of the incorrect return, statement or information furnished by him or her; or
(b) fraud or wilful default, he or she shall be liable to a penalty not exceeding twice the amount of tax which would have been lost if he or she had been assessed on the basis of the incorrect return, statement or information furnished by him or her.
(3) If, in any tax year in which the determination of the taxable income of any person does not result in an assessed loss, that person is entitled to the deduction of a balance of assessed loss from the previous tax year, and the balance to which he or she is entitled is less than it would have been if it had been calculated on the basis of the tax return, statement or information furnished by him or her for the tax year in which it was incurred, he or she shall be deemed for the purposes of this section to have omitted from his or her tax return of the first-mentioned tax year an amount equal to the difference between the amount at which such balance of loss is finally determined and the amount at which it would have been determined if the incorrect return, statement or information had been accepted by the Commissioner General as correct under section 78(4).
(4) Where for any tax year a person furnishes a provisional return under section 66 whereby the tax payable under section 83 is less than three-quarters of the tax chargeable under an assessment made under section 78 for that tax year, that person shall be liable to pay a penalty calculated at the rate of one and a half per cent per month, compounded monthly, on the amount of the difference between the tax payable under the provisional assessment issued under section 83 and the tax charged in relation to an assessment made under section 78 for the period commencing 30 days after the due date for furnishing a tax return under section 65 for that tax year.
(5) Where for any tax year the amount of estimated tax paid in accordance with the provisions of section 114 by a company designated under section 113(1) is less than the tax due on its tax return for that year, the company shall be liable to pay a penalty calculated at the rate of one and a half per cent per month, compounded monthly, on the amount of the difference between the tax payable on its tax return and the estimated tax paid for the period commencing on 1st July of the next tax year and ending on the date on which the tax return is furnished.
(6) For the purposes of withholding taxes as contained under the provisions of Division III of Part VIII, the Commissioner General shall impose on a person who after reasonable request-
(a) fails to give access to books and records;
(b) fails to appear at a tax office for determination of the tax liability of such person for withholding of tax; or
(c) otherwise impedes the determination or collection or withholding tax under Division III of Part VIII,
a penalty of P100 per day or one per cent of the tax due for each month or part of a month during which such failure or impediment continues, whichever is greater.
(7) A person who-
(a) within the prescribed time fails to register as an employer, to notify any change of address or to notify that he or she has ceased to be an employer;
(b) within the prescribed time fails to deduct any amount of tax from the remuneration paid to an employee;
(c) within the prescribed time fails to pay to the Commissioner General any amount of tax deducted from an employees' remuneration;
(d) fails to comply with any direction issued or condition specified by the Commissioner General under the Fifth Schedule;
(e) fails to maintain a record of remuneration paid to his or her employees and tax deducted therefrom;
(f) fails to deliver to any employee a certificate of tax deducted from remuneration as and when required;
(g) furnishes to his or her employer or Commissioner General an incorrect return of personal particulars, or gives incorrect information to his or her employer in relation to a matter affecting the amount of tax to be deducted from his or her remuneration;
(h) issues, possesses, uses or causes to be issued or used any certificate of remuneration and tax deducted which is incorrect;
(i) fails to deduct any tax from payment made to any person to which section 57 applies;
(j) within the prescribed period, fails to pay to the Commissioner General any amount deducted under section 57;
(k) within the prescribed period fails to notify the Commissioner General that he or she has entered into a contract to which the Sixth Schedule applies;
(l) fails to comply with the provisions of section 58; or
(m) fails to deliver to any contractor a certificate of tax deducted within the time prescribed in the Sixth Schedule.
shall be liable to a penalty of P100 per day or one percent of the tax due for each month or part of a month that the violation continues, whichever is the greater.
119. Penalties: failure to appoint a public officer, precedent partner, agent or address for service of notices
(1) Where a company makes default-
(a) in appointing a public officer;
(b) in appointing an address for service of notices; or
(c) in notifying the Commissioner General of any change of public officer or address for service of notices,
it shall be liable to a penalty not exceeding P10 for every day during which the default continues.
(2) Where a partnership makes default-
(a) in notifying the Commissioner General of the name of its precedent partner or in appointing an agent of the partnership;
(b) in appointing an address for service of notices; or
(c) in notifying the Commissioner General of any change of precedent partner, agent or address for service of notices,
it shall be liable to a penalty not exceeding P10 for every day during which the default continues.
119A. Penalties: Failure to comply with provisions of section 64A
(1) Any person who fails to comply with the provisions of section 64A, before the end of the period allowed for filing tax returns under section 65 (1) or (2), shall be liable to a penalty not exceeding P10,000.
(2) The provisions of subsection (1) shall not apply where a person proves that he or she had a just cause for failing to comply with the provisions of section 64A and unless he or she is given an opportunity to be heard.
119B. Penalties: Failure to comply with provisions of section 69
(1) Any person who fails to comply with the provisions of section 69 (1) or (3), shall be liable to a penalty not exceeding P10,000.
(2) For any subsequent failure to comply with the provisions of section 69 (1) or (3), the penalty shall not exceed P20,000.
(3) The provisions of subsection (1) shall not apply where a person proves that he or she had a just cause for failing to comply with the provisions of section 69 (1) or (3) and unless he or she is given an opportunity to be heard.
DIVISION II
CRIMINAL PROCEEDINGS (ss 120-129)
(1) Subject to the powers of the Director of Public Prosecutions under the Constitution, no criminal proceedings in respect of any offence under this Act shall be commenced except with the sanction of the Commissioner General.
(2) Criminal proceedings under this Act shall be commenced in the name of the Commissioner General.
121. Offences: breach of secrecy
Any person appointed under or employed in carrying out the provisions of this Act who, in contravention of the oath or declaration of secrecy made by him or her under section 5 discloses to any unauthorized person any document, information or confidential instruction which has come into his or her possession or to his or her knowledge in the course of his or her duties, or permits any unauthorized person to have access to any records in the possession or custody of the Commissioner General, shall be guilty of an offence and liable to a fine of P1,000 and to imprisonment for one year.
122. Offences: failure to comply with requirements of this Act
(1) Any person who-
(a) fails or neglects to furnish to the Commissioner General any return or document as and when required under this Act;
(b) fails to comply with the requirements of any notice in writing served on him or her under this Act;
(c) refuses or neglects to answer truly and fully any questions put to him or her or to supply any information required from him or her respecting his or her gross income or the gross income of any other person;
(d) fails to keep a proper record of his or her transactions as required under section 26;
(e) fails to preserve any books of account or document which he or she is required to preserve under section 144;
(f) obstructs or hinders any person appointed or employed under this Act in the discharge of his or her duties;
(g) fails to disclose in any tax return made by him or her any gross income accrued to him or her or any material facts which should have been disclosed; or
(h) signs any return or statement rendered to the Commissioner General without reasonable grounds for believing that return or statement or any part thereof to be correct,
shall be guilty of an offence and liable to a fine of P1,000 and to imprisonment for one year.
(2) Any person who, having been convicted under subsection (1) of failing to do anything required to be done by him or her under this Act, fails, within any further period specified by the Commissioner General in a notice served on that person, to comply with the requirements of the notice, shall be guilty of a further offence and shall be liable for each day during which the default continues to a fine of P10 and to imprisonment for one month.
123. Offences: intent to evade liability to tax
(1) Any person who wilfully and with intent to evade assessment or liability to tax-
(a) makes or causes or allows to be made any incorrect statement in any return lodged under this Act;
(b) signs any statement in any return lodged under this Act having reason to believe such statement or any part thereof to be incorrect;
(c) gives any incorrect answer, verbally or in writing, to any request for information made by the Commissioner General;
(d) prepares or maintains any incorrect books of account or other records, or falsifies any books of account or other records;
(e) authorizes the preparation or maintenance of any incorrect books of account or other records or the falsification of any books of account or other records; or
(f) makes use of or authorizes the use of any fraud whatever,
shall be guilty of an offence and liable to a fine of P4,000 and to imprisonment for two years.
(2) In any proceedings under this section, if it is proved that any incorrect statement or entry is wilfully made in any return, answer, books of account or other records, certificate or statement by any person, he or she shall be presumed, until the contrary is proved, to have made or caused or allowed to be made that incorrect statement or entry with intent to evade assessment or liability to tax.
(1) Any person who, wilfully and with intent to evade liability to tax-
(a) within the prescribed time fails to register as an employer, or to notify any change of address or to notify that he or she has ceased to be an employer;
(b) within the prescribed time fails to deduct any amount of tax from remuneration paid to an employee;
(c) within the prescribed time fails to pay to the Commissioner General any amount of tax so deducted;
(d) fails to comply with any direction issued or condition specified by the Commissioner General under the Fifth Schedule;
(e) fails to maintain a record of remuneration paid to his or her employees and tax deducted therefrom; or
(f) fails to deliver to any employee a certificate of tax deducted from remuneration, as and when required,
shall be guilty of an offence and liable to a fine of P4,000 and to imprisonment for two years.
(2) In this section the words "employer", "remuneration" and "employee" have the meanings assigned to them in the Fifth Schedule.
(1) Any person who wilfully with intent to evade assessment or liability to tax-
(a) furnishes to his or her employer or the Commissioner General an incorrect return of personal particulars, or gives any incorrect information to his or her employer in relation to any matter affecting the amount of tax to be deducted from his or her remuneration;
(b) issues, possesses, uses or causes to be issued or used any certificate of remuneration and tax deducted which is incorrect;
(c) alters any certificate of remuneration and tax deducted, issued by any other person, pretends to be the employee named in any certificate of remuneration and tax deducted, or in any other way to his or her own advantage or benefit obtains credit with respect to or payment of the whole or any part of any amount of tax deducted from remuneration received by another person; or
(d) not being an employer and without being authorized by any person who is an employer issues or causes to be issued any document purporting to be a certificate of remuneration and tax deducted from remuneration,
shall be guilty of an offence and liable to a fine of P4,000 and to imprisonment for two years.
(2) In this section the words "employer", "remuneration" and "employee" have the meanings assigned to them in the Fifth Schedule.
126. Offences: deduction from payments due under certain contracts with non-residents
Any person who, wilfully and with intent to evade liability to tax-
(a) fails to deduct any tax from a payment made to any person to which section 57 applies;
(b) within the prescribed time fails to pay to the Commissioner General any amount deducted under section 57;
(c) within the prescribed time fails to notify the Commissioner General that he or she has entered into a contract to which the Sixth Schedule applies; or
(d) fails to deliver to any contractor a certificate of tax deducted within the time prescribed in the Sixth Schedule,
shall be guilty of an offence and liable to a fine of P4,000 and to imprisonment for two years.
127. Offences under section 58
Any person who, wilfully and with intent to evade liability to tax fails to comply with the provisions of section 58 shall be guilty of an offence and liable to a fine of P4,000 and to imprisonment for two years.
128. Aiding and abetting an offence
(1) Where any person-
(a) wilfully makes or delivers on behalf of another person; or
(b) aids or abets another person to make or deliver,
an incorrect return, account, statement or any incorrect information relating to any matter affecting the tax liability of that other person, the first-mentioned person shall be guilty of an offence and liable to a fine of P2,000 and to imprisonment for one year.
(2) Where any person wilfully and with intent to assist any other person to evade assessment or liability to tax does any of the matters referred to in section 123, he or she shall be guilty of an offence and liable to a fine of P4,000 and to imprisonment for two years.
(3) In any proceedings under subsection (2), if it is proved that any incorrect statement or entry is wilfully made in any return, answer, book of ac count or other record, certificate or statement by such person, he or she shall be presumed, until the contrary is proved, to have made such incorrect statement or entry with intent to assist such other person to evade assessment or liability to tax.
129. Mitigation of penalties and compounding of offences
(1) Where any person has committed a breach of the provisions of this Act for which a penalty is provided under Division I of this Part, then in relation to such breach the Commissioner General may mitigate any penalty imposed by him or her, either wholly or in part, and whether before or after judgment for its recovery has been obtained.
(2) Nothing in subsection (1) shall be construed so as to authorize the Commissioner General to mitigate any penalty where the penalty imposed by the Commissioner General has been the subject of appeal under section 91.
(3) Where any penalty has been mitigated under subsection (1) by agreement with the person concerned then, notwithstanding the provisions of sections 88 and 91, that person shall not be entitled to object to or appeal against the imposition of, or the amount of, the penalty as so mitigated.
(4) Subject to the direction of the Director of Public Prosecutions, where any person has committed an offence against this Act for which criminal proceedings may be taken under Division II of this Part, then in relation to such offence the Commissioner General may, at any time prior to the commencement of the hearing by any court of such proceedings, compound the offence and order the person to pay such sum of money, not exceeding the amount provided in Division II of this Part for such offence, as the Commissioner General may think fit.
(5) The Commissioner General shall not exercise his or her power to compound under this section unless the person who has committed the offence requests the Commissioner General in writing to so deal with the offence.
(6) Where the Commissioner General compounds any offence under this section and makes an order accordingly-
(a) the order shall be made in writing and there shall be attached to it the request referred to in subsection (5);
(b) the order shall specify-
(i) the offence committed;
(ii) the sum of money ordered to be paid; and
(iii) the date on which payment is to be made or the dates on which instalments of that sum are to be paid;
(c) a copy of the order shall be given, if he or she so requests, to the person who committed the offence;
(d) that person shall not be liable to any criminal proceedings or further criminal proceedings, as the case may be, in respect of such offence, and if any such proceedings are taken it shall be a good defence for that person to prove that the offence has been compounded under this section;
(e) the order shall be final and shall not be subject to any appeal; and
(f) a statement of the amount due by reason of the order may be filed with any court of competent jurisdiction in the manner provided in section 103 and such amount shall be deemed to be an amount of tax due and payable and unpaid, and recovery thereof shall be made in accordance with the provisions of that section.
(7) Where under subsection (6)(b)(iii) any sum is to be paid by instalments and there is default in payment of any instalment, the whole of the balance then outstanding shall become due and payable forthwith.
