Commercial and Taxation Laws › Taxation Law › Tax Remedies › Taxpayer Remedies › Compromise and Abatement of Taxes

i. Compromise of Criminal Violations; Effect of Payment on Criminal Liability

Compromise

Authority of the CIR to Compromise Taxes

  • Criminal cases, other than those already filed in court or those involving tax fraud
  • Before the complaint is filed with the prosecutor’s office, the CIR has full discretion to enter into a compromise.
  • After the complaint is filed with the prosecutor’s office but before the information is filed with the court, the CIR can still enter into a compromise, provided the prosecutor gives consent.
  • After information is filed with the court, the CIR is no longer permitted to enter into a compromise, with or without the consent of the prosecutor. (People v. Magdaluyo, G.R. No. L-16235, 20 April 1961)1
  • Civil cases
  • The CIR is expressly authorized by the NIRC to compromise taxes subject to certain conditions. (NIRC, Sec. 204(A)(1)–(2)2)
  • The compromise settlement shall be subject to the following minimum amounts:
GROUND MIN. COMPROMISE RATE
Financial Incapacity 10% of the basic assessed tax
Other Cases 40% of the basic assessed tax

Instances When the Compromise shall be Subject to the Approval of the Evaluation Board (composed of the CIR and 4 Deputy Commissioners):

  • The basic tax involved exceeds Php 1 million; or
  • The settlement offered is less than the prescribed minimum rates.

Authorities

  • NIRC, Sec. 204
  • People v. Magdaluyo, G.R. No. L-16235, 20 April 1961