Update:
As numerous municipalities in the country are on lockdown due to the Corona Virus (COVID-19) outbreak, taxpayers are left with confusion on how they should go about their filing of Annual Income Tax Return and Financial Statements with the Bureau of Internal Revenue (BIR). The said agency has released Revenue Memorandum Circular No. 28-2020 for guidelines. Fortunately, the April 15th deadline has been extended to May 15 without the imposition of penalties to taxpayers. Taxpayers can also pay to any Authorized Agent Banks anywhere in the country (not only in the jurisdiction of the respective Revenue District Office).
For your convenience, here are the summary of guidelines:
- Taxpayers are encouraged to use the Electronic Filing and Payment System (EFPS), and eBIRforms facility.
- For those who need to settle their tax liabilities, here are some available payment options:
- Landbank Link.ZIZ portal – for taxpayers with Landbank accounts
- PesoNet Facilities – RCBC and Robinsons Bank account holders
- Development Bank of the Philippines (DPB) Pay tax online
- UnionBank online Web and Mobile Payment Facility – For taxpayers with Unionbank accounts
- G Cash and Paymaya facilities – select “tax payment” as transaction type
If this is your first time filing an Income Tax Return in the Philippines, read below to know more about what, when, where and how to file your income tax.
What is Income Tax Return
A type of tax that taxpayers file with the BIR to report their income, expenses, and other information regarding their tax.
According to Bureau of Internal Revenue (BIR), Income Tax is a tax on a person’s income, emoluments, profits arising from property, practice of profession, conduct of trade or business or on the pertinent items of gross income specified in the Tax Code of 1997 (Tax Code), as amended, less the deductions if any, authorized for such types of income, by the Tax Code, as amended, or other special laws.
Who are required to file Income Tax Return
Individuals who are earning a salary or any income source. Non-individuals such as Corporations, Partnerships, Foreign Corporations and Estates, and Trusts.
To clarify, under the Tax Reform for Acceleration and Inclusion (TRAIN) law, Filipinos who earn less than Php 250,000 a year are exempted to pay taxes, BUT, they still need to submit an Income Tax Return. So, even if you do not have any taxes to pay, you still have to submit your ITR.
Those who are exempted to file are Filipinos who are residing and working outside the country.
When to File
This return is filed on or before April 15th of each year covering income for the preceding taxable year.
Failure to submit this on the deadline will result in penalties of 25% surcharge of the tax due and a 12% interest per year until you fully paid the amount.
How to File (For Individuals and Entrepreneurs)
- You may use the eBIRForms to prepare and submit your Income Tax return. The system ONLY runs only for Windows users.
However, if your business is registered under One Person Corporation, Partnership or Corporation, it is better to have a Certified Public Accountant assist you since you also need to submit a Financial Statement in the Securities and Exchange Commission.
Here’s a list of what kind of Income Tax return Form for submission:
BIR Form 1700 – for individuals earning purely compensation, including non-business/non-profession income.
BIR Form 1701A – for individuals earning income purely from business or profession.
BIR Form 1701 – For self-employed.
BIR 1702-MX – For mixed-income earners.
BIR 1702-EX – for non-individual taxpayers who are exempted under the Tax Code.
1702-RT – for non-individual taxpayers subjected to the regular tax rate.
Once you are done, print the duly accomplished form in triplicate. If you receive any BIR form 2307 from clients (withheld tax certificate) or BIR form 2316 (tax withheld from compensation), this needs to be submitted as attachments.
(Yes, this is the longest Step 1 I’ve written so far).
If you have exceeded the Php 3 million gross revenue for the year, you would need to provide an audited financial statement, which means, better disregard all these and go directly to a Certified Public Accountant with Board of Investments accreditation.
For Non-Individuals:
- BIR Form 2304 – Certificate of Income Payments Not Subjected to Withholding Tax, if applicable
- BIR Form 2307 – Certificate of Creditable Tax Withheld at Source, if applicable
- Duly Approved Tax Debit Memo, if applicable
- Proof of Foreign Tax Credits, if applicable
- Income tax return previously filed and proof of payment, if amended return id filed for the same taxable year
- Account Information Form (AIF) or the Certificate of the Independent CPA with Audited Financial Statement (AFS), if the gross annual sales, earnings, receipts or output exceed P3,000,000.
- Proof of prior year;’s tax credits, if applicable
2. Proceed to the nearest Authorized Agent Bank (AAB) under the jurisdiction of the Revenue District Office where you are registered and present the duly accomplished BIR Form, together with the required attachments and your payment.
3. Receive your copy of the duly stamped and validated form from the Revenue District Office RDO/Tax Filing Center representative.
Final Thoughts
Most of us especially Filipinos, knows how dreadful filing anything in any government agencies. It takes too much time and effort. Again, make sure to submit it before April 15 to avoid penalties. You can also submit it earlier than April 15 to evade a long queue line.
Don’t want any hassle? Or you just do not have time doing this? Contact us now and let our professionals handle your Income Tax Return.
Reference:
https://www.bir.gov.ph/index.php/tax-information/income-tax.html
