FILING

Income tax return – a sworn declaration of the income tax liability of a taxpayer.

Individual Return

1. Individuals Required to File Income Tax Return

(a) Every Filipino citizen residing in the Philippines;

(b) Every Filipino citizen residing outside of the Philippines on his income from sources within the
Philippines;
(c) Every alien residing in the Philippines on income derived from sources within the Philippines; and
(d) Every non-resident alien engaged in the trade or business or in the exercise of profession in the
Philippines.

2. Individuals Not Required to File Income Tax Return

(a) An individual whose taxable income does not exceed P250,000 under the graduated rates of Section
24(A)(2)(a) of the Tax Code.
(b) An individual receiving purely compensation income, regardless of amount, from only one employer
in the Philippines for the calendar year, the income tax of which has been withheld correctly by the
said employer (substituted filing1)

EXCLUDING:

1) An individual deriving compensation from two or more employers concurrently or

successively at any time during the taxable year shall file an income tax return.

2) Individuals receiving purely compensation income from a single employer although the
income tax of which has been correctly withheld, but whose spouse does not qualify for
substituted filing, must file an income tax return covering the income of both spouses.

(c) An individual whose sole income has been subjected to final withholding tax pursuant to Section
57(A) of the Tax Code.
(d) A minimum wage earner as defined in Section 22(HH) of the Tax Code or an individual who is
exempt from income tax pursuant to the provisions of this Code and other laws, general or special.

Notes:

(1) Individuals deriving other non-business, non-profession-related income in addition to

compensation income not otherwise subject to final tax are required to file an income tax
return.

(2) The foregoing notwithstanding, any individual not required to file an income tax return may
nevertheless be required to file an information return pursuant to rules and regulations.

3. Husband and W ife

1The employee shall sign BIR Form No. 2316 (Certificate of Compensation Payment and Tax Withheld) and return the same to the employer. The employer
shall, in turn, submit a duplicate copy to the BIR not later than February 28 of the succeeding year with the accompanying Certified List of Employees
Qualified for Substituted Filing of ITR. This list, when stamped “RECEIVED” by the BIR shall be tantamount to the substituted filing of ITR by the
qualified employees.

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 Married individuals shall file a joint return to include the income of both spouses, but where it is
impracticable for the spouses to file on return, each spouse may file a separate return of income but the
returns so filed shall be consolidated by the Bureau for purposes of verification for the taxable year.

Return of Parent to Include Income of Children

The income of unmarried minors derived from property received from a living parent shall be included in
the return of the parent, except:

(1) When the donor’s tax has been paid on such property; or
(2) When the transfer of such property is exempt from donor’s tax.

4. Individual Returns shall be Filed in duplicate.

5. Audited Financial Statements Which Must be Attached to the Annual Income Tax Return
Upon Filing

If the gross sales, earnings, receipts, or output from business for the year exceed P3,000,000:

(a) Balance Sheet and Profit and Loss Statement certified by an independent CPA.
(b) Comparative profit and loss statements for the current and preceding taxable years.
(c) Schedule of income producing properties and corresponding incomes therefrom.

6. Where to File Return

The return shall be filed with:

a) An authorized agent bank (AAB), or

b) Revenue District Officer, Collection Agent, or duly authorized Treasurer of the City or
Municipality in which such person has his legal residence or principal place of business in the
Philippines, or if there be no legal residence or place of business in the Philippines, with the
Office of the Commissioner.

7. When to File Return

(a) The annual return must be filed on or before the fifteenth (15th) day of April of each year
covering income for the preceding taxable year;

(b) Individuals earning self-employment (business) income (whether solely or in combination with
employment or passive income not subject to final taxes) must file quarterly returns as follows:

1st Quarter – on or before May 15 of the current taxable year;

2nd Quarter – on or before August 15 of the current taxable year;
3rd Quarter – on or before November 15 of the current taxable year;
Final Adjusted Return – on or before April 15 of the next year.2 3

(c) Individuals subject to tax on capital gains:

2RR. No. 8-2018. However, under the Tax Code as amended by the TRAIN Law, the final adjusted ITR shall be filed on or before May 15 of the following
year.

3Professionals and other suppliers of services deriving gross receipts of P250,000 or less in any 12-month period and who (1) are hired under a job order or
service contract with the departments and agencies of the government, local government units (“LGUs”), state colleges and universities, including GOCCs
and government financial institutions (“GFIs”), and (2) receive income from LONE PAYOR with no other source of income, shall be exempt from filing
quarterly ITRS. Such professionals or supplier of service shall file only an annual ITR (RMC No. 51-2018).

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 (1) From the sale or exchange or shares of stock not traded thru a local stock
exchange shall file a return within thirty (30) days after each transaction, and a final
consolidation return on or before April 15 of each year covering all stock transactions of
the preceding taxable year; and

(2) From the sale or disposition of real property classified as a capital asset, the return shall be
filed within 30 days following each sale or other disposition.

8. When There is an Overpayment in the Final Adjusted Return (Annual Return)

The taxpayer has the following options:

a) For the overpayment to be refunded to him;

b) For him to be issued a Tax Credit Certificate; or
c) For the overpayment to be carried over as a tax credit against his income tax liabilities for the
quarters of the succeeding taxable years.

Option (c) is the default choice.

9. Installment Payment

When the tax due is in excess of Two Thousand Pesos (P2,000), the taxpayer, other than a corporation,
may elect to pay the tax in two (2) equal installments, in which case, the first installment shall be paid at
the time the return is filed, and the second installment, on or before October 154 following the close of
the calendar year.

If any installment is not paid on or before the date fixed for its payment, the whole amount of the tax
unpaid becomes due and payable, together with the delinquency penalties.

10. Filing an Amended Return

A return may be modified, changed, or amended within (3) years from the date such return is filed
provided no notice for audit or investigation of such return has, in the meantime, been actually served
upon the taxpayer.

Corporate Return

1. Quarterly and Final Adjusted Returns

With the exception of foreign corporations not engaged in trade or business in the Philippines, all other
corporations shall file quarterly income tax returns and a final adjusted return as follows:

1st Quarter – not later than 60 days from the close of the quarter
2nd Quarter – not later than 60 days from the close of the quarter
3rd Quarter – not later than 60 days from the close of the quarter
Final Adjusted Return – not later than the 15th day of the 4th month following the close of the taxable
year.

Note: A GPP may, but is not required to file quarterly income tax returns or quarterly information returns
(BIR Form 1702Q) because it is exempt from taxes. It is required, however, to file an annual income tax

4 Before the TRAIN, the second installment should be paid on or before July 15 following the close of the calendar year.

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 return or annual information return (BIR Form No. 1702EX) setting forth the items of gross income and
deductions, and the names, TINs, addresses and shares of each partner.

Audited Financial Statements Which Must be Attached to the Income Tax Return Upon
Filing

If the gross sales, earnings, receipts, or output from business for the year exceed P3,000,000.
a) Balance Sheet and Profit and Loss Statement certified by an independent CPA.
b) Comparative profit and loss statements for the current and preceding taxable years.
c) Schedule of income producing properties and corresponding incomes therefrom.

2. Place of Filing
The Quarterly income tax return and the final adjustment return shall be filed with
a) The authorized agent bank, or
b) Revenue District Officer, Collection Agent, or duly authorized Treasurer of the City or
Municipality having jurisdiction over the location of the principal office of the corporation filing
the return or place where its main books of accounts and other data from which the return is
prepared are kept.

3. When There is An Overpayment in the Final Adjusted Return (Annual Return)

The corporation has the following options:

a) For the overpayment to be refunded; or
b) For a Tax Credit Certificate to be issued; or
c) For the overpayment to be carried over as a tax credit against income tax liabilities for the
quarters of the succeeding taxable years (default choice).

4. Filing an Amended Return

A return may be modified, changed, or amended within (3) years from the date such return is filed
provided no notice for audit or investigation of such return has, in the meantime, been actually served
upon the corporate taxpayer.

5. Annual Tax Incentives Report under R.A. No. 10708 (Tax Incentives Management and
Transparency Act (TIMTA))

Registered Business Entities (RBEs) availing of incentives administered by Investment Promotion

Agencies (IPAs)5 shall file with their respective IPAs an Annual Tax Incentives Report within thirty (30)
days from the statutory deadline of filing of the Final Adjustment Return for Income Tax and payment of
tax due thereon, if any.

Annual Tax Incentives Report of a Registered Business Entity – shall refer to the report to be submitted
by an RBE to its respective IPA containing complete information on income-based tax incentives in the
form of tax holidays and preferential tax rates, VAT incentives, duty exemptions, deductions, credits,
exclusions from the tax base, and other information that may be required by the rules.

5 IPAs include the Board of Investments (BOI), Philippine Economic Zone Authority (PEZA), Bases Conversion and Development Authority (BCDA),
Subic Bay Metropolitan Authority (SBMA), Clark Development Corporation (CDC), John Hay Management Corporation (JHMC), Poro Point
Management Corporation (PPMC), Bataan Technology Park, Inc. (BTPI), Cagayan Economic Zone Authority (CEZA) Zamboanga City Special Economic
Zone Authority (ZCSEZA), Phividec Industrial Authority (PIA), Aurora Pacific Economic Zone and Freeport Authority (APECO), Authority of the
Freeport Area of Bataan (AFAB), Tourism Infrastructure and Enterprise Zone Authority (TIEZA), and all other similar authorities that may be created by
law in the future.

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ELECTRONIC FILING AND PAYMENT SYSTEM (“eFPS”)

eFPS refers to the system developed and maintained by the BIR for electronically filing tax returns,
including attachments, if any, and paying taxes due thereon, specifically through the internet.

Who are covered?

The following shall e-file their returns and e-pay the taxes due thereon through the eFPS:

(a) Taxpayer Account Management Program (“TAMP”) taxpayers – individuals or juridical

entities that have been identified by a Revenue District Office (“RDO”) as the top taxpayers in the
tax region based on selection criteria pursuant to existing revenue issuances.

(b) Accredited Importers who or which are required to secure BIR-Importer Clearance
Certificates (“ICCs”) and BIR-Customs Broker Clearance Certificates (“BCCs”)

(c) National Government Agencies (“NGAs”)

(d) Licensed local contractors

(e) Enterprises enjoying fiscal incentives granted by other government agencies , such as
those registered with the PEZA, BOI, TIEZA, etc.

(f) Top 5,000 individuals engaged in trade or business or practice of a profession

(g) Corporations with paid-up capital of Ten Million Pesos (P10,000,000) and above.

(h) Corporations with complete computerized systems

(i) Government Offices insofar as remittance of withheld VAT and business tax is concerned

(j) Government bidders

(k) Large taxpayers – taxpayers who have been classified and duly notified by the Commissioner of
Internal Revenue for having satisfied any or a combination of set criteria.

(l) Top 20,000 private corporations

(m) Stock brokers duly registered with the SEC, and insurance companies duly registered
with the SEC and licensed by the Insurance Commission

Time of Filing of Return

a) The e-filing of returns shall be available 24 hours a day, 7 days a week. However, to ensure timely filing
of a return and payment of the corresponding tax, the electronic returns must be filed and the
corresponding tax must be paid on or before 10 P.M. of the due date.

b) For purposes of filing certain returns under the eFPS, taxpayers are classified under different business
groups based on industry, primary line of business, or primary purpose of existence. Depending on such
groupings, there shall be staggered filing as follows:

1) The Monthly Withholding Tax returns, except withholding VAT, shall be filed eleven (11) twelve
(12), thirteen (13), fourteen (14), or fifteen (15) days following the end of the month;

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 2) The Monthly VAT Declarations, and Monthly Percentage Tax Returns shall be filed twenty-five
(25), twenty-four (24), twenty-three (23), twenty-two (22), or twenty-one (21) days following the
end of the month.

Time of Payment of Taxes

Following the “pay as you file principle”, the payment of taxes shall be made within banking hours of the day the
return was electronically filed for cases of manual payment, or within the day of e-filing for cases of electronic
payment. However, no penalties shall be imposed for taxpayers who e-filed earlier and paid at a later date but
within the prescribed due date for the applicable tax.

PENALTIES

- Applies to all taxes

- Applies also to withholding agents

Civil Penalties

I. Surcharge
- Percentage of the amount of tax due.

25% Surcharge 50% Surcharge

(1) Failure to file any return and pay the tax due (1) Willful neglect to file the return within the
thereon (within the prescribed period for filing period prescribed by the Tax Code or by rules
and payment); and regulations;

Involves a situation where the taxpayer
voluntarily files the return beyond the
prescribed period, but before any notice is
received from the BIR.
(2) Filing a return with an internal revenue officer
other than those with whom the return is
required to be filed;
(3) Failure to pay the deficiency tax6 within the
time prescribed for its payment in the notice
of assessment;
Note: The 50% surcharge shall be imposed in case
the taxpayer files the return only after prior notice
in writing.
(2) In case a false or fraudulent return is willfully
made.
A substantial under-declaration of taxable
sales, receipts or income, or a substantial
overstatement of deductions by >30%, shall
constitute a prima facie evidence of falsity or
fraud.

(4) Failure to pay the full or part of the amount of

tax shown on any return required to be filed,
or before the date prescribed for its payment;

(5) Pursuant to Section 248(A)(1) and (4) of the Tax

Code (paragraphs (1) and (4) above), in an
amendment of return by a taxpayer where an
additional tax is due per amended return, the
25% penalty shall be imposed based on the
additional tax to be paid per amended return.7

6As a rule, no surcharge is imposed on deficiency tax. Deficiency tax means the amount by which the correct number of tax is determined by the BIR
exceeds the amount shown in the taxpayer’s return.

7 DOR Memo 16-2018 (RMC No. 21-2018)

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 II. Interest

There shall be assessed and collected on any unpaid amount of tax, interest at the rate of double the
legal interest rate for loan or forbearance of any money in the absence of an express stipulation as set by
the Bangko Sentral ng Pilipinas, form the date prescribed for payment until the amount is fully paid.

Note: The current rate set by the BSP is six percent (6%) per annum, pursuant to BSP Circular No. 799
dated June 21, 2013. Twice (2x) this rate is twelve percent (12%) per annum.8

Provided, that the deficiency and delinquency9 interest shall not be imposed simultaneously.

Notes:

(a) In cases where extended payment of the tax is duly authorized by the BIR, no 25% surcharge
shall be imposed for late payment since the deadline for payment has been duly extended.
However, 12% interest par annum for the extended payment shall be imposed. The 12%
interest per annum shall be imposed on the extended payment based on the diminishing
balance of the unpaid amount.

Provided, however, that the taxpayer’s request for extension of the period within which to pay is
made on or before the deadline.

Conversely, if such request is made after the deadline prescribed for payment, the taxpayer shall
already be treated late in payment, in which case, the 25% surcharge shall be imposed even if
payment of the delinquency be allowed in partial amortization.

(b) Pursuant to Section 248(A)(1) and (4) of the Tax Code, in an amendment of return by a taxpayer
where an additional tax is due per amended return, the 12% interest and the 25% penalty shall
be imposed based on the additional tax to be paid per amended return.10

III. Other Penalties

A. For failure to file an information return, statement, list, or any required

attachment:
P1,000 for each such failure. The aggregate amount to be imposed for all such failures during a
calendar year shall not exceed P25,000

B. For failure of a withholding agent to collect and remit the tax:

Penalty in the amount equal to the total amount of the tax not withheld.

C. For failure of a withholding agent to refund excess withholding tax:

Any employer/withholding agent who fails or refuses to refund excess withholding tax shall be
liable to a penalty equal to the total amount of refunds which was not refunded.

8 Before the effectivity of the TRAIN (January 1, 2018), interest was set at 20% per annum.

9 DOR Memo 16-2018 (RMC No. 21-2018)

10 DOR Memo 16-2018 (RMC No. 21-2018)

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