Sei - Itr

2.
SELF-EMPLOYED INDIVIDUAL
(Business Grocery Store)
BIR Annual Income Tax Return (ITR)
Form No. 1701A
Item No. 1 – Taxable Period
Taxable Year – It determines for what year the present Annual Income
Tax Return is to be filed. It may be Calendar Year or Fiscal Year.
Under the National Internal Revenue Code (NIRC), rules and

jurisprudence, the Calendar Year is any 12-month period beginning from
January and ending in December. The Fiscal Year is any 12-month period
beginning anytime, beginning in the first of the month, except January but
ending after the 12-month period.
Section 22. Definitions. When used in this Title:
(P) The term ‘taxable year’ means the calendar year, or the fiscal year
ending during such calendar year, upon the basis of which the net
income is computed under this Title. ‘Taxable year’ includes, in the case
of a return made for a fractional part of a year under the provisions of
this Title or under rules and regulations prescribed by the Secretary of
Finance, upon recommendation of the Commissioner, the period for
which such return is made.
For individual taxpayers, whether engaged in trade or business or not,

they are only allowed to choose the calendar year for purposes of filing income
tax. Only corporations, they can choose between fiscal year or calendar year for
purposes of filing income tax. Hence, Self-Employed Individuals are only
allowed to file income tax using the Calendar year as taxable period.
Item No.2 – If the current ITR is an Amended Return
The purpose and relevance of this item is that if the Self-Employed

Individual filed an amended return for possibility of taxes paid before amending
the return.
Section 6.
Any return, statement of declaration filed in any office authorized to

receive the same shall not be withdrawn: Provided, That within three (3)
years from the date of such filing, the same may be modified, changed,
or amended: Provided, further, That no notice for audit or investigation
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of such return, statement or declaration has in the meantime been
actually served upon the taxpayer.
Section 74. Declaration of Income Tax for Individuals. –
(A) In General. - Except as otherwise provided in this Section, every

individual subject to income tax under Sections 24 and 25(A) of this
Title, who is receiving self-employment income, whether it constitutes
the sole source of his income or in combination with salaries, wages
and other fixed or determinable income, shall make and file a
declaration of his estimated income for the current taxable year on or
before April 15 of the same taxable year. In general, 'self-employment
income' consists of the earnings derived by the individual from the
practice of profession or conduct of trade or business carried on by him
as a sole proprietor or by a partnership of which he is a member.
Nonresident Filipino citizens, with respect to income from without the
Philippines, and nonresident aliens not engaged in trade or business in
the Philippines, are not required to render a declaration of estimated
income tax. The declaration shall contain such pertinent information as
the Secretary of Finance, upon recommendation of the Commissioner,
may, by rules and regulations prescribe. An individual may make
amendments of a declaration filed during the taxable year under the
rules and regulations prescribed by the Secretary of Finance, upon
recommendation of the Commissioner.
This item is also important as to the date of such filing of the amended
return will have an effect on the reckoning period for purposes of the remedy of
taxpayer in protesting the validity of the assessment of income tax of the BIR
and the recovery of excessive and illegally collected taxes under Section 203
and 229 of the Tax Code.
Section 203. Period of Limitation Upon Assessment and
Collection. –
Except as provided in Section 222, internal revenue taxes shall be

assessed within three (3) years after the last day prescribed by law for
the filing of the return, and no proceeding in court without assessment
for the collection of such taxes shall be begun after the expiration of
such period: Provided, That in a case where a return is filed beyond the
period prescribed by law, the three (3)-year period shall be counted
from the day the return was filed. For purposes of this Section, a return
filed before the last day prescribed by law for the filing thereof shall be
considered as filed on such last day.
Section 229. Recovery of Tax Erroneously or Illegally Collected. –
No suit or proceeding shall be maintained in any court for the recovery

of any national internal revenue tax hereafter alleged to have been
erroneously or illegally assessed or collected, or of any penalty claimed
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to have been collected without authority, or of any sum alleged to have
been excessively or in any manner wrongfully collected without
authority, or of any sum alleged to have been excessively or in any
manner wrongfully collected, until a claim for refund or credit has been
duly filed with the Commissioner; but such suit or proceeding may be
maintained, whether or not such tax, penalty, or sum has been paid
under protest or duress.
In any case, no such suit or proceeding shall be filed after the expiration
of two (2) years from the date of payment of the tax or penalty
regardless of any supervening cause that may arise after payment:
Provided, however, That the Commissioner may, even without a written

claim therefor, refund or credit any tax, where on the face of the return
upon which payment was made, such payment appears clearly to have
been erroneously paid.
Under jurisprudence, if the amendment to the ITR is not substantial in
determining his income tax liability and the taxpayer paid the assessed tax, the
original date of the filing of the ITR will be considered as the date of the filing of
such despite the amendment. If the amendment is substantial, the date of the
filing of the amended return will be considered as the date of the filing of the
return of the taxpayer who paid thereafter and for purposes of reckoning
period, such date will be considered, if the taxpayer subsequently realized that
after filing the amended return, the tax paid is erroneous or illegally collected.
Item No.3 – Indication if Short Period Return
The purpose and relevance of this item is to reflect that If a taxpayer is

not in existence for the entire taxable year, a return is required for the short
period during which the taxpayer was in existence.
PART I – BACKGROUND INFORMATION ON TAXPAYER/FILER
Item No. 4 – Taxpayer’s Identification No. (TIN No.)
The relevance of this item is the (TIN) supplied by the BIR to a taxpayer
as provided for under the NIRC under the Chapter on Administrative Provisions
particularly Section 236 (I) on Registration Requirements.
Section 236. Registration Requirements

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(I) Supplying of Taxpayer Identification Number (TIN). – Any
person required under the authority of this Code to make, render or file
a return, statement or other document shall be supplied with or
assigned a Taxpayer Identification Number (TIN) which he shall indicate
in such return, statement or document filed with the Bureau of Internal
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Revenue for his proper identification for tax purposes, and which he
shall indicate in certain documents. x x x x
x x x x In cases where a registered taxpayer dies, the administrator or

executor shall register the estate of the decedent in accordance with
Subsection (A) hereof and a new Taxpayer Identification Number (TIN)
shall be supplied in accordance with the provisions of this Section.
In the case of a non-resident decedent, the executor or administrator of

the estate shall register the estate with the Revenue District Office
where he is registered: Provided, however; That in case such executor
or administrator is not registered, registration of the estate shall be
made with and the Taxpayer Identification Number (TIN) supplied by
the Revenue District Office having jurisdiction over his legal residence.
Only one Taxpayer Identification Number (TIN) shall be assigned to a

taxpayer. Any person who shall secure more than one Taxpayer
Identification Number shall be criminally liable under the provisions of
Section 275 on ‘Violation of Other Provisions of this Code or Regulations
in General.”
Item No. 5 – Revenue District Office Code (RDO)
This is the Code as designated by the BIR which corresponds to the

Revenue District Office (RDO) which is where the Self-Employed Individual will
file his ITR in which such RDO is determined by basis on the address provided
for by the individual taxpayer. Section 51 (B) of the Tax Code provides:
Section. 51. Individual Returns
(B) Where to File. - Except in cases where the Commissioner otherwise

permits, the return shall be filed with an authorized agent bank,
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.
Item No. 6 – Taxpayer Type
The purpose and relevance of this item is to indicate whether the Self-
Employed Individual (SEI) is a Single Proprietor or Professional.
According to the Senate Deliberations on the basis of passing RA 10963,
the TRAIN Law, which amended the Tax Code, a Single Proprietor is a sole
proprietor, or an independent contractor engaged in trade or business or other
venture or undertaking who reports income earned from self-employment.
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A Professional refers to a person certified by a professional body
belonging to a specific profession by having completed a required course of
studies and/or practice like doctors, accountants, engineers and the likes.
Likewise, it can be a person who engages in same art or sport of money, as a
means of livelihood, rather than as a hobby and may include professional
entertainers, athletes, directors, consultants and other recipients of
professional, promotional and talent fees.
Item No. 7 – Alphanumeric Tax Code
This is provided for by BIR in the Form itself as 1011 for purposes of
what category of tax is paid for by the taxpayer. Alphanumeric tax codes (ATCs)
reflects the type of tax to be paid. They are indicated in tax returns,
representing the actual rate and type of tax to be paid.
Item No. 8 – Taxpayer’s Name
The purpose and relevance of this to determine who is filing the current
Income Tax Return (ITR) and upon whom the assessment upon which the
ultimate tax liability will be imposed. This is pursuant to the requirements
under Section 51 (A) (5) (a).
Section 51. Individual Return. –
(A) Requirements. –
(5) The income tax return (ITR) shall consist of a maximum of four (4)
pages in paper form or electronic form, and shall only contain the
following information:
(a) Personal profile and information;
Item No. 9 – Registered Address
The purpose and relevance of this item is to determine the present

address of the individual taxpayer indicated in item no. 7 as registered in the
records of the BIR for purposes of filing of ITR. It also pertains to the place
where the BIR will send its pre-assessment notice (PAN) and final-assessment
notice (PAN) and other notices and inquiries it makes in accordance to its
powers to assess and collect taxes under the Tax Code, based upon the income
tax return filed to impose upon the taxpayer his tax liability for the taxable
period indicated in the return.
This is pursuant to the requirements under Section 51 (A) (5) (a).
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Item No. 9A – Zip Code
The purpose and relevance of this in relation to item no. 9 for mailing
purposes of notices and inquiries of BIR corresponding to the registered
address of the individual taxpayer filing the return.
Item 10 – Date of Birth
The purpose and relevance of this item is to determine the date of birth
of the individual taxpayer. This is pursuant to the requirements under Section
51 (A) (5) (a).
Item 11 – Email Address

The purpose and relevance of this item is to determine email address of
the individual taxpayer for electronic communications of BIR. This is pursuant
to the requirements under Section 51 (A) (5) (a).
Item 12 - Citizenship
The purpose and relevance of this item is also to determine whether the
Self-Employed Individual (SEI) pertains to whether Resident Citizen (RC), Non-
Resident Citizen (NRC), Resident Alien (RA) or “Non-Resident Alien Engaged in
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Trade or Business (NRAETB)”, to which the Tax Code imposes different tax
treatments in relation to the applicable tax rates under Section 24 (A) (2) (b)
subject to different conditions.
A Resident Citizen (RC) is a citizen of the Philippines and residing
therein. They are physically staying or present in the Philippines or has an
intention to reside here permanently or those who are absent but has an
intention to return thereto.
Under the NIRC, Section 23 (A) provides that a citizen of the Philippines
residing (RC) therein is taxable on all income from sources within and without
the Philippines.
Section 23 (B) then provides that a Non-Resident Citizen (NRC) is taxable
only on income derived from sources within the Philippines.
Section 22 defined who are Non-Resident Citizens:

(E) The term ‘non-resident citizen’ means:
(1) A citizen of the Philippines who establishes to the satisfaction of the

Commissioner the fact of his physical presence abroad with a definite
intention to reside therein.
(2) A citizen of the Philippines who leaves the Philippines during the
taxable year to reside abroad, either as an immigrant or for employment
on a permanent basis.
(3) A citizen of the Philippines who works and derives income from
abroad and whose employment thereat requires him to be physically
present abroad most of the time during the taxable year.
(4) A citizen who has been previously considered as nonresident citizen

and who arrives in the Philippines at any time during the taxable year
to reside permanently in the Philippines shall likewise be treated as a
nonresident citizen for the taxable year in which he arrives in the
Philippines with respect to his income derived from sources abroad until
the date of his arrival in the Philippines.
Section 22 (F) provides that the term ‘Resident Alien’ means an
individual whose residence is within the Philippines and who is not a citizen
thereof. Section 22 (G) provides that the term ‘Non-Resident Alien’ means an
individual whose residence is not within the Philippines and who is not a
citizen thereof, which may be engaged or not in trade or business here in the
Philippines.
A Non-Resident Alien Engaged in Trade or Business (NRAETB) is a
citizen of another country, not residing in the Philippines, but engaging in
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economic or commercial activities here in the Philippines or exercising a
profession. Section 25 (A) (1) discusses some indicators for a NRAETB.
Section 25. Tax on Non-resident Alien Individual. –
(A) Non-resident Alien Engaged in Trade or Business Within the

Philippines. –
(1) In General. – A non-resident alien individual engaged in trade or

business in the Philippines shall be subject to an income tax in the
same manner as an individual citizen and a resident alien individual,
on taxable income received from all sources within the Philippines. A
non-resident alien individual who shall come to the Philippines and stay
therein for an aggregate period of more than one hundred eighty (180)
days during any calendar year shall be deemed a ‘non-resident alien
doing business in the Philippines’, Section 22(G) of this Code
notwithstanding.
Furthermore, other factors may include the principle of habituality in

entering into commercial transactions on a more or less regular basis; putting
up a branch of business in the Philippines; hiring of agents in the Philippines;
hiring of employees in the Philippines.
Whereas, a Non-Resident Alien Not Engaged in Trade or Business
(NRANETB) is a citizen of another country, not residing in the Philippines, who
is not entering in economic or commercial activities here in the Philippines or
exercising profession.
Therefore, for RC, if he indicates in this item that he or she is a Filipino,
upon establishing that he or she is staying here or has an intention to reside
permanently, all his compensation income is within and outside the Philippines
is taxable. But if he establishes that he is a NRC under the situations under
Section 22 (E) upon inquiry by BIR, his compensation income derived only
within the Philippines is taxable.
Hence, if the taxpayer indicates in this item that he or she is not a
Filipino, it means that he or she is an alien. He will then establish upon inquiry
of the BIR of whether he is a Resident Alien (RA), Non-Resident Alien (NRA),
engaged in business or not, (NRAETB) or (NRANETB). However, their income
derived from only from sources within the Philippines is taxable.
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Sec. 23 (D) provides that an alien individual, whether a resident or not of
the Philippines (RA) or (NRA), is taxable only on income derived from sources
within the Philippines.
Another importance of this item is in choosing the applicable tax rates on
Self-Employed Individuals under Section 24 (A) (2) (b).
Item No. 13 – Claiming Foreign Tax Credits
The purpose and relevance of this item is the applicability for the Self-
Employed Individual to claim foreign tax credits under the Tax Code in
determining his respective total income tax liability
Foreign Tax Credits is allowed as a deduction from gross income of the

Self-Employed Individual taxpayer expressly provided under Section 34 (C) (3)
of the Tax Code which provides:
Section 34. Deductions from Gross Income. – Except for taxpayers
earning compensation income arising from personal services rendered
under an employer-employee relationship where no deductions shall be
allowed under this Section, in computing taxable income subject to
income tax under Sections 24(A); 25(A); 26; 27(A), (B), and (C); and
28(A)(1), there shall be allowed the following deductions from gross
income:
(3) Credit Against Tax for Taxes of Foreign Countries. – If the taxpayer
signifies in his return his desire to have the benefits of this paragraph,
the tax imposed by this Title shall be credited with:
(a) Citizen and Domestic Corporation. – In the case of a citizen of the

Philippines and of a domestic corporation, the amount of income taxes
paid or incurred during the taxable year to any foreign country; and
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An alien individual and a foreign corporation shall not be allowed the

credits against the tax for the taxes of foreign countries allowed under
this paragraph.
As a Resident Citizen (RC) is taxable on all income derived from

worldwide sources and Non-Resident Citizen (NRC) for taxes derived within, it
is possible that the foreign-source income was also subjected to taxation in the
country from which it was derived. Another importance of this is to minimize
the possibility of double taxation which the taxpayer may avail of the benefits
provided under an applicable and effective tax treaty, which may either be in
the form of tax exemption or a preferential tax rate. The amount of income
taxes paid during the taxable year to any foreign country may be used as
credits against Philippine income taxes.
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Hence, it is possible that if the SEI taxpayer is a RC who obtained
income abroad, the income from abroad that was already taxed by the taxing
authority of the foreign country, he may indicate in the ITR that he or she
wants to claim such taxes paid as tax credit in the current taxable period
subject of the return.
To avail of this benefit, the taxpayer must submit a Certificate of

Residency (COR) to the tax authority of the foreign jurisdiction to prove that he
is a resident of the tax partner treaty of said foreign country. A COR shall only
be issued to resident taxpayer with an existing Tax Identification Number (TIN)
who has complied with the documentary requirements prescribed by BIR.
Item No. 14 – Foreign Tax Number
This purpose and relevance of this is in relation to item no. 13 in

claiming foreign tax credits of SEI taxpayer, in determining is total taxable
income in his current ITR. This is with the process of the BIR in verifying the
validity and correctness in determining the amount of taxes paid abroad to be
allowed as deduction to the gross income of the SEI as tax credit.
Item No. 15 – Contact Number
The purpose and relevance of this item is to inform BIR of contact

information of the individual taxpayer for communication purposes of BIR. This
is pursuant to the requirements under Section 51 (A) (5) (a).
Item No. 16 – Civil Status
The purpose and relevance of this item is in relation for the manner of
filing of the income tax return.
If the Self-Employed Individual indicated that he is “Single”, he will file

the return on the basis solely of his earned income for the taxable period to
determine his taxable income. However, if he indicates that he is “Married”, the
filing of the return and the conditions therein to arrive at the taxable income
will be governed by the following provisions under the Tax Code:
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Section 24 - Income Tax Rates.
(A) (2) (a)
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For married individuals, the husband and wife, subject to the provision
of Section 51 (D) hereof, shall compute separately their individual
income tax based on their respective total taxable income: Provided,
That if any income cannot be definitely attributed to or identified as
income exclusively earned or realized by either of the spouses, the
same shall be divided equally between the spouses for the purpose of
determining their respective taxable income.
- xxxx -
Section 51. Individual Return.
(D) Husband and Wife. – Married individuals, whether citizens, resident
or non-resident aliens, who do not derive income purely from
compensation, shall file a return for the taxable year to include the
income of both spouses, but where it is impracticable for the spouses to
file one 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.
As a rule, Section 51 above provides that married individuals whether
resident or non-resident aliens, who do not derive income purely from
compensation income, are not required to file an income tax return to include
the income of both spouses. If the Self-Employed Individuals indicates that he
or she is married, they shall file jointly their income tax returns on their
respective total taxable income under Section 24 (A) (2) (b) in relation to Section
51 (D).
However, as an exception, each spouse may file a separate return of

income, if it is impracticable for the spouses to file one return. The returns
shall be consolidated by BIR for purposes of verification for the taxable year.
However, if after such separate filing of income tax returns for both
spouses, some income cannot clearly be attributed as income exclusively
realized by either of them, those income will be divided equally between them
to arrive at each of their final taxable income.
Item No. 17 – If married, whether spouse has income
The purpose and relevance of this item is in relation to item no. 15 for
matters of filing method of spouses to determine the taxable income. If the
individual taxpayer indicated that he or she has a spouse, the BIR will further
inquire on the manner of filing and if separate filing was done, details will be
further required in the next items in the return for the taxpayer to fill filing the
current return, to determine their respective taxable income.
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Item No. 18 – Filing Status if Married
The purpose and relevance of this item is in relation to items no. 16 and
17 for matters of filing method of spouses to determine the taxable income in
accordance with Sections 24 (A) (2) (a) and 51 (D) for the separate filing of each
spouse’ income tax return.
If joint filing is indicated, the taxable income will be determined

considering the income of both spouses for the taxable year. If separate filing is
indicated, their returns shall be consolidated by BIR for verification for the
taxable year, and their individual income tax will be based on their respective
total taxable income
Item No. 19 – Tax Rate
The purpose and the relevance of this item is the choice of tax rate that
may be availed of by the SEI taxpayer in relation to the amended rules under
the Tax Code.
Applying Sec. 24 (A) (2) (b), it provides that for Self-Employed Individual
(SEI) taxpayers whether RC, NRC, RA or NRAETB, they are subject to the
following tax rates subject to certain conditions:
For self-employed individuals or practice of profession, whose gross

sales/receipts and other non-operating income does not exceed the VAT
threshold as provided in Section 109 (BB) of the Tax Code, which is (3)
Three Million Pesos shall have the option to avail of:
An eight percent (8%) tax on gross sales or receipts and other non-
operating income in excess of P250, 000. 00 in lieu of the graduated
income tax rates under Section 24 (A) and the percentage tax under
Section 116 of the Tax Code; or
The graduated income tax rates under Section 24 (A) (2) (a) of the Tax
Code, as amended.
This item is also important as it shows that if the SEI avails of the
graduated income tax rates he may also avail of the Optional Standard
Deduction (OSD) as method of deduction, in lieu of the allowable deductions
under Section 34 of the Tax Code. The OSD is provided under Section 34 (L):
Section 34. Deductions from Gross Income. –
Except for taxpayers earning compensation income arising from

personal services rendered under an employer-employee relationship
where no deductions shall be allowed under this Section, in computing
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taxable income subject to income tax under Sections 24(A); 25(A); 26;
27(A), (B), and (C); and 28(A)(1), there shall be allowed the following
deductions from gross income:
(L) Optional Standard Deduction. –
In lieu of the deductions allowed under the preceding Subsections, an

individual subject to tax under Section 24, other than a non-resident
alien, may elect a standard deduction in an amount not exceeding forty
percent (40%) of his gross sales or gross receipts, as the case may be.
In the case of a corporation subject to tax under Sections 27(A) and
28(A)(1), it may elect a standard deduction in an amount not exceeding
forty percent (40%) of its gross income as defined in Section 32 of this
Code. Unless the taxpayer signifies in his return his intention to elect
the optional standard deduction, he shall be considered as having
availed himself of the deductions allowed in the preceding Subsections.
Such election when made in the return shall be irrevocable for the
taxable year for which the return is made: Provided, That an individual
who is entitled to and claimed for the optional standard deduction shall
not be required to submit with his tax return such financial statements
otherwise required under this Code:. . . . x x x x
It is clear from the above provision that the choice for the tax rate of the
graduated income tax rates with the option to avail the OSD for SEI is not
available for Non-Resident Alien.
PART II – TOTAL TAX PAYABLE
Item No. 20– Tax Due
The purpose and relevance of this item is the tax due to be paid by the
Compensation Income Earner either as a SEI, who is a RC, NRC or RA or an
NRAETB. The amount to be indicated in this item is referred to as the tax
payable after the determining the net taxable income and applying the tax rate
as chosen by the SEI between graduated income tax rates or the eight percent
(8%) tax on gross sales or receipts and other non-operating income in excess of
P250, 000. 00 in lieu of the graduated income tax rates under Section 24 (A)
and the percentage tax under Section 116 of the Tax Code if the gross
threshold.
This item is the same as that of item of either 46 or 56, depending on

what applicable tax rates was chosen. The mentioned items and their relevance
are further discussed below.
Item No. 21– Less Total Tax Credits/Payments
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The purpose of this item is to indicate the amount from item 64, meaning
either of the taxpayer or the spouse pertaining to the summation of the total
credits or tax payments withheld or paid under items 57 to 63 which will be
deducted from item no. 46 or 56 depending on what tax rate was used in order
to arrive at the Net Tax Payable, or Overpayment of the income tax of the SEI if
it appears the result will be in the negative.
Item No. 22– Net Taxable Payable / (Overpayment)
The purpose and relevance of this item is the indicated amount arrived at
after deducting the amount in item no. 21 from item no. 20. It is called the Net
Taxable Payable if it not appears to be in the negative. It is called Overpayment
if it appears in the negative in which the combined taxes withheld with the
credits availed of and taxes previously paid if the current return is an amended
return, is in excess after deducting the tax due computed.
Item No. 23– Less: Portion of Tax Payable Allowed for 2nd Installment to
be paid on or before October 15 (50% or less of item 20)
The purpose and relevance of this item is the allowed amount by which
the Self-Employed Individual will be deducting from the Net Tax Payable or
Overpayment in item 21 that he will pay for this current return, if he desired to
avail of the option to pay the remaining balance by installment on or before
October 15 after filing this return as provided under Section 56 of the Tax
Code. This is available only for SEI subject to the graduated income tax rates.
Section 56. Payment and Assessment of Income Tax for
Individuals and Corporations. –
(A) Payment of Tax. –
(2) Installment of Payment. – When a tax due is in excess of Two

thousand pesos (PhP2,000), the taxpayer other National Tax Research
Center 109 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
15 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.
Item No. 24– Amount of Tax Payable / (Overpayment)
The purpose and relevance of this item is the indication of the sum after
the amount in item no. 23, referring to the portion of the tax due computed
after computing the net taxable income and the income tax rates, is deducted
from item no. 22. It is called the Taxable Payable if it not appears to be in the
negative. It is called Overpayment if it appears in the negative in which the
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combined taxes withheld with the credits availed of and taxes previously paid if
the current return is an amended return, is in excess after deducting item no.
23 representing the portion of the tax due to be paid on installment.
Item No. 25 – Surcharge
The purpose and relevance of this item is for the imposition of the BIR of
surcharge civil penalty to the Self-Employed Individual under Section 248 of
the Tax Code.
Section. 248. - Civil Penalties.
(A) There shall be imposed, in addition to the tax required to be paid, a

penalty equivalent to twenty-five percent (25%) of the amount due, in
the following cases:
(1) Failure to file any return and pay the tax due thereon as required
under the provisions of this Code or rules and regulations on the date
prescribed; or
(2) Unless otherwise authorized by the Commissioner, filing a return

with an internal revenue officer other than those with whom the return
is required to be filed; or
(3) Failure to pay the deficiency tax within the time prescribed for its
payment in the notice of assessment; or
(4) Failure to pay the full or part of the amount of tax shown on any
return required to be filed under the provisions of this Code or rules and
regulations, or the full amount of tax due for which no return is required
to be filed, on or before the date prescribed for its payment.
Fifty percent (50%) of the tax or deficiency tax is imposed in case of:
a. Willful neglect to file return within the period prescribed by the Code
or by rules and regulations
b. A false or fraudulent return is willfully made
Under the 25% surcharge, it presupposes that the taxpayer inadvertently

failed to file and pay the return and tax respectively on the prescribed period
and subsequently filed without the demand of BIR
Under the 50% surcharge, it reflects a situation whereby there was no

filing of return and BIR made a demand. Despite the demand, the taxpayer still
failed to file the required the return.
Item No. 26 – Interest
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interest civil penalty to the Self-Employed Individual under Section 249 of the
Tax Code.
Section 249. Interest. –
(A) In General. – There shall be assessed and collected on any unpaid

amount of tax, interest at the rate of double the legal interest rate for
loans or forbearance of any money in the absence of an express
stipulation as set by the Bangko Sentral ng Pilipinas from the date
prescribed for payment until the amount is fully paid: Provided, That in
no case shall the deficiency and the delinquency interest prescribed
under Subsections (B) and (C) hereof, be imposed simultaneously.
(B) Deficiency Interest. – Any deficiency in the tax due, as the term is
defined in this Code, shall be subject to the interest prescribed in
Subsection (A) hereof, which interest shall be assessed and collected
from the date prescribed for its payment until the full payment thereof,
or upon issuance of a notice and demand by the Commissioner of
Internal Revenue, whichever comes earlier.
(C) Delinquency Interest. – In case of failure to pay:
(1) The amount of the tax due on any return required to be filed, or
(2) The amount of the tax due for which no return is required, or
(3) A deficiency tax, or any surcharge or interest thereon on the

due date appearing in the notice and demand of the
Commissioner, there shall be assessed and collected on the
unpaid amount, interest at the rate prescribed in Subsection (A)
hereof until the amount is fully paid, which interest shall form part
of the tax.
(D) Interest on Extended Payment. – If any person required to pay the

tax is qualified and elects to pay the tax on installment under the
provisions of this Code, but fails to pay the tax or any installment
hereof, or any part of such amount or installment on or before the date
prescribed for its payment, or where the Commissioner has authorized
an extension of time within which to pay a tax or a deficiency tax or any
part thereof, there shall be assessed and collected interest at the rate
hereinabove prescribed on the tax or deficiency tax or any part thereof
unpaid from the date of notice and demand until it is paid.
Item No. 27 – Compromise
compromise civil penalty to the Self-Employed Individual under Section 255,
250 and 275 of the Tax Code and RMO. No. 7-2015.
Page | 16
Section 255. Failure to File Return, Supply Correct and Accurate
Information, Pay Tax Withhold and Remit Tax and Refund
Excess Taxes Withheld on Compensation. – Any person required
under this Code or by rules and regulations promulgated thereunder to
pay any tax make a return, keep any record, or supply correct the
accurate information, who willfully fails to pay such tax, make such
return, keep such record, or supply correct and accurate information, or
withhold or remit taxes withheld, or refund excess taxes withheld on
compensation, at the time or times required by law or rules and
regulations shall, in addition to other penalties provided by law, upon
conviction thereof, be punished by a fine of not less than Ten thousand
pesos (PhP10,000) and suffer imprisonment of not less than one (1) year
but not more than ten (10) years.
Any person who attempts to make it appear for any reason that he or
another has in fact filed a return or statement, or actually files a return
or statement and subsequently withdraws the same return or statement
after securing the official receiving seal or stamp of receipt of internal
revenue office wherein the same was actually filed shall, upon
conviction therefor, be punished by a fine of not less than Ten thousand
pesos (PhP10,000) but not more than Twenty thousand pesos
(PhP20,000) and suffer imprisonment of not less than one (1) year but
not more than three (3) years.
In addition, Annex A of Revenue Memorandum Order (RMO) No. 7-
2015 provides for the Revised Consolidated Schedule of Compromise Penalties
for Violations of the National Internal Revenue Code (NIRC),
For late filing of Tax Returns with NO Tax Due to be paid, the

compromise penalty will be imposed upon filing of the Tax Return based on the
following:
a. For violations of the NIRC provisions which are subject to

compromise, the reference is found in page 4 of Annex A of RMO No.
7-2015.
For violations of the NIRC provisions which may be the subject of

criminal actions, Section 250 of the NIRC will apply as follows:
Section 250. Failure to File Certain Information Returns. -

In the case of each failure to file an information return, statement or list,
or keep any record, or supply any information required by this Code or
by the Commissioner on the date prescribed therefor, unless it is shown
that such failure is due to reasonable cause and not to willful neglect,
there shall, upon notice and demand by the Commissioner, be paid by
the person failing to file, keep or supply the same, One Thousand Pesos
(P 1,000) for each failure: Provided, however, That the aggregate
Page | 17
amount to be imposed for all such failures during a calendar year shall
not exceed Twenty-Five Thousand Pesos (P 25,000).
For late filing of Statements/Reports required to be filed with No Tax Due

to be paid, the compromise penalty will be imposed upon filing of the Tax
Return based on the following:
Section 275. Violation of Other Provisions of this Code or Rules

and Regulations in General.- Any person who violates any provision
of this Code or any rule or regulation promulgated by the Department of
Finance, for which no specific penalty is provided by law, shall, upon
conviction for each act or omission, be punished by a fine of not more
than One Thousand Pesos (P 1,000) or suffer imprisonment of not more
than six (6) months, or both.
Item No. 28 – Total Penalties
The purpose and relevance of this item is for the total amount of
penalties imposed by BIR to the Self-Employed Individual under items 25 to 27
in relation to filing of his return as required by BIR and the compliance to the
corresponding payment of the tax subject thereof, in accordance of the
applicability of the provisions on Civil Penalties under Section 248, 249, 250,
255, 275 of the Tax Code and RMO. No 7-2015 as discussed above in the
previous items.
Item No. 29 – Total Amount Payable / (Overpayment)
The purpose and relevance of this item is for the total sum of item no.
24, referring to the Amount of Tax Payable or Overpayment and the amount in
item no. 28, the sum of penalties to be paid by the Self-Employed Individual
imposed by BIR.
This Total Amount Payable or Overpayment is the amount tax payable or

that which may be overpaid if it appears that the amount is in the negative,
hence having excess payment of tax.
Item No. 30 – Aggregate Amount Payable / (Overpayment)
The purpose and relevance of this item is for the total sum of item no.
29, the Total Amount Payable or Overpayment, which is the sum of the amount
indicated on such item for the Self-Employed Individual and the spouse
indicated if the SEI taxpayer chose joint filing with the other spouse for the
income tax return for the taxable year. This is the Tax Payable or Overpaid
taxes.
Page | 18
This Aggregate Amount Payable or Overpayment is the amount tax
payable or that which may be overpaid if it appears that the amount is in the
negative, hence having excess payment of tax. Hence, for purposes of
overpayment the SEI is given the option of Refund; To be issued a Tax Credit
Certificate; or To be carried over as a Tax Credit for next year or quarter.
Item No. 31 – No. of Attachments
The purpose and relevance of this item is for the number of additional
sheets attached by the taxpayer in relation to the other items which needs
more filling spaces in addition to the details in the return. It also includes
attachments for proof to substantiate tax credits, payments, deductions and
other relevant matters involving the taxpayer’s income tax liability.
PART III – DETAILS OF PAYMENT
Item Nos. to 32 to 35 – Bank Matters
The purpose and relevance of this item if for the details of the particulars
of the payment mode of the taxpayer. The particulars of this item relating to
details of payment are; Cash/Bank Debit Memo, the Drawee Bank or Agency,
Check Payment, Tax Debit Memo and others as can be indicated by the
taxpayer.
PART IV – COMPUTATION OF INCOME TAX
PART IV.A – For Graduated Income Tax Rates
Item No. 36 – Sales/Revenues/Receipts/Fees
The purpose and relevance of this item is to input the to the total sales
transactions net of VAT, if applicable, reported during the period, without any
other deduction. These are derived from sale or exchange under Section 108 (A)
which provides:
Section 108. Value-added Tax on Sale of Services and Use or
Lease of Properties. –
(A) Rate and Base of Tax. – There shall be levied, assessed and
collected, a value-added tax equivalent to twelve percent (12%) of gross
receipts derived from the sale or exchange of services, including the use
or lease of properties. The phrase ‘sale or exchange of services’ means
the performance of all kinds of services in the Philippines for others for
a fee, remuneration or consideration, including those performed or
rendered by construction and service contractors; stock, real estate,
commercial, customs and immigration brokers; lessors of property,
Page | 19
whether personal or real; warehousing services; lessors or distributors
of cinematographic films; persons engaged in milling, processing,
manufacturing or repacking goods for others; proprietors, operators or
keepers of hotels, motels, resthouses, pension houses, inns, resorts;
proprietors or operators of restaurants, refreshment parlors, cafes and
other eating places, including clubs and caterers; dealers in securities;
lending investors; transportation contractors on their transport of goods
or cargoes, including persons who transport goods or cargoes for hire
and other domestic common carriers by land relative to their transport
of goods or cargoes; common carriers by air and sea relative to their
transport of passengers, goods or cargoes from one place in the
Philippines to another place in the Philippines; sales of electricity by
generation companies, transmission by any entity, and distribution
companies, including electric cooperatives; services of franchise
grantees of electric utilities, telephone and telegraph, radio and
television broadcasting and all other franchise grantees except those
under Section 119 of this Code and non-life insurance companies
(except their crop insurances), including surety, fidelity, indemnity and
bonding companies; and similar services regardless of whether or not
the performance thereof calls for the exercise or use of the physical or
mental faculties. . . x x x x
Item No. 37 – Less: Sales Returns, Allowances and Discounts
The purpose and relevance of this item is for the amount to be deducted
from item no. 36 in transactions of the SEI. This is in accordance with Section
106 (D) of the Tax Code.
Section 106. Value-Added Tax on Sale of Goods or Properties.
(D) Sales Returns, Allowances and Sales Discounts. – The value of

goods or properties sold and subsequently returned or for which
allowances were granted by a VAT-registered person may be deducted
from the gross sales or receipts for the quarter in which a refund is
made or a credit memorandum or refund is issued. Sales discount
granted and indicated in the invoice at the time of sale and the grant of
which does not depend upon the happening of a future event may be
excluded from the gross sales within the same quarter it was given.
Item No. 38 – Net Sales/Revenues/Receipts/Fees
The purpose and relevance of this item is it reflects the result after the
item no. 37 is deducted from item no. 36, to arrive at the net sales of the
business of the SEI pertaining to the goods in the grocery store.
Page | 20
Item No. 39 – Less: Allowable Deduction – Optional Standard Deduction
(OSD) (40%)
The purpose and relevance of this item is to indicate the amount of the
OSD if the SEI avails of the graduated income tax rates and the the Optional
Standard Deduction (OSD) as method of deduction, in lieu of the allowable
deductions under Section 34 of the Tax Code, which is 40% of the Net Sales in
item no. 38. The OSD is provided under Section 34 (L):


It is clear from the above provision that the choice for the tax rate of the
graduated income tax rates with the option to avail the OSD for SEI is not
available for Non-Resident Alien.
Item No. 40 – Net Income
The purpose and relevance of this item is to indicate the income after the
OSD Allowable Deduction in item no. 39 is deducted from the Net Sales in item
no. 38.
Page | 21
Item No. 41-42 – Add: Other Non-Operating Income
The purpose and relevance of this item to indicate other non-operating

income that the taxpayer possibly have earned from his or her business during
the taxable year. Non-operating income pertains to the gains or losses from
sources not related to the typical activities of the business or organization.
Non-operating income can include gains or losses from investments, property
or asset sales, currency exchange, and other atypical gains or losses.
Item No. 43 – Amount Received/Share in Income by a Partner from

General Professional Partnership (GPP)
The purpose and relevance of this item is to indicate the share received
by a SEI who exercises his profession in a professional partnership with other
co-professionals. The income he received will be part of the computation to
determine his personal income tax liability under Section 26 of the Tax Code:
Section 26. Tax Liability of Members of General Professional
Partnerships. –
A general professional partnership as such shall not be subject to the

income tax imposed under this Chapter. Persons engaging in business
as partners in a general professional partnership shall be liable for
income tax only in their separate and individual capacities.
For purposes of computing the distributive share of the partners, the net
income of the partnership shall be computed in the same manner as a
corporation.
Each partner shall report as gross income his distributive share,

actually or constructively received, in the net income of the partnership.
Item No. 44 – Total Other Income
The purpose and relevance of this item is to indicate the total of the non-
operating income specified in items no. 41 and 42 and 43.
Item No. 45 – Total Taxable Income
The purpose and relevance of this item is the combined income of the net
income in item no. 40 to the other income total under item no. 44.
Item No. 46 – TAX DUE
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The purpose and relevance of this item is the Tax Due for the income
actually received during the taxable after multiplying the Total Taxable Income
in item no. 45 with the graduated income tax rates as applicable.
Part IV.B – FOR 8% INCOME TAX RATES
Item No. 47 – Sales/Revenues/Receipts/Fees
The purpose and relevance of this item is to input the to the total sales
transactions net of VAT, if applicable, reported during the period, without any
other deduction. These are derived from sale or exchange under Section 108 (A)
which provides:
Section 108. Value-added Tax on Sale of Services and Use or
Lease of Properties. –
(A) Rate and Base of Tax. – There shall be levied, assessed and
collected, a value-added tax equivalent to twelve percent (12%) of gross
receipts derived from the sale or exchange of services, including the use
or lease of properties. The phrase ‘sale or exchange of services’ means
the performance of all kinds of services in the Philippines for others for
a fee, remuneration or consideration, including those performed or
rendered by construction and service contractors; stock, real estate,
commercial, customs and immigration brokers; lessors of property,
whether personal or real; warehousing services; lessors or distributors
of cinematographic films; persons engaged in milling, processing,
manufacturing or repacking goods for others; proprietors, operators or
keepers of hotels, motels, resthouses, pension houses, inns, resorts;
proprietors or operators of restaurants, refreshment parlors, cafes and
other eating places, including clubs and caterers; dealers in securities;
lending investors; transportation contractors on their transport of goods
or cargoes, including persons who transport goods or cargoes for hire
and other domestic common carriers by land relative to their transport
of goods or cargoes; common carriers by air and sea relative to their
transport of passengers, goods or cargoes from one place in the
Philippines to another place in the Philippines; sales of electricity by
generation companies, transmission by any entity, and distribution
companies, including electric cooperatives; services of franchise
grantees of electric utilities, telephone and telegraph, radio and
television broadcasting and all other franchise grantees except those
under Section 119 of this Code and non-life insurance companies
(except their crop insurances), including surety, fidelity, indemnity and
bonding companies; and similar services regardless of whether or not
the performance thereof calls for the exercise or use of the physical or
mental faculties. . . x x x x
Item No. 48 – Less: Sales/Revenues/Receipts/Fees
Page | 23
The purpose and relevance of this item is for the amount to be deducted from
item no. 36 in transactions of the SEI. This is in accordance with Section 106
(D) of the Tax Code.
Section 106. Value-Added Tax on Sale of Goods or Properties.
(D) Sales Returns, Allowances and Sales Discounts. – The value of

goods or properties sold and subsequently returned or for which
allowances were granted by a VAT-registered person may be deducted
from the gross sales or receipts for the quarter in which a refund is
made or a credit memorandum or refund is issued. Sales discount
granted and indicated in the invoice at the time of sale and the grant of
which does not depend upon the happening of a future event may be
excluded from the gross sales within the same quarter it was given.
Item No. 49 – Net Sales/Revenues/Receipts/Fees
item no. 48 is deducted from item no. 47, to arrive at the net sales of the
business of the SEI pertaining to the goods in the grocery store.
Item No. 50-51 – Add: Other Non-Operating Income
The purpose and relevance of this item to indicate other non-operating

income that the taxpayer possibly have earned from his or her business during
the taxable year. Non-operating income pertains to the gains or losses from
sources not related to the typical activities of the business or organization.
Non-operating income can include gains or losses from investments, property
or asset sales, currency exchange, and other atypical gains or losses.
Item No. 52 – Total Other Non-Operating Income
The purpose and relevance of this item is to indicate the total of the non-
operating income specified in items no. 50 and 51.
Item No. 53 – Total Taxable Income
The purpose and relevance of this item is the combined income of the net
income in item no. 49 to the other income total under item no. 52.
Page | 24
Item No. 54 – Less: Allowable reduction from gross sales/receipts and
other non-operating income of PURELY self-employed individuals and/or
professionals in the amount of P 250, 000
The purpose and relevance of this item is the amount of allowed

reduction from the total income from the gross sales or receipts and other non-
operating income of purely SEI or SEP subject to Section 24 of the Tax Code:
“For self-employed individuals or practice of profession, whose gross

threshold as provided in Section 109 (BB) of the Tax Code, which is (3) Three
Million Pesos shall have the option to avail of:
a. An eight percent (8%) tax on gross sales or receipts and other non-
b. The graduated income tax rates under Section 24 (A) (2) (a) of the Tax
Code, as amended.”
Item No. 55 – Taxable Income (Loss)
item no. 54 is deducted from item no. 53, to arrive at the taxable income or
loss of the operations of the grocery business store.
Item No. 56 – TAX DUE
The purpose and relevance of this item is the Tax Due for the income
actually received during the taxable after multiplying the Total Taxable Income
in item no. 55 with the 8% income tax rate.
Part IV.C – TAX CREDITS/PAYMENTS
Item No. 57 – Prior Year’s Excess Credits
The purpose and relevance of this item is to indicate the prior year’s tax
credits which it wants to be credit to the current taxable year. Under the rules
and jurisprudence:
If the sum of the quarterly tax payments made during the said taxable year is
not equal to the total tax due on the entire taxable income of that year, the
taxpayer shall either:
(A) Pay the balance of tax still due; or
(B) Carry-over the excess credit; or
Page | 25
(C) Be credited or refunded with the excess amount paid, as the case
may be. This item pertains to unused taxed credits of the taxpayer for the
previous years.
Item No. 58 – Tax Payments for the First Three (3) Quarters
The purpose and relevance of this item is to indicate the Creditable Tax
Withheld from the taxpayer during the First Three (3) Quarters pursuant to Section 74
(B) of the Tax Code:
Section 74. Declaration of Income Tax for Individuals
(B) Return and Payment of Estimated Income Tax by Individuals. - The

amount of estimated income as defined in Subsection (C) with respect to
which a declaration is required under Subsection (A) shall be paid in
four (4) installments. The first installment shall be paid at the time of
the declaration and the second and third shall be paid on August 15
and November 15 of the current year, respectively. The fourth
installment shall be paid on or before April 15 of the following calendar
year when the final adjusted income tax return is due to be filed.
Item No. 59 – Creditable Tax Withheld for the First Three 3 Quarters
The purpose and relevance of this item is to reflect the Creditable Tax Withheld
from the taxpayer during the First Three (3) Quarters pursuant to Section 57 of the
Tax Code:
Section 57. Withholding of Tax at Source
(B) Withholding of Creditable Tax at Source. - The Secretary of Finance

may, upon the recommendation of the Commissioner, require the
withholding of a tax on the items of income payable to natural or
juridical persons, residing in the Philippines, by payor-
corporation/persons as provided for by law, at the rate of not less than
one percent (1%) but not more than thirty-two percent (32%) thereof,
which shall be credited against the income tax liability of the taxpayer
for the taxable year.
Item No. 60 – Creditable Tax Withheld per BIR Form No. 2307 for the 4 th
Quarter
The purpose and relevance of this item reflects the Creditable Tax
Withheld from the taxpayer during the 4 th Quarter as reflected on his BIR Form
No. 2307 which refers to the Certificate of Creditable Tax Withheld at Source
It is a Certificate to be accomplished and issued to recipients of income

subject to expanded withholding tax paid by a Payor/Withholding Agent
Page | 26
including government money payments made by a government office showing
therein the monthly breakdown of the total income payments made and the
total taxes withheld and remitted during the quarter/period.
For VAT Withholding - This Certificate is to be attached to the Monthly

VAT Declaration, BIR Form No. 2550M and Quarterly VAT Return, BIR Form
No. 2550Q.
This is in pursuant of Section 57 (B) of the Tax Code:
Section 57. Withholding of Tax at Source
(B) Withholding of Creditable Tax at Source. - The Secretary of Finance

may, upon the recommendation of the Commissioner, require the
withholding of a tax on the items of income payable to natural or
juridical persons, residing in the Philippines, by payor-
corporation/persons as provided for by law, at the rate of not less than
one percent (1%) but not more than thirty-two percent (32%) thereof,
which shall be credited against the income tax liability of the taxpayer
for the taxable year.
Item No. 61 – Tax Paid in Return Previously Filed, if amended Return
The purpose and relevance of this item is to determine the amount paid
for the original income tax return filed, if this current return to be filed is an
amended return. This item is also relevant to determine the date the amended
return filed for purposes of reckoning period of the 2-year period within which
to avail of the remedy to recover the tax he paid on the original return filed
when he realize that he it is excessive or wrongfully collected upon filing an
amended return.
Section 229. Recovery of Tax Erroneously or Illegally Collected. –
No suit or proceeding shall be maintained in any court for the recovery

of any national internal revenue tax hereafter alleged to have been
erroneously or illegally assessed or collected, or of any penalty claimed
to have been collected without authority, or of any sum alleged to have
been excessively or in any manner wrongfully collected without
authority, or of any sum alleged to have been excessively or in any
manner wrongfully collected, until a claim for refund or credit has been
duly filed with the Commissioner; but such suit or proceeding may be
maintained, whether or not such tax, penalty, or sum has been paid
under protest or duress.
In any case, no such suit or proceeding shall be filed after the expiration
of two (2) years from the date of payment of the tax or penalty
regardless of any supervening cause that may arise after payment:
Page | 27
Provided, however, That the Commissioner may, even without a written
claim therefor, refund or credit any tax, where on the face of the return
upon which payment was made, such payment appears clearly to have
been erroneously paid.
Item No. 62 – Foreign Tax Credits, if applicable
The purpose and relevance of this item is for the SEI taxpayer to indicate
the desire to avail of foreign tax credits for taxes paid in a foreign country
under Section 34 (C) (3).
This deduction is not available to them because of Section 34 of the Tax

Code as amended by the TRAIN Law and indicate the amount of Foreign Tax
Credits which will be deducted.
income: x x x x
xxxx
(3) Credit Against Tax for Taxes of Foreign Countries. – If the

taxpayer signifies in his return his desire to have the benefits of this
paragraph, the tax imposed by this Title shall be credited with:
xxxx

this paragraph.
Item No. 63 – Other Tax Credits/Payments
The purpose and relevance of this item indicates to the other tax credits
or payments the SEI may use to deduct in the current income tax return.
Item No. 64 – Total Tax Credits/Payments
The purpose and relevance of this item is to show the total credits from
items 57 to 63 in the computation of the Net Tax Payable.
Item No. 65 – Net Tax Payable / (Overpayment)
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The purpose and relevance of this item is for the amount result of the
deduction of item no. 64, the amount of the total credits less the tax due from
either item 46, when the graduated income tax rates was applied or item 56,
when the 8% income tax rate is chosen.
PART V. – BACKGROUND INFORMATION ON SPOUSE
Item No. 66 – Spouse’s Taxpayer Identification Number (TIN)
The purpose and relevance of this item is in relation to item no. 1. This is
for the BIR to look for the records of the spouse’s income tax return in relation
to the current income tax return to be filed by the other spouse, whether they
are jointly filing their income tax return or if they are separately filing. This is
for consolidation purposes of the BIR for the other spouse’s income tax return
with the current ITR to be filed also by one of the spouses as provided in
Section 51(D).
The relevance of this item is the (TIN) supplied by the BIR to a taxpayer
as provided for under the NIRC under the Chapter on Administrative Provisions
particularly Section 236 (I) on Registration Requirements.
Section 236. Registration Requirements

xxxx
(I) Supplying of Taxpayer Identification Number (TIN). – Any
person required under the authority of this Code to make, render or file
a return, statement or other document shall be supplied with or
assigned a Taxpayer Identification Number (TIN) which he shall indicate
in such return, statement or document filed with the Bureau of Internal
Revenue for his proper identification for tax purposes, and which he
shall indicate in certain documents. x x x x
x x x x In cases where a registered taxpayer dies, the administrator or

executor shall register the estate of the decedent in accordance with
Subsection (A) hereof and a new Taxpayer Identification Number (TIN)
shall be supplied in accordance with the provisions of this Section.
In the case of a non-resident decedent, the executor or administrator of

the estate shall register the estate with the Revenue District Office
where he is registered: Provided, however; That in case such executor
or administrator is not registered, registration of the estate shall be
made with and the Taxpayer Identification Number (TIN) supplied by
the Revenue District Office having jurisdiction over his legal residence.
Only one Taxpayer Identification Number (TIN) shall be assigned to a

taxpayer. Any person who shall secure more than one Taxpayer
Identification Number shall be criminally liable under the provisions of
Page | 29
Section 275 on ‘Violation of Other Provisions of this Code or Regulations
in General.”
Item No. 67 – RDO Code
This is the Code as designated by the BIR which corresponds to the

Revenue District Office (RDO) which is where the spouse of the Self-Employed
Individual who files his ITR in which such RDO is determined by basis on the
address provided for by the spouse as individual taxpayer. Section 51 (B) of the
Tax Code provides:
Section. 51. Individual Returns
(B) Where to File. - Except in cases where the Commissioner otherwise

permits, the return shall be filed with an authorized agent bank,
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.
Item No. 68 – Filer’s Spouse Type
The purpose and relevance of this item is to indicate whether the spouse
of the Self-Employed Individual (SEI) is a Single Proprietor or Professional.
According to the Senate Deliberations which based on passing RA 10963,
the TRAIN Law, which amended the Tax Code, a Single Proprietor is a sole
proprietor, or an independent contractor engaged in trade or business or other
venture or undertaking who reports income earned from self-employment.
A Professional refers to a person certified by a professional body
belonging to a specific profession by having completed a required course of
studies and/or practice like doctors, accountants, engineers and the likes.
Likewise, it can be a person who engages in same art or sport of money, as a
means of livelihood, rather than as a hobby and may include professional
entertainers, athletes, directors, consultants and other recipients of
professional, promotional and talent fees.
Item No. 69 – Alphanumeric Tax Code
This is provided for by BIR in the Form itself as 1011 for purposes of
what category of tax is paid for by the taxpayer. Alphanumeric tax codes (ATCs)
reflects the type of tax to be paid. They are indicated in tax returns,
representing the actual rate and type of tax to be paid.
Item No. 70 – Spouse’s Name

Page | 30
The purpose and relevance of this to determine for the identification of
the spouse of the one filing the current Income Tax Return (ITR) and upon
whom the assessment upon which the ultimate tax liability will be imposed in
accordance with the requirements under Section 51 A (5). This is for
consolidation purposes of the BIR for the other spouse’s ITR with the current
ITR to be filed also by one of the spouses as provided in Section 51(D). Section
51 A (5) provides:
Item No. 71 – Contact Number
The purpose and relevance of this item is to inform BIR of contact

information of the individual taxpayer for communication purposes of BIR. This
is pursuant to the requirements under Section 51 (A) (5) (a).
Item No. 72 – Citizenship
The purpose and relevance of this item is also to determine whether the
spouse of the Self-Employed Individual (SEI) pertains to whether Resident
Citizen (RC), Non-Resident Citizen (NRC), Resident Alien (RA) or “Non-Resident
Alien Engaged in Trade or Business (NRAETB)”, to which the Tax Code imposes
different tax treatments in relation to the applicable tax rates under Section 24
(A) (2) (b) subject to different conditions.
A Resident Citizen (RC) is a citizen of the Philippines and residing

therein. They are physically staying or present in the Philippines or has an
Page | 31
intention to reside here permanently or those who are absent but has an
intention to return thereto.
Under the NIRC, Section 23 (A) provides that a citizen of the Philippines
residing (RC) therein is taxable on all income from sources within and without
the Philippines.
Section 23 (B) then provides that a Non-Resident Citizen (NRC) is taxable
only on income derived from sources within the Philippines.
Section 22 defined who are Non-Resident Citizens:

(E) The term ‘non-resident citizen’ means:
(1) A citizen of the Philippines who establishes to the satisfaction of the

Commissioner the fact of his physical presence abroad with a definite
intention to reside therein.
(2) A citizen of the Philippines who leaves the Philippines during the
taxable year to reside abroad, either as an immigrant or for employment
on a permanent basis.
(3) A citizen of the Philippines who works and derives income from
abroad and whose employment thereat requires him to be physically
present abroad most of the time during the taxable year.
(4) A citizen who has been previously considered as nonresident citizen

and who arrives in the Philippines at any time during the taxable year
to reside permanently in the Philippines shall likewise be treated as a
nonresident citizen for the taxable year in which he arrives in the
Philippines with respect to his income derived from sources abroad until
the date of his arrival in the Philippines.
Section 22 (F) provides that the term ‘Resident Alien’ means an
individual whose residence is within the Philippines and who is not a citizen
thereof. Section 22 (G) provides that the term ‘Non-Resident Alien’ means an
individual whose residence is not within the Philippines and who is not a
citizen thereof, which may be engaged or not in trade or business here in the
Philippines.
A Non-Resident Alien Engaged in Trade or Business (NRAETB) is a
citizen of another country, not residing in the Philippines, but engaging in
economic or commercial activities here in the Philippines or exercising a
profession. Section 25 (A) (1) discusses some indicators for a NRAETB.
Section 25. Tax on Non-resident Alien Individual. –
(A) Non-resident Alien Engaged in Trade or Business Within the

Philippines. –
Page | 32
(1) In General. – A non-resident alien individual engaged in trade or
business in the Philippines shall be subject to an income tax in the
same manner as an individual citizen and a resident alien individual,
on taxable income received from all sources within the Philippines. A
non-resident alien individual who shall come to the Philippines and stay
therein for an aggregate period of more than one hundred eighty (180)
days during any calendar year shall be deemed a ‘non-resident alien
doing business in the Philippines’, Section 22(G) of this Code
notwithstanding.
Furthermore, other factors may include the principle of habituality in

entering into commercial transactions on a more or less regular basis; putting
up a branch of business in the Philippines; hiring of agents in the Philippines;
hiring of employees in the Philippines.
Whereas, a Non-Resident Alien Not Engaged in Trade or Business
(NRANETB) is a citizen of another country, not residing in the Philippines, who
is not entering in economic or commercial activities here in the Philippines or
exercising profession.
Therefore, for RC, if he indicates in this item that he or she is a Filipino,
upon establishing that he or she is staying here or has an intention to reside
permanently, all his compensation income is within and outside the Philippines
is taxable. But if he establishes that he is a NRC under the situations under
Section 22 (E) upon inquiry by BIR, his compensation income derived only
within the Philippines is taxable.
Hence, if the taxpayer indicates in this item that he or she is not a
Filipino, it means that he or she is an alien. He will then establish upon inquiry
of the BIR of whether he is a Resident Alien (RA), Non-Resident Alien (NRA),
engaged in business or not, (NRAETB) or (NRANETB). However, their income
derived from only from sources within the Philippines is taxable.
Sec. 23 (D) provides that an alien individual, whether a resident or not of

the Philippines (RA) or (NRA), is taxable only on income derived from sources
within the Philippines.
Another importance of this item is in relation to item 19 in choosing the
applicable tax rates on Self-Employed Individuals under Section 24 (A) (2) (b).
Item No. 73 – Claiming Foreign Tax Credits
The purpose and relevance of this item is the applicability for the spouse of the
Self-Employed Individual to claim foreign tax credits under the Tax Code in
determining his respective total income tax liability
Page | 33
Foreign Tax Credits is allowed as a deduction from gross income of the
spouse Self-Employed Individual taxpayer as long as he or she is not an Alien
expressly provided under Section 34 (C) (3) of the Tax Code which provides:
income:
(3) Credit Against Tax for Taxes of Foreign Countries. – If the taxpayer
signifies in his return his desire to have the benefits of this paragraph,
the tax imposed by this Title shall be credited with:
(a) Citizen and Domestic Corporation. – In the case of a citizen of the

Philippines and of a domestic corporation, the amount of income taxes
paid or incurred during the taxable year to any foreign country; and
xxxx

this paragraph.
As a Resident Citizen (RC) is taxable on all income derived from

worldwide sources and Non-Resident Citizen (NRC) for taxes derived within, it
is possible that the foreign-source income was also subjected to taxation in the
country from which it was derived. Another importance of this is to minimize
the possibility of double taxation which the taxpayer may avail of the benefits
provided under an applicable and effective tax treaty, which may either be in
the form of tax exemption or a preferential tax rate. The amount of income
taxes paid during the taxable year to any foreign country may be used as
credits against Philippine income taxes.
Hence, it is possible that if the spouse of the SEI taxpayer is a RC who

obtained income abroad, the income from abroad that was already taxed by the
taxing authority of the foreign country, he may indicate in the ITR that he or
she wants to claim such taxes paid as tax credit in the current taxable period
subject of the return.
To avail of this benefit, the taxpayer must submit a Certificate of

Residency (COR) to the tax authority of the foreign jurisdiction to prove that he
is a resident of the tax partner treaty of said foreign country. A COR shall only
be issued to resident taxpayer with an existing Tax Identification Number (TIN)
who has complied with the documentary requirements prescribed by BIR.
Page | 34
Item No. 74 – Foreign Tax Number of Spouse
This purpose and relevance of this is in relation to item no. 12 in

claiming foreign tax credits of the spouse of the current CIE individual
taxpayer, in determining is total taxable income whether his or her ITR is
jointly or separately filed the other spouse. This is with the process of the BIR
in verifying the validity and correctness in determining the amount of taxes
paid abroad to be allowed as deduction to the gross income of the
Compensation Income Earner as tax credit.
Item No. 75 – Tax Rate
The purpose and the relevance of this item is the choice of tax rate that
may be availed of by the spouse of the SEI taxpayer in relation to the amended
rules under the Tax Code.
Applying Sec. 24 (A) (2) (b), it provides that for Self-Employed Individual
(SEI) taxpayers whether RC, NRC, RA or NRAETB, they are subject to the
following tax rates subject to certain conditions:
For self-employed individuals or practice of profession, whose gross
threshold as provided in Section 109 (BB) of the Tax Code, which is (3) Three
Million Pesos shall have the option to avail of:
c. An eight percent (8%) tax on gross sales or receipts and other non-
d. The graduated income tax rates under Section 24 (A) (2) (a) of the Tax
Code, as amended.
This item is also important as it shows that if the SEI avails of the
graduated income tax rates he may also avail of the Optional Standard
Deduction (OSD) as method of deduction, in lieu of the allowable deductions
under Section 34 of the Tax Code. The OSD is provided under Section 34 (L):

Page | 35

It is clear from the above provision that the choice for the tax rate of the graduated income
tax rates with the option to avail the OSD for SEI is not available for Non-Resident Alien.
Page | 36

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2.

Item No. 1 – Taxable Period

Under the National Internal Revenue Code (NIRC), rules and

Section 22. Definitions. When used in this Title:

For individual taxpayers, whether engaged in trade or business or not,

Item No.2 – If the current ITR is an Amended Return

The purpose and relevance of this item is that if the Self-Employed

Any return, statement of declaration filed in any office authorized to

Section 74. Declaration of Income Tax for Individuals. –

(A) In General. - Except as otherwise provided in this Section, every

Except as provided in Section 222, internal revenue taxes shall be

Section 229. Recovery of Tax Erroneously or Illegally Collected. –

No suit or proceeding shall be maintained in any court for the recovery

Provided, however, That the Commissioner may, even without a written

Item No.3 – Indication if Short Period Return

The purpose and relevance of this item is to reflect that If a taxpayer is

PART I – BACKGROUND INFORMATION ON TAXPAYER/FILER

Item No. 4 – Taxpayer’s Identification No. (TIN No.)

Section 236. Registration Requirements

x x x x In cases where a registered taxpayer dies, the administrator or

In the case of a non-resident decedent, the executor or administrator of

Only one Taxpayer Identification Number (TIN) shall be assigned to a

This is the Code as designated by the BIR which corresponds to the

Section. 51. Individual Returns

(B) Where to File. - Except in cases where the Commissioner otherwise

Item No. 6 – Taxpayer Type

Item No. 8 – Taxpayer’s Name

Section 51. Individual Return. –

(a) Personal profile and information;

Item No. 9 – Registered Address

The purpose and relevance of this item is to determine the present

Section 51. Individual Return. –

(a) Personal profile and information;

Item No. 9A – Zip Code

Section 51. Individual Return. –

(a) Personal profile and information;

Item 11 – Email Address

Section 51. Individual Return. –

(a) Personal profile and information;

Section 22 defined who are Non-Resident Citizens:

(1) A citizen of the Philippines who establishes to the satisfaction of the

(4) A citizen who has been previously considered as nonresident citizen

Section 25. Tax on Non-resident Alien Individual. –

(A) Non-resident Alien Engaged in Trade or Business Within the

(1) In General. – A non-resident alien individual engaged in trade or

Furthermore, other factors may include the principle of habituality in

Item No. 13 – Claiming Foreign Tax Credits

Foreign Tax Credits is allowed as a deduction from gross income of the

(a) Citizen and Domestic Corporation. – In the case of a citizen of the

An alien individual and a foreign corporation shall not be allowed the

As a Resident Citizen (RC) is taxable on all income derived from

To avail of this benefit, the taxpayer must submit a Certificate of

Item No. 14 – Foreign Tax Number

This purpose and relevance of this is in relation to item no. 13 in

Item No. 15 – Contact Number

The purpose and relevance of this item is to inform BIR of contact

Section 51. Individual Return. –

(a) Personal profile and information;

Item No. 16 – Civil Status

If the Self-Employed Individual indicated that he is “Single”, he will file

However, as an exception, each spouse may file a separate return of

Item No. 17 – If married, whether spouse has income

If joint filing is indicated, the taxable income will be determined