Individuals Required To File ITR

Who Are Required To File Income Tax Returns
Individuals
 Resident citizens receiving income from sources within or outside the Philippines

o employees deriving purely compensation income from 2 or more employers,
concurrently or successively at anytime during the taxable year
o employees deriving purely compensation income regardless of the amount,
whether from a single or several employers during the calendar year, the income
tax of which has not been withheld correctly (i.e. tax due is not equal to the tax
withheld) resulting to collectible or refundable return
o self-employed individuals receiving income from the conduct of trade or business
and/or practice of profession
o individuals deriving mixed income, i.e., compensation income and income from
the conduct of trade or business and/or practice of profession
o individuals deriving other non-business, non-professional related income in
addition to compensation income not otherwise subject to a final tax
o individuals receiving purely compensation income from a single employer,
although the income of which has been correctly withheld, but whose spouse is
not entitled to substituted filing
o marginal income earners
 Non-resident citizens receiving income from sources within the Philippines
 Aliens, whether resident or not, receiving income from sources within the
Philippines
 Corporation shall include partnerships, no matter how created or organized.
 Domestic corporations receiving income from sources within and outside the
Philippines
 Foreign corporations receiving income from sources within the Philippines
 Estates and trusts engaged in trade or business
[return to index]
Annual Income Tax For Individuals Earning Purely Compensation Income

(Including Non-Business/Non-Profession Related Income) and For Marginal
Income Earners
Tax Form
BIR Form 1700 - Annual Income Tax Return (For Individual Earning Purely
Compensation Income Including Non-Business/Non-Profession Related Income)
Documentary Requirements
1. Certificate of Income Tax Withheld on Compensation (BIR Form 2316)
2. Waiver of the Husband’s right to claim additional exemption, if applicable
3. Duly approved Tax Debit Memo, if applicable
4. Proof of Foreign Tax Credits, if applicable
5. Income Tax Return previously filed and proof of payment, if filing an amended return
for the same taxable year
Procedures
1. Fill-up BIR Form 1700 in triplicate.
2. If there is payment:
• Proceed to the nearest Authorized Agent Bank (AAB) of the Revenue District Office
where you are registered and present the duly accomplished BIR Form 1700, together
with the required attachments and your payment.
• In places where there are no AABs, proceed to the Revenue Collection Officer or duly
Authorized City or Municipal Treasurer located within the Revenue District Office where
you are registered and present the duly accomplished BIR Form 1700, together with the
required attachments and your payment.
• Receive your copy of the duly stamped and validated form from the teller of the
AABs/Revenue Collection Officer/duly Authorized City or Municipal Treasurer.
3. For "No Payment" Returns including refundable returns, and for tax returns qualified
for second installment:
• Proceed to the Revenue District Office where you are registered or to any Tax Filing
Center established by the BIR and present the duly accomplished BIR Form 1700,
together with the required attachments.
• Receive your copy of the duly stamped and validated form from the RDO/Tax Filing
Center representative.
Deadline
On or before the 15th day of April of each year covering taxable income for the
preceding taxable year
[return to index]
Annual Income Tax For Self-Employed Individuals, Estates And Trusts (Including
Those With Mixed Income,i.e., Compensation Income and Income from Business
and/or Practice of Profession )
Tax Form
BIR Form 1701 - Annual Income Tax Return (For Self-Employed Individuals, Estates
and Trusts Including Those With Both Business and Compensation Income)
1. Certificate of Income Tax Withheld on Compensation (BIR Form 2316), if applicable
2. Certificate of Income Payments not Subjected to Withholding Tax (BIR Form 2304) if
applicable
3. Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if applicable
4. Waiver of the Husband’s right to claim additional exemption, if applicable
7. Income Tax Return previously filed and proof of payment, if filing an amended return
for the same year
8. Account Information Form (AIF) or the Certificate of the independent CPA with
Audited Financial Statements if the gross quarterly sales, earnings, receipts or output
exceed P 150,000.00
9. Proof of prior year’s excess tax credits, if applicable
Procedures
1. Fill-up BIR Form 1701 in triplicate copies.
you are registered and present the duly accomplished BIR Form 1701, together with the
required attachments and your payment.
AABs/Revenue Collection Officer/duly Authorized City or Municipal Treasurer
3. For "No Payment" including refundable/ creditable returns, returns with excess tax
credit carry over, and returns qualified for second installment:
• Proceed to the Revenue District Office where you are registered or to any established
Tax Filing Centers established by the BIR and present the duly accomplished BIR Form
1701, together with the required attachments.
Deadline
Final Adjustment Return or Annual Income Tax Return - On or before the 15th day of
April of each year covering income for the preceding year
[return to index]
Account Information Form For Self-Employed Individuals, Estates And Trusts

(Including Those With Mixed Income , I.E., Compensation Income and Income
from Business and/or Practice of Profession)
Tax Form
BIR Form 1701 AIF - Account Information Form For Self-Employed Individuals, Estates
and Trusts (Including those with Mixed Income, i.e., Compensation Income and Income
from Business and/or Practice of Profession) and Estates and Trusts (Engaged in Trade
or Business)
NOTE: Pursuant to Revenue Memorandum Circular No. 6 – 2001, corporations,

companies or persons whose gross quarterly sales, earnings, receipts or output exceed
P 150,000.00 may not accomplish this form. In lieu thereof, they may file their annual
income tax returns accompanied by balance sheets, profit and loss statement,
schedules listing income-producing properties and the corresponding income therefrom,
and other relevant statements duly certified by an independent CPA.
None
Procedures
1. Accomplish BIR Form 1701 AIF in triplicate.
2. Attach the same to BIR Form 1701.
Deadline
Same deadline as BIR Form 1701 - On or before the 15th day of April of each year
covering taxable income for the preceding year
[return to index]
Quarterly Income Tax For Self-Employed Individuals, Estates And Trusts

(Including Those With Mixed Income, I.E., Compensation Income and Income
from Business and/or Practice of Profession)
Tax Form
BIR Form 1701Q - Quarterly Income Tax Return For Self-Employed Individuals, Estates
and Trusts (Including those with both Business and Compensation Income)
1. Certificate of Income Tax Withheld at Source (BIR Form 2307), if applicable
2. Certificate of Income Payments not Subjected to Withholding Tax (BIR Form 2304) if
applicable
4. Previously filed return, if an amended return is filed for the same quarter
Procedures
1. Fill-up BIR Form 1701Q in triplicate.
where you registered and present the duly accomplished BIR Form 1701 Q, together
you are registered and present the duly accomplished BIR Form 1701Q, together with
the required attachments and your payment.
3. For "No Payment" Returns including refundable/ creditable returns with excess tax
credit carry over and returns qualified for second installment:
Center established by the BIR and present the duly accomplished BIR Form 1701Q,
together with the required attachments.
Deadlines
• April 15 – for the first quarter
• August 15 – for the second quarter
• November 15 – for the third quarter
[return to index]
Annual Income Tax For Corporations And Partnerships
Tax Form
BIR Form 1702 - Annual Income Tax Return (For Corporations and Partnerships)
1. Certificate of Income Payments not Subjected to Withholding Tax (BIR Form 2304),
if applicable
2. Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if applicable

5. Income tax return previously filed and proof of payment, if amended return is filed for
the same taxable year
6. Account Information Form (AIF) and/or the Certificate of the independent CPA with
Audited Financial Statements, if the gross quarterly sales, earnings, receipts or output
exceed P150,000.00
7. Proof of prior year’s excess tax credits, if applicable
Procedures
you are registered and present the duly accomplished BIR Form 1702 with the required
attachments and your payments.
3. For "No Payment" Returns including refundable/ creditable returns and returns with
excess tax credit carry over:
Center established by BIR and present the duly accomplished BIR Form 1702, together
with the required attachments.
Center representative
Deadline
Final Adjustment Return or Annual Income Tax Return - On or before the 15th day of
the fourth month following the close of the taxpayer’s taxable year
[return to index]
Account Information Form For Corporations And Partnerships
Tax Form
BIR Form 1702 AIF - Account Information Form (For Corporations and Partnerships)
NOTE: Pursuant to Revenue Memorandum Circular No. 6 – 2001, corporations,

companies or persons whose gross quarterly sales, earnings, receipts or output exceed
P 150,000.00 may not accomplish this form. In lieu thereof, they may file their annual
income tax returns accompanied by balance sheets, profit and loss statement,
schedules listing income-producing properties and the corresponding income therefrom,
and other relevant statements duly certified by an independent CPA.
None
Procedures
1. Accomplish BIR Form 1702 AIF in triplicate.
2. Attach the same to BIR Form 1702.
Deadline
Same deadline as BIR Form 1702 - On or before the 15th day of the fourth month
following the close of the taxpayer’s taxable year
[return to index]
Quarterly Income Tax For Corporations And Partnerships
Tax Form
BIR Form 1702 Q - Quarterly Income Tax Return (For Corporations and Partnerships)
1. Certificate of Income Tax Withheld at Source (BIR Form 2307), if applicable
2. Certificate of Income Payments not Subjected to Withholding Tax (BIR Form 2304), if
applicable

4. Previously filed return, if an amended return is filed for the same quarter
Procedures
1. Fill-up BIR Form 1702 Q in triplicate.
where you are registered and present the duly accomplished BIR Form 1702 Q,
together with the required attachments and your payment.
you are registered and present the duly accomplished BIR Form 1702 Q.
3. For Refundable Returns and for those returns with second installment:
• Proceed to the Revenue District Office where you are registered and present the duly
accomplished BIR Form 1702 Q, together with the required attachments.
• Receive your copy of the duly stamped and validated form from the RDO
representative.
Deadline
Corporate Quarterly Declaration or Quarterly Income Tax Return - On or before the 60th
day following the close of each of the quarters of the taxable year
[return to index]
Improperly Accumulated Earnings Tax For Corporations
Tax Form
BIR Form 1704 - Improperly Accumulated Earnings Tax Return (For Corporations)
1. Photocopy of Annual Income Tax Return (BIR Form 1702) with Audited Financial
Statements and/or Account Information Form of the covered taxable year duly received
by the BIR; and
2. Sworn declaration as to dividends declared taken from the covered year's earnings
and the corresponding tax withheld, if any
Procedures
you are registered and present the duly accomplished BIR Form 1704
3. If there is no payment:
• Proceed to the Revenue District Office where you are registered and present the duly
accomplished BIR Form 1704, together with the required attachments.
• Receive your copy of the duly stamped and validated form from the RDO
representative
Deadline
Within fifteen (15) days after the close of the taxable year
[return to index]
Annual Income Information Form for General Professional Partnerships
Sec. 55. Returns of General Professional Partnership (Tax Code of 1997, as amended)
Every general professional partnership shall file, in duplicate, a return of its income,
except income exempt under Section 32 (B) of this Title, setting forth the items of gross
income and of deductions allowed by this Title, and the names, Taxpayer Identification
Numbers (TIN),addresses and shares of each of the partners.
[return to index]
Tax Rate
A. For Individuals Earning Purely Compensation Income and Individuals Engaged

in Business and Practice of Profession
Amount of Net Taxable Income Rate

Over But Not Over
P10,000 5%
P10,000 P30,000 P500 + 10% of the Excess over P10,000
P30,000 P70,000 P2,500 + 15% of the Excess over P30,000
P500,000 P125,000 + 32% of the Excess over P500,000 in 2000 and onward
Note: When the tax due exceeds P2,000.00, the taxpayer may elect to pay in two equal
installments, the first installment to be paid at the time the return is filed and the second
installment 15 of the same year at on or before July the Authorized Agent Bank (AAB)
within the jurisdiction of the Revenue District Office (RDO) where the taxpayer is
registered.
Tax Rate Taxable Base

1. Domestic Corporations:
a. In General 30% (effective Jan. Net taxable income from all sources
1, 2009)
b. Minimum Corporate Income Tax* 2% Gross Income
c. Improperly Accumulated Earnings 10% Improperly Accumulated Taxable
Income
2. Proprietary Educational Institution 10% Net taxable income provided that the
gross income from unrelated trade,
business or other activity does not
exceed 50% of the total gross income
3. Non-stock, Non-profit Hospitals 10% Net taxable income provided that the
gross income from unrelated trade,
business or other activity does not
exceed 50% of the total gross income
4. GOCC, Agencies & Instrumentalities
a. In General 30% Net taxable income from all sources
Income
5. National Gov't. & LGUs
Income
6. Taxable Partnerships
Income
7. Exempt Corporation
a. On Exempt Activities 0%
b. On Taxable Activities 30% Net taxable income from all sources
8. General Professional Partnerships 0%
9. Corporation covered by Special Rate specified
Laws under the
respective special
laws
10. International Carriers 2.5% Gross Philippine Billings
11. Regional Operating Head 10% Taxable Income
12. Offshore Banking Units (OBUs) 10% Gross Taxable Income On Foreign
Currency Transaction
30% On Taxable Income other than Foreign
13. Foreign Currency Deposit Units 10% Gross Taxable Income On Foreign
(FCDU) Currency Transaction
30% On Taxable Income other than Foreign
*Beginning on the 4th year immediately following the year in which such corporation
commenced its business operations, when the minimum corporate income tax is greater
than the tax computed using the normal income tax.
Passive Income
1. Interest from currency deposits, trust funds and deposit substitutes 20%
2. Royalties (on books as well as literary & musical composition) 10%
- In general 20%
3. Prizes (P10,000 or less ) 5%
- In excess of P10,000 20%
4. Winnings (except from PCSO and lotto) 20%
5. Interest Income of Foreign Currency Deposit 7.5%
6. Cash and Property Dividends
- To individuals from Domestic Corporations 10 %
- To Domestic Corporations from Another Domestic Corporations 0%
7. On capital gains presumed to have been realized from sale, exchange or
6%
other disposition of real property (capital asset)
8. On capital gains for shares of stock not traded in the stock exchange
- Not over P100,000 5%
- Any amount in excess of P100,000 10%
9. Interest Income from long-term deposit or investment in the form of savings,
common or individual trust funds, deposit substitutes, investment management
accounts and other investments evidenced by certificates
Upon pretermination before the fifth year , there should be imposed on the entire Exempt
income from the proceeds of the long-term deposit based on the remaining
maturity thereof:
Holding Period
- Four (4) years to less than five (5) years 5%
- Three (3) years to less than four (4) years 12%
- Less than three (3) years 20%
B. For Non-Resident Aliens Engaged in Trade or Business
1. Interest from currency deposits, trust funds and deposit substitutes 20%
2. Interest Income from long-term deposit or investment in the form of savings,
common or individual trust funds, deposit substitutes, investment management
accounts and other investments evidenced by certificatesUpon pretermination
Exempt
before the fifth year, there should be imposed on the entire income from the
proceeds of the long-term deposit based on the remaining maturity
thereof:Holding Period:
-Four (4) years to less than five (5) years 5%
-Three (3) years to less than four (4) years 12%
-Less than three (3) years 20%
3. On capital gains presumed to have been realized from the sale, exchange or
6%
other disposition of real property
4. On capital gains for shares of stock not traded in the Stock Exchange
- Not over P100,000 5%
C) For Non-Resident Aliens Not Engaged in Trade or Business
1. On the gross amount of income derived from all sources within the Philippines 25%
2. On capital gains presumed to have been realized from the exchange or other
6%
disposition of real property located in the Phils.
3. On capital gains for shares of stock not traded in the Stock Exchange
- Not Over P100,000 5%
D) On the gross income in the Philippines of Aliens Employed by Regional

Headquarters (RHQ) or Area Headquarters and Regional Operating Headquarters
(ROH), Offshore Banking Units (OBUs), Petroleum Service Contractor and
Subcontractor
On the gross income in the Philippines of Aliens Employed by Regional 15%

Headquarters (RHQ) or Area Headquarters and Regional Operating
Headquarters (ROH), Offshore Banking Units (OBUs), Petroleum Service
Contractor and Subcontractor
E) General Professional Partnerships
General Professional Partnerships 0%
F) Domestic Corporations
1) a. In General – on net taxable income 30%

b. Minimum Corporate Income Tax – on gross income 2%
c. Improperly Accumulated Earnings – on improperly accumulated taxable
10%
income
2) Proprietary Educational Institution and Non-profit Hospitals 10%
- In general (on net taxable income) 10%
- If the gross income from unrelated trade, business or other activity exceeds
30%
50% of the total gross income from all sources
4) GOCC, Agencies & Instrumentalities
a. In General - on net taxable income 30%
10%
income
5) Taxable Partnerships
a. In General – on net taxable income 30%
10%
income
6) Exempt Corporation
a. On Exempt Activities 0%
b. On Taxable Activities 30%
8) Corporation covered by Special Laws Rate specified
under the
respective special
laws
G) Resident Foreign Corporation
1) a. In General – on net taxable income 30%

10%
income
2) International Carriers – on gross Philippine billings 2.50%
3) Regional Operating Headquarters on gross income 10%
4) Corporation Covered by Special Laws Rate specified
under the
respective special
laws
5) Offshore Banking Units (OBUs) on gross income 10%
6) Foreign Currency Deposit Units (FCDU) on gross income 10%
[return to index]
Related Revenue Issuances
RR No. 4-95, RR No. 4-96, RR No. 5-97, RR No. 1-98, RA 9337, RR 14-2002, RR 12-
2007
[return to index]
Codal Reference
Sections 23-59, 67-73 and 74-77 of the National Internal Revenue Code
[return to index]
Frequently Asked Questions
1) What is income?
Income means all wealth, which flows into the taxpayer other than as a mere return of
capital.
2) What is Taxable Income?
Taxable income means the pertinent items of gross income specified in the Tax Code
as amended, less the deductions and/or personal and additional exemptions, if any,
authorized for such types of income, by the Tax Code or other special laws.
3) What is Gross Income?
Gross income means all income derived from whatever source.
4) What comprises gross income?
Gross income includes, but is not limited to the following:

 Compensation for services, in whatever form paid, including but not limited to
fees, salaries, wages, commissions and similar item
 Gross income derived from the conduct of trade or business or the exercise of
profession
 Gains derived from dealings in property
 Interest
 Rents
 Royalties
 Dividends
 Annuities
 Prizes and winnings
 Pensions
 Partner's distributive share from the net income of the general professional
partnerships
5) What are some of the exclusions from gross income?
o
 Life insurance
 Amount received by insured as return of premium
 Gifts, bequests and devises
 Compensation for injuries or sickness
 Income exempt under treaty
 Retirement benefits, pensions, gratuities, etc.
 Miscellaneous items

o income derived by foreign government
o income derived by the government or its political subdivision
o prizes and awards in sport competition
o prizes and awards which met the conditions set in the Tax Code
o 13th month pay and other benefits
o GSIS, SSS, Medicare and other contributions
o gain from the sale of bonds, debentures or other certificate of indebtedness
o gain from redemption of shares in mutual fund
6) What are the allowable deductions from gross income?
Except for taxpayers earning compensation income arising from personal services
rendered under an employer-employee relationships where the only deduction provided
that the gross family income does not exceed P250,000 per family is the premium
payment on health and/or hospitalization insurance, a taxpayer may opt to avail any of
the following allowable deductions from gross income:
a)Optional Standard Deduction - an amount not exceeding 40% of the net sales for
individuals and gross income for corporations; or
b) Itemized Deductions which include the following:

 Expenses
 Interest
 Taxes
 Losses
 Bad Debts
 Depreciation
 Depletion of Oil and Gas Wells and Mines
 Charitable Contributions and Other Contributions
 Research and Development
 Pension Trusts
In addition, individuals who are either earning compensation income, engaged in

business or deriving income from the practice of profession are entitled to personal and
additional exemptions as follows:
Personal Exemptions:
For single individual or married individual judicially decreed as legally separated with no
qualified dependents………………………………………P 50,000.00
For head of family……………………………P 50,000.00

For each married individual *…………P 50,000.00
Note: In case of married individuals where only one of the spouses is deriving gross
income, only such spouse will be allowed to claim the personal exemption.
Additional Exemptions:

 For each qualified dependent, an P25,000 additional exemption can be claimed
but only up to 4 qualified dependents
The additional exemption can be claimed by the following:

 The husband who is deemed the head of the family unless he explicitly waives his
right in favor of his wife
 The spouse who has custody of the child or children in case of legally separated
spouses. Provided, that the total amount of additional exemptions that may be
claimed by both shall not exceed the maximum additional exemptions allowed by
the Tax Code.
 The individuals considered as Head of the Family supporting a qualified
dependent
The maximum amount of P 2,400 premium payments on health and/or hospitalization

insurance can be claimed if:

 Family gross income yearly should not be more than P 250,000
 For married individuals, the spouse claiming the additional exemptions for the
qualified dependents shall be entitled to this deduction
7) Who are required to file the Income Tax returns?

 Individuals
 Resident citizens receiving income from sources within or outside the Philippines

o employees deriving purely compensation income from 2 or more employers,
concurrently or successively at anytime during the taxable year
o employees deriving purely compensation income regardless of the amount,
whether from a single or several employers during the calendar year, the
income tax of which has not been withheld correctly (i.e. tax due is not equal
to the tax withheld) resulting to collectible or refundable return
o self-employed individuals receiving income from the conduct of trade or
business and/or practice of profession
o individuals deriving mixed income, i.e., compensation income and income
from the conduct of trade or business and/or practice of profession
o individuals deriving other non-business, non-professional related income in
addition to compensation income not otherwise subject to a final tax
o individuals receiving purely compensation income from a single employer,
although the income of which has been correctly withheld, but whose spouse
is not entitled to substituted filing
o marginal income earners

 Non-resident citizens receiving income from sources within the Philippines
 Aliens, whether resident or not, receiving income from sources within the
Philippines
 Corporations no matter how created or organized including partnerships

o domestic corporations receiving income from sources within and outside the
Philippines
o foreign corporations receiving income from sources within the Philippines
o taxable partnerships

 Estates and trusts engaged in trade or business
8) Who are not required to file Income Tax returns?
a. An individual who is a minimum wage earner
b. An individual whose gross income does not exceed his total personal and additional
exemptions
c. An individual whose compensation income derived from one employer does not
exceed P 60,000 and the income tax on which has been correctly withheld
d. An individual whose income has been subjected to final withholding tax (alien
employee as well as Filipino employee occupying the same position as that of the alien
employee of regional headquarters and regional operating headquarters of multinational
companies, petroleum service contractors and sub-contractors and offshore-banking
units, non-resident aliens not engaged in trade or business)
e. Those who are qualified under “substituted filing”. However, substituted filing applies
only if all of the following requirements are present :

 the employee received purely compensation income (regardless of amount) during
the taxable year
 the employee received the income from only one employer in the Philippines
during the taxable year
 the amount of tax due from the employee at the end of the year equals the amount
of tax withheld by the employer
 the employee’s spouse also complies with all 3 conditions stated above
 the employer files the annual information return (BIR Form No. 1604-CF)
 the employer issues BIR Form No. 2316 (Oct 2002 ENCS version ) to each
employee.
9) Who are exempt from Income Tax?
 Non-resident citizen who is:
a) 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
b) 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
c) 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
d) A citizen who has been previously considered as a non-resident citizen and who
arrives in the Philippines at any time during the year to reside permanently in the
Philippines will likewise be treated as a non-resident citizen during 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.
 Overseas Filipino Worker, including overseas seaman
An individual citizen of the Philippines who is working and deriving income from abroad
as an overseas Filipino worker is taxable only on income from sources within the
Philippines; provided, that a seaman who is a citizen of the Philippines and who
receives compensation for services rendered abroad as a member of the complement
of a vessel engaged exclusively in international trade will be treated as an overseas
Filipino worker.
NOTE: A Filipino employed as Philippine Embassy/Consulate service personnel of the

Philippine Embassy/consulate is not treated as a non-resident citizen, hence his income
is taxable.
10) What are the procedures in filing Income Tax returns (ITRs)?
 For “with payment” ITRs (BIR Form Nos. 1700 / 1701 / 1701Q / 1702 / 1702Q /
1704)
File the return in triplicate (two copies for the BIR and one copy for the taxpayer) with
the Authorized Agent Bank (AAB) of the place where taxpayer is registered or required
to be registered. In places where there are no AABs, the return will be filed directly with
the Revenue Collection Officer 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 is none, filing of the return will be at the Office of the
Commissioner.
 For “no payment” ITRs -- refundable, break-even, exempt and no

operation/transaction, including returns to be paid on 2nd installment and returns
paid through a Tax Debit Memo(TDM)
File the return with the concerned Revenue District Office (RDO) where the taxpayer is
registered. However, "no payment" returns filed late shall be accepted by the RDO but
instead shall be filed with an Authorized Agent Bank (AAB) or Collection
Officer/Deputized Municipal Treasurer (in places where there are no AABs), for
payment of necessary penalties.
11) How is Income Tax payable of individuals (resident citizens and non-resident
citizens)computed?
Gross Income P ___________

Less: Allowable Deductions (Itemized or Optional) ___________
Net Income P ___________
Less: Personal & Additional Exemptions ___________
Net Taxable Income P ___________
Multiply by Tax Rate (5 to 32%) ____________
Income Tax Due: Tax withheld (per BIR From 2316/2304) P ___________
Income tax payable P____________
12) How is Income Tax paid?

 Through withholding
o
o
o Generally 10% or 15% if the gross annual business or professional income
exceeds P720,000 per year
o 20% - Fees paid to directors who are not employees and 20% of
professional fees paid to non-individuals
o Other withholding tax rates

 Pay the balance as you file the tax return, computed as follows:
Income Tax Due P ___________

Less: Withholding Tax ___________
Net Income Tax Due P ___________
13) Is the Minimum Corporate Income Tax (MCIT) an addition to the regular or normal
income tax?
No, the MCIT is not an additional tax. An MCIT of 2% of the gross income as of the end
of taxable year (whether calendar or fiscal year, depending on the accounting period
employed) is imposed on a corporation taxable under Title II of the Tax Code, as
amended, beginning on the 4th taxable year immediately following the taxable year in
which such corporation commenced its business operations when the MCIT is greater
than the regular income tax. The MCIT is compared with the regular income tax, which
is due from a corporation. If the regular income is higher than the MCIT, then the
corporation does not pay the MCIT but the amount of the regular income tax.
Notwithstanding the above provision, however, the computation and the payment of
MCIT, shall likewise apply at the time of filing the quarterly corporate income tax as
prescribed under Section 75 and Section 77 of the Tax Code, as amended. Thus, in the
computation of the tax due for the taxable quarter, if the computed quarterly MCIT is
higher than that quarterly normal income tax, the tax due to be paid for such taxable
quarter at the time of filing the quarterly income tax return shall be the MCIT which is
two percent (2%) of the gross income as of the end of the taxable quarter. In the
payment of said quarterly MCIT, excess MCIT from the previous taxable year/s shall not
be allowed to be credited. Expanded withholding tax, quarterly corporate income tax
payments under the normal income tax, and the MCIT paid in the previous taxable
quarter/s are allowed to be applied against the quarterly MCIT due.
14) Who are covered by MCIT?
The MCIT covers domestic and resident foreign corporations which are subject to the
regular income tax. The term “regular income tax” refers to the regular income tax rates
under the Tax Code. Thus, corporations which are subject to a special corporate tax
system do not fall within the coverage of the MCIT.
For corporations whose operations or activities are partly covered by the regular income
tax and partly covered by the preferential rate under special law, the MCIT shall apply
on operations by the regular income tax rate. Newly established corporations or firms
which are on their first 3 years of operations are not covered by the MCIT.
15) When does a corporation start to be covered by the MCIT?
A corporation starts to be covered by the MCIT on the 4th year of its business
operations. The period of reckoning which is the start of its business operations is the
year when the corporation was registered with the BIR. This rule will apply regardless of
whether the corporation is using the calendar year or fiscal year as its taxable year.
16) When is the MCIT reported and paid? Is it quarterly?
The MCIT is paid on an annual basis and quarterly basis. The rules are governed by
Revenue Regulations No. 12-2007.
17) How is MCIT computed?
The MCIT is 2% of the gross income of the corporation at the end of the year.
“Gross income” means gross sales less sales returns, discounts and cost of goods sold.
Passive income, which have been subject to a final tax at source do not form part of
gross income for purposes of the MCIT.
Cost of goods sold includes all business expenses directly incurred to produce the
merchandise to bring them to their present location and use.
For trading or merchandising concern, cost of goods sold means the invoice cost of
goods sold, plus import duties, freight in transporting the goods to the place where the
goods are actually sold, including insurance while the goods are in transit.
For a manufacturing concern, cost of goods manufactured and sold means all costs of
production of finished goods such as raw materials used, direct labor and manufacturing
overhead, freight cost, insurance premiums and other costs incurred to bring the raw
materials to the factory or warehouse.
For sale of services, gross income means gross receipts less sales returns, allowances,
discounts and cost of services which cover all direct costs and expenses necessarily
incurred to provide the services required by the customers and clients including:
o
 Salaries and employees benefits of personnel, consultants and specialists directly
rendering the service;
 Cost of facilities directly utilized in providing the service such as depreciation or
rental of equipment used;
 Cost of supplies
Interest Expense is not included as part of cost of service, except in the case of banks
and other financial institutions.
“Gross Receipts” means amounts actually or constructively received during the taxable
year. However, for taxpayers employing the accrual basis of accounting, it means
amounts earned as gross income.
18) What is the carry forward provision under the MCIT?
Any excess of the MCIT over the normal income tax may be carried forward on an
annual basis and be credited against the normal income tax for 3 immediately
succeeding taxable years.
19) How would the MCIT be recorded for accounting purposes?
Any amount paid as excess minimum corporate income tax should be recorded in the
corporation’s books as an asset under account title “Deferred charges-MCIT”
20) How long can we amend our income tax return?
There is no prescription period for amending the return. When the taxpayer has been
issued a Letter of Authority, he can no longer amend the return.
21) Can a benefactor of a senior citizen claim him/her as additional dependent in

addition to his/her 3 qualified dependent children at P 25,000 each?
No, pursuant to Revenue Regulations 2-94, the benefactor of a senior citizen cannot
claim the additional exemption.
22) What is a tax treaty?
A tax treaty formally known as convention or agreement for the avoidance of double
taxation and the prevention of fiscal evasion with respect to taxes on income (and on
capital) could be defined in terms of its purpose. First, a tax treaty is intended to
promote international trade and investment in several ways, the most important of which
is by allocating taxing jurisdiction between the Contracting States so as to eliminate or
mitigate double taxation of income. Second, a tax treaty is intended to permit the
Contracting States to better enforce their domestic laws so as to reduce tax evasion.
These purposes are in fact incorporated in the title and the preamble.
23) What are the effective Philippine tax treaties?
The Philippines has thirty-seven (37) effective tax treaties. The following tax treaties
and their dates of effectivity as as follows:
Effective Philippine Tax Treaties (as of June 2010)
Country Date of Date and Venue of Signature

Effectivity
1. Australia January 1, 1980 May 11, 1979, Manila, Philippines
2. Austria January 1, 1983 April 4, 1981, Vienna, Austria
3. Bahrain January 1, 2004 November 7, 2001, Manila,
Philippines
4. Bangladesh January 1, 2004 September 8, 1997, Manila,
Philippines
5. Belgium January 1, 1981 October 2, 1976, Manila,
Philippines
6. Brazil January 1, 1992 Sept. 29, 1983, Brasilia, Brazil
7. Canada January 1, 1977 March 11, 1976, Manila,
Philippines
8. China January 1, 2002 November 18, 1999, Beijing,
China
9. Czech January 1, 2004 November 13, 2000, Manila,
Philippines
10. Denmark (Renegotiated) January 1, 1998 June 30, 1995, Copenhagen,
Denmark
11. Finland January 1, 1982 October 13, 1978, Manila,
Philippines
12. France January 1, 1978 January 9, 1976, Kingston,
Jamaica
13. Germany January 1, 1985 July 22, 1983, Manila, Philippines
14. Hungary January 1, 1998 June 13, 1997, Budapest,
Hungary
15. India January 1, 1995 February 12, 1990, Manila,
Philippines
16. Indonesia January 1, 1983 June 18, 1981, Manila,
Philippines
17. Israel January 1, 1997 June 9, 1992, Manila, Philippines
18. Italy January 1, 1990 December 5, 1980, Rome, Italy
19. Japan January 1, 1981 February 13, 1980, Tokyo, Japan
20. Korea January 1, 1987 February 21, 1984, Seoul, Korea
21. Malaysia January 1, 1985 April 27, 1982, Manila, Philippines
22. Netherlands January 1, 1992 March 9, 1989, Manila,
Philippines
23. New Zealand January 1, 1981 April 29, 1980, Manila, Philippines
24. Norway January 1, 1998 July 9, 1987, Manila, Philippines
25. Pakistan January 1, 1979 February 22, 1980, Manila,
Philippines
26. Poland January 1, 1998 September 9, 1992, Manila,
Philippines
27. Romania January 1, 1998 May 18, 1994, Bucharest,
Romania
28. Russia January 1, 1998 April 26, 1995, Manila, Philippines
29. Singapore January 1, 1977 August 1, 1977, Manila,
Philippines
30. Spain January 1, 1994 March 14, 1989, Manila,
Philippines
31. Sweden (Renegotiated) January 1, 2004 June 24, 1998, Manila,
Philippines
32. Switzerland January 1, 2002 June 24, 1998, Manila,
Philippines
33. Thailand January 1, 1983 July 14, 1982, Manila, Philippines
34. United Arab Emirates January 1, 2009 September 21, 2003, Dubai, UAE
35. United Kingdom of Great Britain and January 1, 1979 June 10, 1976, London, United
Northern Ireland Kingdom
36. United States of America January 1, 1983 October 1, 1976, Manila,
Philippines
37. Vietnam January 1, 2004 November 14, 2001, Manila,
Philippines
24) What office can we inquire about the said tax treaties?
The International Tax Affairs Division (ITAD).
25) What taxes are covered by Philippine tax treaties?
Income taxes imposed by the domestic laws of the Contracting States, including
substantially similar taxes that may be imposed later, in addition to, or in place, are
covered by the tax treaties. In the Philippines, this is generally limited to Title II (Tax on
Income) of the National Internal Revenue Code of 1997, as amended.
26) How is business income treated under our tax treaties?
The business profits of a resident of a Contracting State shall not be taxable in the
Philippines unless that enterprise of a resident of a Contracting State carries on
business in the Philippines through a permanent establishment.
27) What is the concept of permanent establishment (PE) as used in tax treaties?
PE is defined as a fixed place of business through which the business of the enterprise
is wholly or partly carried on. The concept of permanent establishment is used to
determine the rights of a Contracting State to tax the business profits of enterprises of
the other Contracting State. Under this concept, profits of an enterprise of a Contracting
State are not taxable by the other Contracting State, unless the enterprise carries on
business through a permanent establishment situated in the other Contracting State.
A list of places, circumstances, and activities which constitute a permanent
establishment is provided under the different tax treaties which the Philippines has with
other countries.
28) What is the Most-Favored-Nation clause (MFN)?
The appearance of the MFN clause in the tax treaty means that a Contracting State will
grant to a resident of the other Contracting State the same lower rate of tax or
exemption the former has granted to a resident of a third State.
29) What is the tax treatment on immovable property?
Income from an immovable property is taxable in the Contracting State where the
property is situated. This term is generally defined under the domestic laws of the
Contracting States. However, this is further defined in the tax treaties.
30) How are capital gains taxed under our tax treaties?
Gains from the alienation of immovable property or movable property forming part of the
business property of a permanent establishment or pertaining to a fixed base are taxed
in the Philippines if the immovable property or permanent establishment or fixed base is
located here.

Individuals Required To File ITR

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Individuals Required To File ITR

Uploaded by

Copyright:

Available Formats

Who Are Required To File Income Tax Returns

 Resident citizens receiving income from sources within or outside the Philippines

Annual Income Tax For Individuals Earning Purely Compensation Income

1. Certificate of Income Tax Withheld on Compensation (BIR Form 2316)

2. Waiver of the Husband’s right to claim additional exemption, if applicable

3. Duly approved Tax Debit Memo, if applicable

4. Proof of Foreign Tax Credits, if applicable

1. Fill-up BIR Form 1700 in triplicate.

2. If there is payment:

4. Waiver of the Husband’s right to claim additional exemption, if applicable

5. Duly approved Tax Debit Memo, if applicable

6. Proof of Foreign Tax Credits, if applicable

9. Proof of prior year’s excess tax credits, if applicable

1. Fill-up BIR Form 1701 in triplicate copies.

2. If there is payment:

Account Information Form For Self-Employed Individuals, Estates And Trusts

NOTE: Pursuant to Revenue Memorandum Circular No. 6 – 2001, corporations,

1. Accomplish BIR Form 1701 AIF in triplicate.

2. Attach the same to BIR Form 1701.

Quarterly Income Tax For Self-Employed Individuals, Estates And Trusts

1. Certificate of Income Tax Withheld at Source (BIR Form 2307), if applicable

3. Duly approved Tax Debit Memo, if applicable

1. Fill-up BIR Form 1701Q in triplicate.

• April 15 – for the first quarter

• August 15 – for the second quarter

• November 15 – for the third quarter

Annual Income Tax For Corporations And Partnerships

3. Duly approved Tax Debit Memo, if applicable

4. Proof of Foreign Tax Credits, if applicable

7. Proof of prior year’s excess tax credits, if applicable

1. Fill-up BIR Form 1702 in triplicate.

2. If there is payment:

NOTE: Pursuant to Revenue Memorandum Circular No. 6 – 2001, corporations,

1. Accomplish BIR Form 1702 AIF in triplicate.

2. Attach the same to BIR Form 1702.

Quarterly Income Tax For Corporations And Partnerships

1. Certificate of Income Tax Withheld at Source (BIR Form 2307), if applicable

3. Duly approved Tax Debit Memo, if applicable

1. Fill-up BIR Form 1702 Q in triplicate.

Improperly Accumulated Earnings Tax For Corporations

1. Fill-up BIR Form 1704 in triplicate.

3. If there is no payment:

Annual Income Information Form for General Professional Partnerships

A. For Individuals Earning Purely Compensation Income and Individuals Engaged

Amount of Net Taxable Income Rate

Tax Rate Taxable Base

B. For Non-Resident Aliens Engaged in Trade or Business

C) For Non-Resident Aliens Not Engaged in Trade or Business

D) On the gross income in the Philippines of Aliens Employed by Regional

On the gross income in the Philippines of Aliens Employed by Regional 15%

E) General Professional Partnerships

General Professional Partnerships 0%

1) a. In General – on net taxable income 30%

G) Resident Foreign Corporation

1) a. In General – on net taxable income 30%

Related Revenue Issuances

Frequently Asked Questions

2) What is Taxable Income?

3) What is Gross Income?

Gross income means all income derived from whatever source.

4) What comprises gross income?

Gross income includes, but is not limited to the following:

5) What are some of the exclusions from gross income?