BIR Form 1709- Information

Return on Transactions with

Related Party
(RR 19-2020 as amended by RR 34-2020, RMC
76-2020, RMC 54-2021)
BIR Form 1709

Objective of BIR Form 1709 or RPT Form

• To verify that taxpayers are reporting their related party

transactions at arm’s length prices.
• To improve and strengthen BIR’s Transfer Pricing risk assessment
and audit.
Who are required to accomplish and file an RPT
Form (RR 34-2020 Section 2, RMC 54-2021)
A taxpayer is required to file RPT Form if the following conditions are
present:
1. It is required to file an Annual Income Tax Return (AITR);
2. It has transactions with a domestic or foreign related party during
the concerned taxable period; and
3. It falls under any of the following categories:
a) Large Taxpayers
b) Taxpayers enjoying tax incentives, i.e. BOI-registered and
economic zone enterprises, those enjoying Income Tax Holiday (ITH)
or subject to preferential income tax rate
c) Taxpayers reporting net operating losses for the current taxable
year and the immediately preceding two (2) consecutive taxable years
d) A related party that has transactions with (a), (b) or (c).
Who are not required to file an RPT form?

• Taxpayers who are exempt from income tax under Section 30 or

similar provisions of the Tax Code or special laws

• Post-employment benefit plans – if their related party transactions

consist only of the contributions from their sponsor employers
Illustration No. 1:

A Co., an exempt corporation, had transactions with its related party B

Co., a large taxpayer. Is A Co. required to file an RPT Form?

A taxpayer exempt from the payment of income tax is not required to

file an RPT Form regardless of whether such taxpayer had dealings with
a related party that falls under Section}(a), (b) or (c).
BIR Form 1709

• RPT form is required to be submitted as an attachment to the Annual

Income Tax Return (AITR) starting for fiscal year ending March 31,
2020 whether tentative or otherwise.
BIR Form 1709

• Deadlines of Submission:

• Manual Filers- the RPT form must be submitted together

with the AITR on or before the statutory due date;

• EFPS Filers- the hard copy of RPT form must be submitted

manually and stamped “received” at the revenue
office where the taxpayer is registered within 15 days
from the statutory due date or actual date of electronic
filing of the AITR, whichever comes later.
FILLING OUT AND SUBMISSION OF BIR
FORM 1709
RR 19-2020 Section 6. Procedures and guidelines

In filling out BIR Form No. 1709, the taxpayer is hereby directed to
observe the following:

1) BIR Form No. 1709 shall be completely and truthfully

accomplished by the taxpayer or its authorized representative/s,
and shall be attached to the ITRs for the current taxable year and
subsequent years, making it an integral part of the latter.

2) The nature of transaction and the accounts affected shall be

described in detail.

o BIR Form No. 1709 Dec 2020 encs.pdf

Question: Is there a materiality threshold for
reportable related party transactions?

• The materiality threshold is only relevant in determining who are

required to prepare a TPD. A taxpayer who is required to file an RPT
Form must disclose all related party transactions irrespective of the
amount.
Question: Is a reasonable estimate of the
related party transactions sufficient?

• No less than the actual amounts of the related party transactions shall be
declared in the RPT Form. Just like any other tax returns, the RPT Form
likewise contains a perjury clause whereby the taxpayer or its duly authorized
representative attest to the truthfulness of the facts stated therein.
Question: In filling out the RPT Form, would it be
possible to report a lump-sum amount and not on a
per transaction basis?

• If possible, similar transactions with the same related party must be

aggregated.
RR 19-2020 Section 6. Procedures and guidelines

3) The "business overview of the ultimate parent company" referred

to in Part IV(A) of BIR Form No. 1709 shall include the profile of
the multinational group of which the taxpayer belongs, along with
the name, address, legal status and country of tax residence of
each of the related parties with whom intra-group transactions
have been entered into by the taxpayer, and ownership linkages
among them.
RR 19-2020 Section 6. Procedures and guidelines

4) On the other hand, the "functional profile" referred to in Part IV(B)

of BIR Form No. 1709 shall include a broad description of the
business of the taxpayer and the industry in which it operates, and
of the business of the related parties with whom the taxpayer has
transacted;
BIR Form 1709part IV-(A) and IV-(B)
Submission of Transfer Pricing Documents
(TPDs) and other Supporting Documents (RR 34-
2020, RMC 54-2021)
The preparation of a TPD shall be mandatory if the taxpayer meets any
of the following conditions:
(a) annual gross sales/revenue for the subject taxable period exceeding
P150 Million and the total amount of related party transactions with
foreign and domestic related parties exceeds P90 Million
(b) sale of tangible goods involving the same related party exceeding
P60 Million within the taxable year
(c) service transaction, payment of interest, utilization of intangible
goods or other related party transaction involving the same related
party exceeding P15 Million within the taxable year
(d) If TPD was required to be prepared during the immediately
preceeding taxable period for exceeding (a) to (c).
Submission of Transfer Pricing Documents
(TPDs)

• The TPDs and other supporting documents shall no longer be

attached to the RPT Form but shall be submitted within 30 calendar
days upon receipt of request by the Commissioner or his/her duly
authorized representatives pursuant to a duly issued Letter of
Authority covering All Internal Revenue Taxes.
Illustration 2:

• X Co., a large taxpayer, had an annual sale of P1 billion in 2020. In

December of the same year, X Co. sold P10 million worth of raw
materials to Z Co., a related party. Is X Co. required to prepare a TPD?

• No. Section 3(a) states that the taxpayer should at least have an
annual sales of P150 million and related party transactions of P90
million. Moreover, Section 3(b) thereof requires that sale of tangible
goods to a related party within the year should exceed P60 million.
RR 34-2020 Section 4. Additional Disclosure
Requirements

• Taxpayers who are not covered under Sections 2 hereof are required
to disclose in the Notes to the Financial Statements that they are
not covered by the requirements and procedures for related party
transactions provider under this RR.
What is the effect of failure to supply
material information?

• The Bureau requires the submission of a duly accomplished RPT

Form. If the taxpayer fails to provide any material information (e.g.
details of the related parties and related party transactions, etc.) the
Bureau will regard the RPT Form as not duly filed and the penalty for
failure to file such information return will be imposed.
Thank you.