Filing Your Income Tax Returns Philippines- A Step by Step Guide

filing income tax return philippines

Income tax returns are one of the most important documents you will need to file as a business owner in the Philippines. This income tax return Philippines will show the government how much money you have earned over the course of a year, and it is used to determine how much tax you owe.

Filing your income tax return can be a daunting task, but it doesn’t have to be. This step-by-step guide will walk you through everything you need to know, from what documents to prepare to how and when to submit your return. Let’s get started!

What is an Income Tax Return Philippines (ITR)?

The income tax return is a document that businesses or individuals must file with the Bureau of Internal Revenue (BIR) every year. This document declares your income, deductions, and other relevant financial information for the year.

Incomes Subjects To Income Tax Return Philippines

Compensation Income

If you’re an employee in the Philippines, your compensation income is subject to tax. This includes your salary, wages, commissions, taxable bonuses, and fringe benefits. The Income Tax Return (ITR) is the document you use to file your tax return. You can file your ITR online or through a paper return.

When filing your ITR, you’ll need to include your compensation income as well as any other income you earned during the year. You can deduct certain expenses from your income, such as business expenses and allowable deductions.

Related: The Withholding Tax On Compensation Income Guide

Business Income

If you’re self-employed or run a business in the Philippines, your business income is subject to tax. This includes income from selling goods or services, as well as investment income. When filing your ITR, you’ll need to include your business income as well as any other income you earned during the year. You can deduct certain expenses from your income, such as business expenses and allowable deductions.

Related: How to Register Your Business as Barangay Micro Business Enterprise (BMBEs)

Passive Income

Passive income is subject to tax in the Philippines. This includes interest from savings accounts, dividends from stocks, and rental income. When filing your ITR, you’ll need to include your passive Income as well as any other Income you earned during the year. You can deduct certain expenses from your Income, such as business expenses and allowable deductions.

Other Income

Other Income is subject to tax in the Philippines. This includes gambling winnings, prizes, and awards. When filing your ITR, you’ll need to include your other Income as well as any other Income you earned during the year. You can deduct certain expenses from your Income, such as business expenses and allowable deductions.

Related: Professional Fee Withholding Tax in the Philippines

Who must file an ITR in the Philippines?

All businesses or individuals who earn an income must file an ITR. This includes those who are

  • self-employed
  • freelance workers
  • professionals
  • employees of private or public entities
  • Filipino citizens who work and reside abroad, but only for the income they earn from the Philippines.
  • Non-Filipino citizens, but for any income earned from sources within the Philippines.
  • Domestic corporations and partnerships who earn income from both inside and outside the Philippines. This also includes foreign corporations and partnerships who earn income from sources within the Philippines.
  • Estates and trusts who are engaged in a trade or business in the Philippines.

Related:How To Easily Transfer Your Rdo Using Bir Form 1905

Who Are Not Required To File Tax Return Philippines?

The following persons are not required to file an Income Tax Return (ITR) in the Philippines:

  • Individuals whose annual taxable Income does not exceed their total personal and additional exemptions.
  • Minimum wage earners who only receive compensation Income from one employer, provided that such Income has been subjected to withholding tax at the maximum rate.
  • Senior citizens or elderly taxpayers, as long as they solely derive Income from pensions and interest income which have been subjected to final withholding taxes.
  • Persons suffering from terminal illness with a life expectancy of one year or less, as certified by a physician.
  • A Filipino worker who lives and works outside the Philippines.
  • A Person whose income was subjected to final withholding tax

What is the deadline for filing ITR in the Philippines?

The deadline for filing your Income Tax Return (ITR) in the Philippines is April 15. This is the same deadline for filing your US Income Tax Return.

Manual Tax Filing ITR

If you only earn income from working as an employee, or if your income is very low, you will need to fill out three copies of BIR Form 1701. You will also need the following documents:

  • Certificate of Income Tax Withheld on Compensation or BIR Form 2316,
  • A waiver of the spouse’s right to claim an additional exemption,
  • Duly approved Tax Debit memo and proof of foreign tax credits.

If you are self-employed or have a mixed income, you will need to fill out three copies of BIR Form 1701. You will also need the following documents:

  • Certificate of Income Tax Withheld on Compensation BIR Form 2316
  • Proof that you paid too much tax in the previous year
  • Certificate from your employer stating how much money you made that was not taxed.

Step by Step Filing Income Tax Return Philippines

  1. Fill out three copies of BIR Form 1700, Form 1701, and 1701 as instructed.
  2. If you need to pay taxes, go to the nearest Authorized Agent Bank of the Revenue District Office where you are registered.
  3. Present the completed form and payment to receive a stamped and validated copy.
  4. If there is no payment needed, including returns with excess tax credit carry over or returns qualified for the second installment, go to the Revenue District Office where you are registered or any Tax Filing Centers established by the BIR.
  5. Submit the duly accomplished BIR Form together with required attachments.

Electronic Filing ITR (e-filing)

The eFPS is a service that allows people to send their tax return information to the government over the internet. You do this by going to the BIR website. To use this service, you need to enroll and have an online banking facility integrated with it.

The people who are required to use this service are:

  • People who have to pay a lot of taxes
  • The top 20,000 private companies that the BIR has notified
  • The top 5,000 individual taxpayers that the BIR has notified
  • People who want to do business with the government
  • Private companies with a paid-up capital stock of P10 million
  • Companies registered with the Philippine Economic Zone Authority and those located within Special Economic Zones
  • The government, insofar as receiving payments for withheld value-added tax is concerned

Step by Step Filing Income Tax Return Philippines

  1. Access BIR eFPS website
  2. Select Income Tax Return Forms
  3. Fill out the Tax returns
  4. Validate and Submit

How do you file your ITR in the Philippines if you are working overseas or living abroad as a Filipino citizen or resident alien?”

If you are working overseas or living abroad as a Filipino citizen or resident alien, you may file your Income Tax Return (ITR) in any of the following ways:

By mail – You may file your ITR by mailing it to the Embassy, Consulate General, or Permanent Mission where you are accredited. The ITR must be postmarked on or before April 15.

In person – You may also file your ITR in person at the Embassy, Consulate General, or Permanent Mission where you are accredited. The ITR must be received on or before April 15.

Online – You may also file your ITR online through the eBIRForms website. The ITR must be filed on or before April 15.

Related: How to Get TIN Number Online and Verification Process

What are the different Income Tax Return (ITR) forms in the Philippines?

The different Income Tax Return (ITR) forms in the Philippines are:

BIR Form 1700 – For Individuals Earning Compensation Income and Filing a Return for the First Time

BIR Form 1701 – For Self-Employed Individuals, Estates, and Trusts

BIR Form 1702 – For Corporations, Partnerships, and Joint Ventures Engaged in Trade or Business or Exercise of Profession (including Non-Resident Foreign Corporations)

BIR Form 1703 – For Domestic Corporations and Resident Foreign Corporations Deriving Income from Sources Within the Philippines (including Non-Resident Foreign Corporations)

BIR Form 1704 – For Income Taxes on Partnerships, Joint Ventures, or Other Unincorporated Businesses

BIR Form 1705 – For Individuals (Other Than Compensation Income Earners and MIXED Income Taxpayers) Who Have Opted to Use the Presumptive Income Tax Rates

BIR Form 1906 – For Filing an Amended Income Tax Return for the Previous Years. BIR Form 1906 may also be used by taxpayers who have been previously non-compliant but are now compliant with their tax obligations.

Conclusion

Filing your income tax return in the Philippines doesn’t have to be a stressful experience. Just follow the steps outlined in this guide and you’ll be done in no time. And don’t forget – if you have any questions, the BIR website is always a great resource.

Recommended: Income Tax Train Law and New Tax Rates 2021

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