A Comprehensive Guide on How to Prepare and Submit Your ITR in the Philippines
Each year, businesses and entrepreneurs file their Income Tax Returns (ITRs) on or before the deadlines set by the Bureau of Internal Revenue (BIR) for their tax type and associated tax return. However, some taxpayers are still confused with the filing and payment process. Until today, there are individuals and non-individuals who fail to declare their income taxes on time, resulting in hefty fines and penalties from the BIR.
Employers in the Philippines are required to withhold a portion of their employees’ salary for personal income tax filings. This process may seem confusing to some individuals or corporate entities, especially the first-timers. This article aims to help future and existing taxpayers in achieving full compliance by being aware of the requirements, forms and documents, filing deadlines, and the process of filing with the BIR.
How You Can File Your ITR
Before we begin, make sure to gather all related documents and data from your accounting records. After compiling all necessary information, you can start filing your ITRs using three (3) prescribed methods: (1) Manual Filing; (2) Electronic Filing and Payment System (eFPS); and (3) Electronic BIR Forms (eBIRForms).
Manual Tax Filing is the simplest method of submitting tax returns. It only requires a taxpayer to visit the nearest BIR office to declare their taxes. They must download a copy of their required tax return from the BIR website and report to the nearest Authorized Agent Bank (AAB) of the Revenue District Office (RDO) for submission and payment.
For manual taxpayers, make it a habit of settling all income tax declarations on or before BIR’s prescribed filing dates for each tax return. This is to help you avoid waiting for longer queues a day before or during the deadline.
We listed the necessary steps of the Manual Filing method below:
- Fill up three (3) copies of the applicable ITR (e.g., Form 1700, 1701, 1701Q, 1702, 1702Q, and 1704). Other ITR forms such as Form 1702-EX, 1702-MX, and 1702-RT only require a single copy. Additional attachments may differ with each tax return, so carefully read the instructions found at the back of each tax return.
- For payment, proceed to an AAB from where you have filed the ITR. If there are no AABs available, you can still submit the tax return and pay the tax with the Revenue Collection Officer (RCO) under the jurisdiction of the RDO.
- However, if you still cannot pay for the tax returns or other fees (e.g., refundable or creditable returns), you may proceed to the RDO where you are registered or to any of the established BIR Tax Filing Centers and present the accomplished tax return together with the required attachments.
Individual taxpayers must file their annual ITRs on or before April 15 following the close of each taxable year while self-employed individuals and professionals must submit their First Quarter BIR Form 1701Q on May 15 of the current year.
Electronic Filing and Payment System (eFPS)
The eFPS system handles both electronic filings of tax returns and payment of tax liabilities through an AAB’s internet banking feature. It provides a secure and hassle-free experience for taxpayers looking to expedite their tax filing process.
BIR first introduced eFPS to Large and Non-Large Taxpayers; however, Revenue Regulations (RR) No. 1-2013 expands the coverage of taxpayers required to utilize this system.
RR No. 1-2013 mandates the following taxpayers to use eFPS:
- Large Taxpayers duly notified by the BIR;
- Top 20,000 Private Corporations duly notified by the BIR;
- Top 5,000 Individual Taxpayers duly notified by the BIR;
- Taxpayers who wish to enter into a contract with government offices;
- Corporations with paid-up capital stock of Ten Million Pesos (P10,000,000)
- Entities registered with the Philippine Economic Zone Authority (PEZA) and those located within Special Economic Zones (SEZ); and
- Government Offices, in so far as remittance of withheld VAT and business tax is concerned.
If you meet any of the criteria mentioned above, you may proceed with the registration process:
- Access the official eFPS website and its “Login” page.
- Click “Enroll to eFPS” and fill the necessary details.
- After accomplishing the application form, click the “Submit” button.
The eFPS webpage will notify you if they have received your application, and you will have to wait for an email from BIR regarding the status of your application. If the email specifies that your account status is “Active,” you may proceed filling up tax returns and validating them for submission. You can avail of online banking facilities for payment as long as your preferred bank is in the list of Authorized Agent Banks (AAB).
If BIR denies your enrollment, this could be due to any of the following reasons:
- Upon investigation, BIR identifies you as a bogus taxpayer;
- The information you provided does not match with the data stored in the BIR database; and/or
- The President of the Corporation/ Head of Office does not authorize your application.
Electronic BIR Forms
BIR created the Electronic BIR Forms system (eBIRForms) to provide non-eFPS taxpayers and Accredited Tax Agents (ATAs) with an efficient and convenient method of preparing and filing taxes. Taxpayers and ATAs can submit their tax returns to the eBIRForms System, BIR’s online infrastructure for tax return collection.
The Offline eBIRForms Package is a tax preparation software that allows taxpayers and ATAs to fill up offline tax forms. Compared to the Manual Filing method, the entire tax filing process is digital as it does not require the taxpayer to visit the AAB to submit their tax return, except for their tax payments.
Take note of the following steps when filing an eBIR Form:
- Visit the BIR website and click on “eServices.”
- Download a copy of the latest Offline eBIRForms Package and install the program.
- Access the package and select the required tax return.
- After filling up the required form, save a copy of the finalized tax return.
- Submit the accomplished form to the Online eBIRForms system. Online eBIRForms will generate the FRN as proof that BIR has received the tax return.
- If the submission was unsuccessful, click on the “Final Copy” button. The system will display alternate tax return submission methods.
- An Email will be sent to confirm the receipt of your tax returns.
- Visit the nearest AAB of your RDO for payment.
Required Tax Returns and Filing Dates
Each BIR form specifies the type of income, individuals/non-individuals required to file income taxes, and the filing dates for each tax return. Please take note of the following ITRs and their respective deadlines.
Tax returns required for submission:
- Form 1700 – Annual Income Tax Return for Individuals Earning Purely Compensation Income (Including Non-Business/Non-Profession Income)
- Form 1701 – Annual Income Tax Return for Self-Employed Individuals, Estates, and Trusts
- Form 1701A – Annual Income Tax Return for Individuals Earning Income PURELY from Business/ Profession (Those under the graduated income tax rates with OSD (Optional Standard Deductions) as mode of deduction or those who opted to avail of the 8% flat Income Tax rate)
- Form 1701Q – Quarterly Income Tax Return for Individuals, Estates, and Trusts
- Form 1702Q – Quarterly Income Tax Return for Corporations, Partnerships, and other Non-Individual Taxpayers
- Form 1702-EX – Annual Income Tax Return for Corporation, Partnership, and Other Non-Individual Taxpayer EXEMPT under the Tax Code, as Amended, [Sec. 30 and those exempted in Sec. 27(C)] and Other Special Laws, with NO Other Taxable Income
- Form 1702-MX – Annual Income Tax Return for Corporation, Partnership and Other Non-Individual with MIXED Income Subject to Multiple Income Tax Rates or with Income Subject to SPECIAL/PREFERENTIAL RATE
- Form 1702-RT – Annual Income Tax Return for Corporation, Partnership, and Other Non-Individual Taxpayer Subject Only to REGULAR Income Tax Rate
Taxpayers required to file ITRs:
- Resident citizens receiving income from sources inside and outside of the Philippines.
- Employees obtaining compensation income concurrently or successively from two or more employers at any time during the taxable year.
- Employees obtaining compensation income regardless of its amount, whether from a single or more employers during the calendar year. Income taxes not withheld correctly may result in a collectible or refundable return.
- Self-employed taxpayers (e.g. freelance workers and sole proprietors) receiving income from participating in trade or business and/ or practice of profession.
- Individuals obtaining mixed income such as compensation income and income from participating in trade or business activities and/ or practice of profession.
- Individuals obtaining income not related to businesses or practice of profession in addition to compensation income not in any other way subject to final taxes.
- Individuals receiving compensation income entirely from a single employer, although the income of which has been correctly withheld, but whose spouse is not entitled to substituted filing.
- Non-resident citizens receiving income from sources inside the Philippines.
- Resident or non-resident aliens receiving income from sources inside the Philippines.
- Corporations including partnerships, regardless of how they were created or organized.
- Domestic corporations receiving income from sources inside and outside of the Philippines.
- Foreign corporations receiving income from sources inside the Philippines.
- Estates and trusts participating in trade or business.
Filing Dates for each ITR:
- Form 1700/ 1701
- Filed on or before April 15 of each year covering income for the preceding taxable year.
- Form 1701Q
- 1st Quarter – On or before May 15 of the current taxable year.
- 2nd Quarter – On or before August 15 of the current taxable year.
- 3rd Quarter – On or before November 15 of the current taxable year.
- Form 1702-EX
- Filed on or before the 15th day of the 4th month following the close of the taxpayer’s taxable year.
- Form 1702-MX/ 1702-RT
- Filed on or before the 15th day of the 4th month following the close of the taxpayer’s taxable. This ITR can be filed with or without payment.
- Form 1702Q
- Filed 60 days following the close of each of the first 3 quarters of the taxable year whether it is a calendar year or fiscal year. This corporate quarterly ITR can be filed with or without payment.
With this guide, you can now file your tax returns and settle all tax dues with ease. First-time taxpayers won’t have any problems as the process becomes routinary every time you work on your taxes. Don’t forget to take note of the steps mentioned above to stay on top of tax compliance.
However, if you are constrained with time in filing your tax returns, we can help you ease the process with our Tax Compliance Services. Our tax services are intended for individuals and corporations looking to outsource their tax filings and submissions on time.