Documentary requirements
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
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 amended return
is filed for the same taxable year
6. BIR Form 1702 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 years excess tax credits, if applicable
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 BIR Form 1702
Account Information Form (AIF). 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.
a. The tax on Transactions under Regular Rate is equal to Normal Income Tax
or Minimum Corporate Income Tax (MCIT), whichever is higher. Thus, you
need to determine your to compare it to your Normal Income Tax whichever
is higher will be your Tax on Transactions under Regular Rate. However, a
corporation only 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.
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.
b. 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. Any amount paid as excess
minimum corporate income tax should be recorded in the corporations books
as an asset under account title Deferred charges-MCIT
c. This is the total tax due on transactions covered by the preferential rate
under special law.
3. Compute total amount payable
Aggregate Income Tax Due (see # 2)
Less: Total Tax Credits/Payments (a)
Tax Payable/(Overpayment)
Add: Penalties (b)
Equal: Total Amount Payable/(Overpayment)
Note:
a. The following are the tax credits/ payments a corporation can claim:
Prior Years Excess Credits other than MCIT
Tax Payments for the First Three Quarters
Creditable Tax Withheld for the First Three Quarters
Creditable Tax Withheld Per BIR Form No. 2307 for the Fourth Quarter
Foreign Tax Credits, if applicable
Tax Paid in Return Previously Filed, if this is an Amended Return
b. The following penalties are imposed on the corporation on the following
circumstances:
A. A surcharge of twenty five percent (25%) for each of the following
violations:
a) Failure to file any return and pay the amount of tax or installment due on or
before the due dates;
b) Unless otherwise authorized by the Commissioner, filing a return with a
person or office other than those with whom it is required to be filed;
c) Failure to pay the full or part of the amount of tax shown on the return, or
the full amount of tax due for which no return is required to be filed, on or
before the due date;
d) Failure to pay the deficiency tax within the time prescribed for its payment
in the notice of assessment.
B. A surcharge of fifty percent (50%) of the tax or of the deficiency tax, in case
any payment has been made on the basis of such return before the discovery
of the falsity or fraud, for each of the following violations:
a) Willful neglect to file the return within the period prescribed by the code or
Deadline
Final Adjustment Return or Annual Income Tax Return On or before the 15th
day of the fourth month following the close of the taxpayers taxable year
For more information, please visit this web page (Tax Info) from the Bureau of
Internal Revenue (BIR). Updates to this article will be provided as necessary.
Update: The BIR issued Revenue Regulation No. 19-2011 on November
2011 requiring corporation, partnerships and non-individual taxpayers to use
the revised BIR Form 1702 for the income tax return covering and starting
December 31, 2011 for filing on or before April 15, 2012. Furthermore, all
juridical entities that follow a fiscal year of reporting are also required to start
using the new form if they are under the fiscal year ending January 31,
2012. For more information about the instructions and guidelines on filing the
said return, please refer to the last page of the new form provided in the link
above (in the tax form you will use section).
Documentary requirements
Below are the documentary requirements that should be attached with the
return, if applicable. For taxpayers earning both business income and
compensation income, BIR Form 2316 should be attached.
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 Husbands right to claim additional exemption, if applicable
5. Duly approved Tax Debit Memo, if applicable
6. Proof of Foreign Tax Credits, 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 years excess tax credits, if applicable
The following are simple steps to calculate your income tax payable.
1. Compute your taxable Compensation Income (positive) or excess of
Deductions over Taxable Compensation Income (negative). Here is how
you will compute it.
a. Determine your Gross Taxable Compensation Income. This is the income
you earn from your employer during the taxable year. If you are earning purely
from your business or you are not employed, then you can leave it blank.
b. Determine your premium paid on Health and or Hospitalization, which
should not exceed Php 2,400 per year. If none, then leave it blank. *
c. Determine your Personal and Additional Exemptions as follows:
Personal Exemptions:
For single individual or married individual judicially decreed as legally
separated with no qualified dependentsP
50,000.00
For head of familyP 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, a P25,000 additional exemption can be
claimed but only up to 4 qualified dependents
Expenses
Interest
Taxes
Losses
Bad Debts
Depreciation
Pension Trusts
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.
7. Compute your Income Tax Payable. This is the tax you are still liable at
the end of the year. To calculate your income tax payable, deduct your income
tax due with the following tax credit/payments, if available.
-Prior Years Excess Credits
-Tax Payments for the First Three Quarters
-Creditable Tax Withheld for the First Three Quarters
-Creditable Tax Withheld Per BIR Form No. 2307 for the 4th Qtr.
-Tax Withheld Per BIR Form No. 2316
-Foreign Tax Credits
-Tax Paid in Return Previously Filed, if you have already file and this is your
Amended Return
-Other Payments made
8. Compute your Total Payable. If unfortunately, you fail to pay your income
tax on or before the due date, the following penalties will be imposed and will
be added to your total amount payable.
1. A surcharge of twenty five percent (25%) for each of the following violations:
a) Failure to file any return and pay the amount of tax or installment due on or
before the due dates;
b) Filing a return with a person or office other than those with whom it is
required to be filed;
c) Failure to pay the full or part of the amount of tax shown on the return, or
the full amount of tax due for which no return is required to be filed, on or
before the due date;
d) Failure to pay the deficiency tax within the time prescribed for its payment
in the notice of Assessment (Delinquency Surcharge).
2. A surcharge of fifty percent (50%) of the tax or of the deficiency tax, in case
any payment has been made on the basis of such return before the discovery
of the falsity or fraud, for each of the following violations:
a) Willful neglect to file the return within the period prescribed by the Code or
by rules and regulations; or
b) In case a false or fraudulent return is willfully made.
3. Interest at the rate of twenty percent (20%) per annum, or such higher rate
as may be prescribed by rules and regulations, on any unpaid amount of tax,
from the date prescribed for the payment.
A simple illustration of computing total income tax payable is shown
below:
Gross Income (Gross business income, compensation income and other
income)
Less: Allowable Deductions (Itemized or Optional) (refer to # 4)
Equals: Net Income
Less: Personal & Additional Exemptions (see #1)
Equals: Net Taxable Income
Multiply by Tax Rate (5 to 32%) (refer to # 6)
Equals: Income Tax Due
Less: Tax credits & payments (refer to #7)
Equals: Income tax payable
Add: Penalties (Surcharge, interests & compromise) (refer to #8)
Equals: Total amount payable
Deadline