Income Tax Return in the Philippines: A Comprehensive Guide
Published Date: January 25, 2025
Published By: Jac Cantos, Upcloud Accounting
Navigating the Philippine tax system can be complex, especially for businesses. This guide simplifies the process of filing your Income Tax Return (ITR), clarifying requirements, deadlines, and available filing methods.
Understanding Income Tax Returns (ITRs)
An ITR is a declaration of your income and the corresponding tax liability for a specific tax year. Both individuals and businesses are required to file annually. Filipino citizens are taxed on worldwide income, while foreigners are taxed only on income earned within the Philippines. Taxable income includes salaries, business profits, professional fees, rental income, and passive income (interest, dividends, royalties).
Types of ITRs and BIR Forms
The type of ITR form you need depends on your income source and business structure:
Individuals:
BIR Form 1700: Salary/Compensation income.
BIR Form 1701A: Business/Professional income (8% flat rate or graduated rates).
BIR Form 1701: Mixed income (employment, business, capital gains).
BIR Form 1701Q: Quarterly income tax return for businesses.
Non-Individuals (Businesses):
BIR Form 1702-EX: Exempted corporations/partnerships.
BIR Form 1702Q: Quarterly income tax return.
BIR Form 1702-MX: Mixed income subject to varying tax rates.
BIR Form 1702-RT: Income subject to regular/fixed tax rates.
BIR Form 2307: Certificate of Final Tax Withheld (for certain income types).
Filing Your ITR
You can file your ITR in person at a Revenue District Office (RDO), online through the Electronic Filing and Payment System (eFPS), or using eBIRForms. The April 15th deadline applies to all methods. Late filing results in penalties.
Requirements for Filing
Regardless of your filing method, you'll need:
Tax Identification Number (TIN)
Previous tax returns (if applicable)
Income documents (payslips, W-2 forms, business records)
Expense documents (receipts, invoices)
Tax payment records (BIR Form 2307)
Personal information
Who Must File? Who is Exempted?
Most individuals and businesses earning income in the Philippines must file. Exemptions apply to minimum wage earners, those below certain income thresholds, and individuals with final withholding tax applied. Specific exemptions also exist for OFWs and non-resident Filipinos under certain conditions.
Need Help with Your ITR?
Filing your ITR can be complicated. Let Upcloud Accounting assist you. We provide comprehensive tax services to ensure you meet all deadlines and avoid penalties. Contact us today for assistance with tax preparation, outsourced bookkeeping, and other accounting services.
Upcloud Accounting: Virtual Outsourced Accounting and Bookkeeping Services in the Philippines
Upcloud Accounting offers accounting, bookkeeping, tax compliance, and business licensing services specializing with startups and SMEs in the Philippines.
Our goal is to increase efficiency, automation, and transparency across the accounting and finance functions of our clients with our cutting-edge technology. If you want to move your company’s finance function online, contact our Team of Expert Accountants and Bookkeepers directly via [email protected] or visit www.upcloudaccounting.com to learn more about how Upcloud Accounting accounting services can support your PH business!
Disclaimer: This article or blog is only for general knowledge and guidance and is not a substitute for an expert opinion. For technical advice, please consult your tax / legal advisor for your specific business concerns. For comments, suggestions, and feedback, feel free to email us at [email protected].
