Your 2026 Year-End Tax Planning Checklist

Your 2026 Year-End Tax Planning Checklist

Taxes
November 26, 2025•3 min read

Published Date: November 26, 2025

Published By: Jac Cantos, Upcloud Accounting

As 2026 approaches its final months, businesses in the Philippines must proactively prepare for year-end tax obligations. Planning ahead not only helps you minimize your tax due legally but also prevents stressful last-minute compliance issues. This is the perfect time to review your books, update documents, and identify potential tax savings before December 31. ✔️

📌 Things to Know Before Starting

Here are important concepts to understand when doing year-end tax planning:

1. What is Year-End Tax Planning?

  • Year-end tax planning is the process of reviewing your income, expenses, deductions, and compliance requirements before the year closes to reduce your tax liability and ensure full BIR compliance.

2. What You Should Review Early

  • Deductible expenses

  • Withholding tax compliance

  • VAT or Percentage Tax obligations

  • Inventory count and asset purchases

  • Financial statements and bookkeeping updates

  • Possible use of Optional Standard Deduction (OSD)

  • Cash flow status for Q4 and Q1 tax deadlines

Why Year-End Tax Planning Matters for Your Business

Strategic year-end planning can give your business major advantages:

  • Helps avoid penalties for incorrect or late filings

  • Ensures all allowable expenses and deductions are properly documented

  • Allows your business to increase tax savings legally

  • Improves financial visibility and decision-making for 2027

  • Keeps you prepared for annual audit and BIR requirements

Even a single overlooked withholding tax can lead to penalties, planning ahead protects your bottom line.

What You Should Do Before Dec 31

1. Update Books and Records: Make sure all sales, expenses, and receipts are encoded, supported, and properly filed.

2. Complete Your Inventory Count: Year-end inventory helps compute cost of goods sold (COGS) and impacts your taxable income.

3. Reconcile Your Taxes: Check your withholding tax (2551Q/2550M/2550Q), VAT, and percentage tax returns to ensure they match your books.

4. Evaluate Your Deduction Method:

Choose between:

  • Itemized Deduction (requires documentation)

  • OSD – Optional Standard Deduction (40% of gross) Pick the one that gives you better tax savings.

5. Review Asset Purchases: Some assets acquired before year-end may qualify for depreciation benefits, reducing taxable income.

6. Prepare for Annual Filing: Start organizing documents needed for BIR Form 1701, 1702, and Audited Financial Statements (if required).

📋 Summary: Your 2026 Year-End Tax Checklist

  • Organize all expense receipts and supporting documents

  • Reconcile books, bank statements, and BIR returns

  • Perform inventory count (if applicable)

  • Check withholding tax deductions and remittances

  • Finalize deductions strategy (OSD vs. Itemized)

  • Review asset purchases and depreciation

  • Prepare documents for 2026 annual reports

References

Bureau of Internal Revenue (BIR), Philippines

  • BIR Revenue Regulations No. 2-98 – Withholding Tax Guidelines

  • BIR Revenue Memorandum Circular No. 50-2018 – TRAIN Law Implementing Rules

  • National Internal Revenue Code (NIRC), Sections 34 & 35 – Allowable Deductions

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.comto 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].

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