Filing your Income Tax Return (ITR) is an essential responsibility for taxpayers in the Philippines. Whether you are an individual, a business owner, or part of a corporation, ensuring compliance with the Bureau of Internal Revenue (BIR) is crucial to avoid penalties and stay on top of your tax obligations.
However, many taxpayers are often confused about the specific ITR requirements, including who needs to file, what forms to use, and the necessary attachments. This guide will walk you through everything you need to know about the Income Tax Return requirements in the Philippines to help you file correctly and efficiently.
Who Needs to File an Income Tax Return?
Not everyone is required to file an Income Tax Return. According to the BIR, the following taxpayers must file an ITR based on their source of income and employment status:
1. Self-Employed Individuals and Professionals
This category includes:
✔ Freelancers – Writers, graphic designers, programmers, and other independent service providers earning income from clients.
✔ Sole proprietors – Business owners registered as a sole proprietorship under the Department of Trade and Industry (DTI).
✔ Licensed professionals – Doctors, lawyers, engineers, consultants, and other professionals engaged in their own practice.
Self-employed individuals and professionals must file an ITR using BIR Form 1701 or 1701A (depending on their tax rate selection). They must also keep books of accounts and issue official receipts as part of compliance.
2. Corporations and Partnerships
All businesses registered as corporations and partnerships in the Philippines are required to file an Income Tax Return. This applies to:
✔ Corporations (domestic or foreign) doing business in the country.
✔ Partnerships, including professional partnerships.
✔ Non-profit organizations generating taxable income.
Businesses must file their corporate ITR using BIR Form 1702 and submit audited financial statements along with other tax-related documents.
3. Employees with Multiple Employers
Employees earning solely from a single employer within a taxable year are usually exempt from filing an ITR, as their employer handles their withholding tax through substituted filing.
However, if an employee has multiple employers within the same year, they are required to file an ITR using BIR Form 1700. This is because tax computations can vary, and additional income may not have been subjected to proper withholding.
4. Individuals Earning Income Outside of Employment
Even if an individual is employed, they are still required to file an ITR if they earn additional income from sources other than their salary. This includes:
✔ Rental income from properties.
✔ Commission-based earnings from sales or brokerage.
✔ Dividends, interest income, or capital gains from investments.
Such individuals must file their Income Tax Return in the Philippines to declare their total earnings and ensure proper tax payments are made.
What Are the Required ITR Forms?
The BIR requires different ITR forms depending on the type of taxpayer and the nature of income earned. Choosing the correct form is crucial to avoid rejection or penalties. Below are the commonly used ITR forms:
1. BIR Form 1700 – For Employees with Multiple Employers
✔ Used by individuals earning purely compensation income from multiple employers.
✔ Required if an individual had two or more employers in a taxable year.
✔ Must be filed by April 15 of the following year.
2. BIR Form 1701 – For Self-Employed, Professionals, and Mixed-Income Earners
✔ Used by sole proprietors, freelancers, and professionals reporting business income.
✔ Also applies to individuals earning both salary and business income (mixed-income earners).
✔ Requires books of accounts and financial statements for accurate filing.
3. BIR Form 1701A – For Self-Employed Individuals Opting for the 8% Tax Rate
✔ Specifically for self-employed individuals or professionals who opted for the 8% flat tax on gross sales.
✔ Only applicable if the taxpayer did not claim deductions from business expenses.
✔ Simplifies tax filing since there is no need for itemized deductions or financial statements.
4. BIR Form 1702 – For Corporations, Partnerships, and Non-Individual Taxpayers
✔ Required for corporations, partnerships, and associations earning taxable income.
✔ Businesses must submit audited financial statements (AFS) alongside this form.
✔ Covers both domestic and foreign corporations operating in the Philippines.
📌 Reminder: Filing the wrong form can lead to delays and unnecessary penalties, so it’s important to verify which form applies to your tax situation before submission.
Other Required Income Tax Return Attachments
For some taxpayers, additional documents must be submitted along with their Income Tax Return. These attachments serve as proof of income, tax payments, and deductions:
✔ Certificate of independent CPA (if applicable) – Required if quarterly gross sales exceed P150,000.
✔ Account Information Form (AIF) or Audited Financial Statements (AFS) – Includes:
- Breakdown of Taxes and Licenses
- Other required tax-related disclosures
✔ Statement of Management’s Responsibility (SMR) – For businesses filing an annual ITR.
✔ Certificates of tax withheld: - BIR Form 2304 – For income payments not subjected to withholding tax.
- BIR Form 2307 – For creditable tax withheld at source.
- BIR Form 2316 – Certificate of compensation payment/tax withheld from employment.
✔ Proof of prior years’ excess credits (if applicable).
✔ Proof of foreign tax credits (if applicable).
✔ Tax Debit Memo (if used for payment).
✔ Summary Alphalist of Withholding Agents (SAWT) (if applicable).
✔ Authorization letter (if filed by a representative).
✔ Waiver of husband’s right to claim additional exemption (if applicable).
How Tax Assist PH Can Help with Your ITR Requirements
With all these requirements, it’s no surprise that many taxpayers find filing an ITR complicated and time-consuming. That’s where Tax Assist PH comes in!
At Tax Assist PH, we make sure your Income Tax Return is filed correctly and on time by offering:
🔹 Personalized Tax Consultation – We assess your taxpayer category and identify the correct ITR form for you.
🔹 Complete Tax Preparation – We help you gather the necessary attachments and compute your tax dues or refunds.
🔹 Hassle-Free Filing Assistance – We handle the filing process to ensure compliance with BIR regulations.
Let our tax professionals take care of the process, so you can focus on your business and financial growth.
Need help with your ITR requirements? Contact Tax Assist PH at +63 960 296 0376 today!