Bureau of Internal Revenue Income Tax

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:. Tax Information :. Income Tax
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:: Donor's Tax
Description
:: Estate Tax
Who Are Required To File Income Tax Returns
:: Income Tax
Annual Income Tax For Individuals Earning Purely Compensation Income (Including Non-
:: Percentage Tax
:: Value-Added Tax Business/Non-Profession Related Income) and For Marginal Income Earners
Annual Income Tax For Self-Employed Individuals, Estates And Trusts (Including Those With
:: Withholding Tax
:: Excise Tax Mixed Income,i.e., Compensation Income and Income from Business and/or Practice of
:: Tax Info Ads Profession )
:: Flyers Account Information Form For Self-Employed Individuals, Estates And Trusts (Including
- Tagalog Those With Mixed Income , I.E., Compensation Income and Income from Business and/or
- English Practice of Profession)
Quarterly Income Tax For Self-Employed Individuals, Estates And Trusts (Including Those
With Mixed Income, I.E., Compensation Income and Income from Business and/or Practice of
Profession)
:. Special Sites Annual Income Tax For Corporations And Partnerships
Account Information Form For Corporations And Partnerships
:: Tax Code Quarterly Income Tax For Corporations And Partnerships
:: Tax Calendar Improperly Accumulated Earnings Tax For Corporations
:: BIR Forms Annual Income Information Form for General Professional Partnerships
:: Zonal Values Tax Rate
:: Taxpayer Bill of Rights Related Revenue Issuances
:: PSIC/PSOC Codal Reference
Frequently Asked Questions
:. eTIN
Description
Income Tax is a tax on a person's income, emoluments, profits arising from property, practice of
profession, conduct of trade or business or on the pertinent items of gross income specified in the
Get your Taxpayer Tax Code of 1997 (Tax Code), as amended, less the deductions and/or personal and additional
Identification Number online! exemptions, if any, authorized for such types of income, by the Tax Code, as amended, or other
special laws.
:. BIR Portal
Who Are Required To File Income Tax Returns

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click here.
Individuals
Resident citizens receiving income from sources within or outside the Philippines
:. Contact Us employees deriving purely compensation income from 2 or more employers,
concurrently or successively at anytime during the taxable year
employees deriving purely compensation income regardless of the amount, whether
BIR wants to hear from you. We
from a single or several employers during the calendar year, the income tax of which
welcome your queries, comments
has not been withheld correctly (i.e. tax due is not equal to the tax withheld)
and suggestions. Feel free to
resulting to collectible or refundable return
email us at
self-employed individuals receiving income from the conduct of trade or business
contact_us@cctr.bir.gov.ph
and/or practice of profession
individuals deriving mixed income, i.e., compensation income and income from the
BIR National Office Bldg., conduct of trade or business and/or practice of profession
Agham Road, Diliman, individuals deriving other non-business, non-professional related income in addition
Quezon City, Philippines to compensation income not otherwise subject to a final tax
Trunkline: individuals receiving purely compensation income from a single employer, although
929-7676 | 927-2511 the income of which has been correctly withheld, but whose spouse is not entitled to
substituted filing
marginal income earners
Non-resident citizens receiving income from sources within the Philippines
Aliens, whether resident or not, receiving income from sources within the
Philippines
Corporation shall include partnerships, no matter how created or organized.
Corporation shall include partnerships, no matter how created or organized.
Domestic corporations receiving income from sources within and outside the
Philippines
Foreign corporations receiving income from sources within the Philippines
Estates and trusts engaged in trade or business
Annual Income Tax For Individuals Earning Purely Compensation Income (Including Non-
Business/Non-Profession Related Income) and For Marginal Income Earners
Tax Form
BIR Form 1700 - Annual Income Tax Return (For Individual Earning Purely Compensation
Income Including Non-Business/Non-Profession Related Income)
Documentary Requirements
1. Certificate of Income Tax Withheld on Compensation (BIR Form 2316)
2. Waiver of the Husbands right to claim additional exemption, 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 filing an amended
return for the same taxable year
Procedures
1. Fill-up BIR Form 1700 in triplicate.
2. If there is payment:
Proceed to the nearest Authorized Agent Bank (AAB) of the Revenue District Office
where you are registered and present the duly accomplished BIR Form 1700,
together with the required attachments and your payment.
In places where there are no AABs, proceed to the Revenue Collection Officer or duly
Authorized City or Municipal Treasurer located within the Revenue District Office
Receive your copy of the duly stamped and validated form from the teller of the
AABs/Revenue Collection Officer/duly Authorized City or Municipal Treasurer.
3. For "No Payment" Returns including refundable returns, and for tax returns qualified for
second installment:
Proceed to the Revenue District Office where you are registered or to any Tax Filing
Center established by the BIR and present the duly accomplished BIR Form 1700,
together with the required attachments.
Receive your copy of the duly stamped and validated form from the RDO/Tax Filing
Center representative.
Deadline
On or before the 15th day of April of each year covering taxable income for the preceding taxable
year
Annual Income Tax For Self-Employed Individuals, Estates And Trusts (Including Those With
Mixed Income,i.e., Compensation Income and Income from Business and/or Practice of
Profession )
Tax Form
BIR Form 1701 - Annual Income Tax Return (For Self-Employed Individuals, Estates and
Trusts Including Those With Both Business and Compensation Income)
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

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
Procedures
1. Fill-up BIR Form 1701 in triplicate copies.
AABs/Revenue Collection Officer/duly Authorized City or Municipal Treasurer
3. For "No Payment" including refundable/ creditable returns, returns with excess tax
credit carry over, and returns qualified for second installment:
Proceed to the Revenue District Office where you are registered or to any established
Tax Filing Centers established by the BIR and present the duly accomplished BIR
Form 1701, together with the required attachments.
Deadline
Final Adjustment Return or Annual Income Tax Return - On or before the 15th day of April of each
year covering income for the preceding year
Account Information Form For Self-Employed Individuals, Estates And Trusts (Including Those
With Mixed Income , I.E., Compensation Income and Income from Business and/or Practice of
Profession)
Tax Form
BIR Form 1701 AIF - Account Information Form For Self-Employed Individuals, Estates and
Trusts (Including those with Mixed Income, i.e., Compensation Income and Income from
Business and/or Practice of Profession) and Estates and Trusts (Engaged in Trade or
Business)
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 this form. 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.
None
Procedures
1. Accomplish BIR Form 1701 AIF in triplicate.
2. Attach the same to BIR Form 1701.
Deadline
Same deadline as BIR Form 1701 - On or before the 15th day of April of each year
covering taxable income for the preceding year
Quarterly Income Tax For Self-Employed Individuals, Estates And Trusts (Including Those With
Mixed Income, I.E., Compensation Income and Income from Business and/or Practice of
Profession)
Tax Form
BIR Form 1701Q - Quarterly Income Tax Return For Self-Employed Individuals,
Estates and Trusts (Including those with both Business and Compensation
Income)
1. Certificate of Income Tax Withheld at Source (BIR Form 2307), if applicable

2304) if applicable
4. Previously filed return, if an amended return is filed for the same quarter
Procedures
1. Fill-up BIR Form 1701Q in triplicate.
where you registered and present the duly accomplished BIR Form 1701 Q, together
with the required attachments and your payment.
where you are registered and present the duly accomplished BIR Form 1701Q,
3. For "No Payment" Returns including refundable/ creditable returns with excess tax
credit carry over and returns qualified for second installment:
Center established by the BIR and present the duly accomplished BIR Form 1701Q,
Deadlines
April 15 for the first quarter

August 15 for the second quarter
November 15 for the third quarter
Annual Income Tax For Corporations And Partnerships
Tax Form
BIR Form 1702 - Annual Income Tax Return (For Corporations and Partnerships)

2304), if applicable
2. Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if applicable
5. Income tax return previously filed and proof of payment, if amended return is
filed for the same taxable year
6. 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

Procedures
where you are registered and present the duly accomplished BIR Form 1702 with the
required attachments and your payments.
3. For "No Payment" Returns including refundable/ creditable returns and returns with
excess tax credit carry over:
Center established by BIR and present the duly accomplished BIR Form 1702,
Center representative
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
Account Information Form For Corporations And Partnerships
Tax Form
BIR Form 1702 AIF - Account Information Form (For Corporations and
Partnerships)
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 this form. 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.
None
Procedures
1. Accomplish BIR Form 1702 AIF in triplicate.
2. Attach the same to BIR Form 1702.
Deadline
Same deadline as BIR Form 1702 - On or before the 15th day of the fourth month
following the close of the taxpayers taxable year
Quarterly Income Tax For Corporations And Partnerships
Tax Form
BIR Form 1702 Q - Quarterly Income Tax Return (For Corporations and Partnerships)
1. Certificate of Income Tax Withheld at Source (BIR Form 2307), if applicable

2304), if applicable
4. Previously filed return, if an amended return is filed for the same quarter
Procedures
1. Fill-up BIR Form 1702 Q in triplicate.
where you are registered and present the duly accomplished BIR Form 1702 Q,
where you are registered and present the duly accomplished BIR Form 1702 Q.
3. For Refundable Returns and for those returns with second installment:
Proceed to the Revenue District Office where you are registered and present the duly
accomplished BIR Form 1702 Q, together with the required attachments.
Receive your copy of the duly stamped and validated form from the RDO
representative.
Deadline
Corporate Quarterly Declaration or Quarterly Income Tax Return - On or before

the 60th day following the close of each of the quarters of the taxable year
Improperly Accumulated Earnings Tax For Corporations
Tax Form
BIR Form 1704 - Improperly Accumulated Earnings Tax Return (For Corporations)
1. Photocopy of Annual Income Tax Return (BIR Form 1702) with Audited
Financial Statements and/or Account Information Form of the covered taxable
year duly received by the BIR; and
2. Sworn declaration as to dividends declared taken from the covered year's

earnings and the corresponding tax withheld, if any
Procedures
where you are registered and present the duly accomplished BIR Form 1704
3. If there is no payment:
Proceed to the Revenue District Office where you are registered and present the duly
accomplished BIR Form 1704, together with the required attachments.
Receive your copy of the duly stamped and validated form from the RDO
representative
Deadline
Within fifteen (15) days after the close of the taxable year
Annual Income Information Form for General Professional Partnerships
Sec. 55. Returns of General Professional Partnership (Tax Code of 1997, as amended)
Every general professional partnership shall file, in duplicate, a return of its income, except income exempt
Every general professional partnership shall file, in duplicate, a return of its income, except income exempt
under Section 32 (B) of this Title, setting forth the items of gross income and of deductions allowed by
this Title, and the names, Taxpayer Identification Numbers (TIN), addresses and shares of each of the
partners.
Tax Rate
For Individuals Earning Purely Compensation Income and Individuals Engaged in Business
and Practice of Profession
Amount of Net Taxable Income Rate
Over But Not Over
P10,000 5%
P10,000 P30,000 P500 + 10% of the Excess over P10,000
P30,000 P70,000 P2,500 + 15% of the Excess over P30,000
P125,000 + 32% of the Excess over P500,000 in 2000 and

P500,000
onward
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.
Tax Rate Taxable Base
1. Domestic Corporations:
30% (effective Jan.

a. In General Net taxable income from all sources
1, 2009)
b. Minimum Corporate Income Tax* 2% Gross Income
Improperly Accumulated Taxable

c. Improperly Accumulated Earnings 10%
Income
Net taxable income provided that the

gross income from unrelated trade,
2. Proprietary Educational Institution 10%
business or other activity does not
exceed 50% of the total gross income
Net taxable income provided that the

gross income from unrelated trade,
3. Non-stock, Non-profit Hospitals 10%
business or other activity does not
exceed 50% of the total gross income
4. GOCC, Agencies &

Instrumentalities
a. In General 30% Net taxable income from all sources

Income
Income
5. National Gov't. & LGUs

Income
6. Taxable Partnerships

Income
7. Exempt Corporation
a. On Exempt Activities 0%
b. On Taxable Activities 30% Net taxable income from all sources
8. General Professional Partnerships 0%
Rate specified under

9. Corporation covered by Special
the respective special
Laws
laws
10. International Carriers 2.5% Gross Philippine Billings
11. Regional Operating Head 10% Taxable Income
Gross Taxable Income On Foreign

12. Offshore Banking Units (OBUs) 10%
Currency Transaction
On Taxable Income other than Foreign

30%
13. Foreign Currency Deposit Units Gross Taxable Income On Foreign

10%
(FCDU) Currency Transaction
On Taxable Income other than Foreign

30%
*Beginning on the 4th year immediately following the year in which such corporation commenced
its business operations, when the minimum
corporate income tax is greater than the tax computed using the normal income tax.
Passive Income
1. Interest from currency deposits, trust funds and deposit substitutes 20%
2. Royalties (on books as well as literary & musical composition) 10%
- In general 20%
3. Prizes (P10,000 or less ) 5%
- In excess of P10,000 20%
4. Winnings (except from PCSO and lotto) 20%

5. Interest Income of Foreign Currency Deposit 7.5%
6. Cash and Property Dividends
- To individuals from Domestic Corporations 10 %
- To Domestic Corporations from Another Domestic Corporations 0%
7. On capital gains presumed to have been realized from sale, exchange or
6%
other disposition of real property (capital asset)
8. On capital gains for shares of stock not traded in the stock exchange
8. On capital gains for shares of stock not traded in the stock exchange
- Not over P100,000 5%
- Any amount in excess of P100,000 10%
9. Interest Income from long-term deposit or investment in the form of Exempt
savings, common or individual trust funds, deposit substitutes, investment
management accounts and other investments evidenced by certificates
Upon pretermination before the fifth year , there should be imposed on the
entire income from the proceeds of the long-term deposit based on the
remaining maturity thereof:
Holding Period
- Four (4) years to less than five (5) years 5%
- Three (3) years to less than four (4) years 12%
- Less than three (3) years 20%
B. For Non-Resident Aliens Engaged in Trade or Business
1. Interest from currency deposits, trust funds and deposit substitutes 20%
2. Interest Income from long-term deposit or investment in the form of
savings, common or individual trust funds, deposit substitutes, investment Exempt
management accounts and other investments evidenced by certificates
Upon pretermination before the fifth year, there should be imposed on the
entire income from the proceeds of the long-term deposit based on the
remaining maturity thereof:
Holding Period:
-Four (4) years to less than five (5) years 5%

-Three (3) years to less than four (4) years 12%
-Less than three (3) years 20%
3. On capital gains presumed to have been realized from the sale, exchange or
6%
other disposition of real property
4. On capital gains for shares of stock not traded in the Stock Exchange
- Not over P100,000 5%
C) For Non-Resident Aliens Not Engaged in Trade or Business
1. On the gross amount of income derived from all sources within the
25%
Philippines
2. On capital gains presumed to have been realized from the exchange or other
6%
disposition of real property located in the Phils.
3. On capital gains for shares of stock not traded in the Stock Exchange
- Not Over P100,000 5%
D) On the gross income in the Philippines of Aliens Employed by
Regional Headquarters (RHQ) or Area Headquarters and Regional
15%
Operating Headquarters (ROH), Offshore Banking Units (OBUs),
Petroleum Service Contractor and Subcontractor
E) General Professional Partnerships 0%
F) Domestic Corporations
1) a. In General on net taxable income 30%
b. Minimum Corporate Income Tax on gross income 2%
c. Improperly Accumulated Earnings on improperly accumulated taxable
10%
income
2) Proprietary Educational Institution and Non-profit Hospitals 10%
- In general (on net taxable income) 10%
- If the gross income from unrelated trade, business or other activity
30%
exceeds 50% of the total gross income from all sources
4) GOCC, Agencies & Instrumentalities
a. In General - on net taxable income 30%
10%
income
5) Taxable Partnerships
a. In General on net taxable income 30%
10%
income
6) Exempt Corporation
a. On Exempt Activities 0%
b. On Taxable Activities 30%
Rate specified
under the
8) Corporation covered by Special Laws
respective special
laws
G) Resident Foreign Corporation
1)a. In General on net taxable income 30%

10%
income
2) International Carriers on gross Philippine billings 2.50%
3) Regional Operating Headquarters on gross income 10%
Rate specified
under the
4) Corporation Covered by Special Laws
respective special
laws
5) Offshore Banking Units (OBUs) on gross income 10%
6) Foreign Currency Deposit Units (FCDU) on gross income 10%
Related Revenue Issuances
RR No. 4-95, RR No. 4-96, RR No. 5-97, RR No. 1-98, RA 9337, RR 14-2002, RR 12-2007
Codal Reference
Sections 23-59, 67-73 and 74-77 of the National Internal Revenue Code
Frequently Asked Questions
1) What is income?
Income means all wealth, which flows into the taxpayer other than as a mere return of capital.
2) What is Taxable Income?
Taxable income means the pertinent items of gross income specified in the Tax Code as amended,
less the deductions and/or personal and additional exemptions, if any, authorized for such types of
income, by the Tax Code or other special laws.
3) What is Gross Income?
Gross income means all income derived from whatever source.
4) What comprises gross income?
Gross income includes, but is not limited to the following:
Compensation for services, in whatever form paid, including but not limited to fees, salaries,
wages, commissions and similar item
Gross income derived from the conduct of trade or business or the exercise of profession
Gross income derived from the conduct of trade or business or the exercise of profession
Gains derived from dealings in property
Interest
Rents
Royalties
Dividends
Annuities
Prizes and winnings
Pensions
Partner's distributive share from the net income of the general professional partnerships
5) What are some of the exclusions from gross income?
Life insurance
Amount received by insured as return of premium
Gifts, bequests and devises
Compensation for injuries or sickness
Income exempt under treaty
Retirement benefits, pensions, gratuities, etc.
Miscellaneous items
income derived by foreign government
income derived by the government or its political subdivision
prizes and awards in sport competition
prizes and awards which met the conditions set in the Tax Code
13th month pay and other benefits
GSIS, SSS, Medicare and other contributions
gain from the sale of bonds, debentures or other certificate of indebtedness
gain from redemption of shares in mutual fund
6) What are the allowable deductions from gross income?
Except for taxpayers earning compensation income arising from personal services rendered under
an employer-employee relationships where the only deduction provided that the gross family income
does not exceed P250,000 per family is the premium payment on health and/or hospitalization
insurance, a taxpayer may opt to avail any of the following allowable deductions from gross income:
a)Optional Standard Deduction - an amount not exceeding 40% of the net sales for
individuals and gross income for corporations; or
b) Itemized Deductions which include the following:
Expenses
Interest
Taxes
Losses
Bad Debts
Depreciation
Depletion of Oil and Gas Wells and Mines
Charitable Contributions and Other Contributions
Research and Development
Pension Trusts
In addition, individuals who are either earning compensation income, engaged in business or
deriving income from the practice of profession are entitled to 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, an P25,000 additional exemption can be claimed but only up to
4 qualified dependents
The additional exemption can be claimed by the following:
The husband who is deemed the head of the family unless he explicitly waives his right in
favor of his wife
The spouse who has custody of the child or children in case of legally separated spouses.
Provided, that the total amount of additional exemptions that may be claimed by both shall
not exceed the maximum additional exemptions allowed by the Tax Code.
The individuals considered as Head of the Family supporting a qualified dependent
The maximum amount of P 2,400 premium payments on health and/or hospitalization insurance can
be claimed if:
Family gross income yearly should not be more than P 250,000

For married individuals, the spouse claiming the additional exemptions for the qualified
dependents shall be entitled to this deduction
dependents shall be entitled to this deduction
7) Who are required to file the Income Tax returns?
Individuals
Resident citizens receiving income from sources within or outside the

Philippines
employees deriving purely compensation income from 2 or more employers,
concurrently or successively at anytime during the taxable year
employees deriving purely compensation income regardless of the amount,
whether from a single or several employers during the calendar year, the
income tax of which has not been withheld correctly (i.e. tax due is not equal
to the tax withheld) resulting to collectible or refundable return
self-employed individuals receiving income from the conduct of trade or
business and/or practice of profession
individuals deriving mixed income, i.e., compensation income and income from
the conduct of trade or business and/or practice of profession
individuals deriving other non-business, non-professional related income in
addition to compensation income not otherwise subject to a final tax
individuals receiving purely compensation income from a single employer,
although the income of which has been correctly withheld, but whose spouse
is not entitled to substituted filing
marginal income earners
Non-resident citizens receiving income from sources within the Philippines
Aliens, whether resident or not, receiving income from sources within the
Philippines
Corporations no matter how created or organized including partnerships

domestic corporations receiving income from sources within and outside the
Philippines
foreign corporations receiving income from sources within the Philippines
taxable partnerships
Estates and trusts engaged in trade or business
8) Who are not required to file Income Tax returns?
a. An individual who is a minimum wage earner
b. An individual whose gross income does not exceed his total personal and additional
exemptions
c. An individual whose compensation income derived from one employer does not exceed P
60,000 and the income tax on which has been correctly withheld
d. An individual whose income has been subjected to final withholding tax (alien employee as
well as Filipino employee occupying the same position as that of the alien employee of
regional headquarters and regional operating headquarters of multinational companies,
petroleum service contractors and sub-contractors and offshore-banking units, non-
resident aliens not engaged in trade or business)
e. Those who are qualified under substituted filing. However, substituted filing applies only
if all of the following requirements are present :
the employee received purely compensation income (regardless of amount)

during the taxable year
the employee received the income from only one employer in the Philippines
during the taxable year
the amount of tax due from the employee at the end of the year equals the
amount of tax withheld by the employer
the employees spouse also complies with all 3 conditions stated above
the employer files the annual information return (BIR Form No. 1604-CF)
the employer issues BIR Form No. 2316 (Oct 2002 ENCS version ) to each
employee.
9) Who are exempt from Income Tax?
Non-resident citizen who is:

a) A citizen of the Philippines who establishes to the satisfaction of the Commissioner the
fact of his physical presence abroad with a definite intention to reside therein
b) A citizen of the Philippines who leaves the Philippines during the taxable year to reside
abroad, either as an immigrant or for employment on a permanent basis
c) A citizen of the Philippines who works and derives income from abroad and whose
employment thereat requires him to be physically present abroad most of the time during
the taxable year
d) A citizen who has been previously considered as a non-resident citizen and who arrives
in the Philippines at any time during the year to reside permanently in the Philippines will
likewise be treated as a non-resident citizen during the taxable year in which he arrives in
the Philippines, with respect to his income derived from sources abroad until the date of his
arrival in the Philippines.
arrival in the Philippines.
Overseas Filipino Worker, including overseas seaman
An individual citizen of the Philippines who is working and deriving income from abroad as
an overseas Filipino worker is taxable only on income from sources within the Philippines;
provided, that a seaman who is a citizen of the Philippines and who receives compensation
for services rendered abroad as a member of the complement of a vessel engaged
exclusively in international trade will be treated as an overseas Filipino worker.
NOTE: A Filipino employed as Philippine Embassy/Consulate service personnel of the Philippine

Embassy/consulate is not treated as a non-resident citizen, hence his income is taxable.
10) What are the procedures in filing Income Tax returns (ITRs)?
For with payment ITRs (BIR Form Nos. 1700 / 1701 / 1701Q / 1702 / 1702Q / 1704)
File the return in triplicate (two copies for the BIR and one copy for the taxpayer) with the
Authorized Agent Bank (AAB) of the place where taxpayer is registered or required to be
registered. In places where there are no AABs, the return will be filed directly with the
Revenue Collection Officer or duly Authorized Treasurer of the city or municipality in which
such person has his legal residence or principal place of business in the Philippines, or if
there is none, filing of the return will be at the Office of the Commissioner.
For no payment ITRs -- refundable, break-even, exempt and no operation/transaction,

including returns to be paid on 2nd installment and returns paid through a Tax Debit
Memo(TDM)
File the return with the concerned Revenue District Office (RDO) where the taxpayer is
registered. However, "no payment" returns filed late shall be accepted by the RDO but
instead shall be filed with an Authorized Agent Bank (AAB) or Collection Officer/Deputized
Municipal Treasurer (in places where there are no AABs), for payment of necessary
penalties.
11) How is Income Tax payable of individuals (resident citizens and non-resident citizens)computed?
Gross Income P ___________

Less: Allowable Deductions (Itemized or Optional) ___________
Net Income P ___________
Less: Personal & Additional Exemptions ___________
Net Taxable Income P ___________
Multiply by Tax Rate (5 to 32%) ____________
Income Tax Due: Tax withheld (per BIR From 2316/2304) P ___________
Income tax payable P____________
12) How is Income Tax paid?
Through withholding
Generally 10% or 15% if the gross annual business or professional income exceeds
P720,000 per year
20% - Fees paid to directors who are not employees and 20% of professional fees
paid to non-individuals
Other withholding tax rates
Pay the balance as you file the tax return, computed as follows:
Income Tax Due P ___________

Less: Withholding Tax ___________
Net Income Tax Due P ___________
13) Is the Minimum Corporate Income Tax (MCIT) an addition to the regular or normal income tax?
No, the MCIT is not an additional tax. An MCIT of 2% of the gross income as of the end of taxable
year (whether calendar or fiscal year, depending on the accounting period employed) is imposed on
a corporation taxable under Title II of the Tax Code, as amended, beginning on the 4th taxable year
immediately following the taxable year in which such corporation commenced its business operations
when the MCIT is greater than the regular income tax. The MCIT is compared with the regular
income tax, which is due from a corporation. If the regular income is higher than the MCIT, then the
corporation does not pay the MCIT but the amount of the regular income tax.
Notwithstanding the above provision, however, the computation and the payment of MCIT, shall
likewise appply at the time of filing the quarterly corporate income tax as prescribed under Section
75 and Section 77 of the Tax Code, as amended. Thus, in the computation of the tax due for the
taxable quarter, if the computed quarterly MCIT is higher than that quarterly normal income tax, the
tax due to be paid for such taxable quarter at the time of filing the quarterly income tax return shall
tax due to be paid for such taxable quarter at the time of filing the quarterly income tax return shall
be the MCIT which is two percent (2%) of the gross income as of the end of the taxable quarter. In
the payment of said quarterly MCIT, excess MCIT from the previous taxable year/s shall not be
allowed to be credited. Expanded withholding tax, quarterly corporate income tax payments under
the normal income tax, and the MCIT paid in the previous taxable quarter/s are allowed to be
applied against the quarterly MCIT due.
14) Who are covered by MCIT?
The MCIT covers domestic and resident foreign corporations which are subject to the regular
income tax. The term regular income tax refers to the regular income tax rates under the Tax
Code. Thus, corporations which are subject to a special corporate tax system do not fall within the
coverage of the MCIT.
For corporations whose operations or activities are partly covered by the regular income tax and
partly covered by the preferential rate under special law, the MCIT shall apply on operations by the
regular income tax rate. Newly established corporations or firms which are on their first 3 years of
operations are not covered by the MCIT.
15) When does a corporation start to be covered by the MCIT?
A corporation 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.
16) When is the MCIT reported and paid? Is it quarterly?
The MCIT is paid on an annual basis and quarterly basis. The rules are governed by Revenue
Regulations No. 12-2007.
17) How is MCIT computed?
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.
Cost of goods sold includes all business expenses directly incurred to produce the merchandise to
bring them to their present location and use.
For trading or merchandising concern, cost of goods sold means the invoice cost of goods sold,
plus import duties, freight in transporting the goods to the place where the goods are actually sold,
including insurance while the goods are in transit.
For a manufacturing concern, cost of goods manufactured and sold means all costs of production of
finished goods such as raw materials used, direct labor and manufacturing overhead, freight cost,
insurance premiums and other costs incurred to bring the raw materials to the factory or
warehouse.
For sale of services, gross income means gross receipts less sales returns, allowances, discounts
and cost of services which cover all direct costs and expenses necessarily incurred to provide the
services required by the customers and clients including:
Salaries and employees benefits of personnel, consultants and specialists directly rendering
the service;
Cost of facilities directly utilized in providing the service such as depreciation or rental of
equipment used;
Cost of supplies
Interest Expense is not included as part of cost of service, except in the case of banks and other
financial institutions.
Gross Receipts means amounts actually or constructively received during the taxable year.
However, for taxpayers employing the accrual basis of accounting, it means amounts earned as
gross income.
18) What is the carry forward provision under the MCIT?
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.
19) How would the MCIT be recorded for accounting purposes?
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
20) How long can we amend our income tax return?
There is no prescription period for amending the return. When the taxpayer has been issued a
Letter of Authority, he can no longer amend the return.
21) Can a benefactor of a senior citizen claim him/her as additional dependent in addition to his/her
3 qualified dependent children at P 25,000 each?
No, pursuant to Revenue Regulations 2-94, the benefactor of a senior citizen cannot claim the
additional exemption.
22) What is a tax treaty?

22) What is a tax treaty?
A tax treaty formally known as convention or agreement for the avoidance of double taxation and
the prevention of fiscal evasion with respect to taxes on income (and on capital) could be defined in
terms of its purpose. First, a tax treaty is intended to promote international trade and investment
in several ways, the most important of which is by allocating taxing jurisdiction between the
Contracting States so as to eliminate or mitigate double taxation of income. Second, a tax treaty is
intended to permit the Contracting States to better enforce their domestic laws so as to reduce tax
evasion. These purposes are in fact incorporated in the title and the preamble.
23) What are the effective Philippine tax treaties?
The Philippines has thirty-seven (37) effective tax treaties. The following tax treaties and their
dates of effectivity as as follows:
Effective Philippine Tax Treaties (as of June 2010)
Country Date of Effectivity Date and Venue of Signature

1. Australia January 1, 1980 May 11, 1979, Manila, Philippines
2. Austria January 1, 1983 April 4, 1981, Vienna, Austria
3. Bahrain January 1, 2004 November 7, 2001, Manila, Philippines
4. Bangladesh January 1, 2004 September 8, 1997, Manila, Philippines
5. Belgium January 1, 1981 October 2, 1976, Manila, Philippines
6. Brazil January 1, 1992 Sept. 29, 1983, Brasilia, Brazil
7. Canada January 1, 1977 March 11, 1976, Manila, Philippines
8. China January 1, 2002 November 18, 1999, Beijing, China
9. Czech January 1, 2004 November 13, 2000, Manila, Philippines
10. Denmark (Renegotiated) January 1, 1998 June 30, 1995, Copenhagen, Denmark
11. Finland January 1, 1982 October 13, 1978, Manila, Philippines
12. France January 1, 1978 January 9, 1976, Kingston, Jamaica
13. Germany January 1, 1985 July 22, 1983, Manila, Philippines
14. Hungary January 1, 1998 June 13, 1997, Budapest, Hungary
15. India January 1, 1995 February 12, 1990, Manila, Philippines
16. Indonesia January 1, 1983 June 18, 1981, Manila, Philippines
17. Israel January 1, 1997 June 9, 1992, Manila, Philippines
18. Italy January 1, 1990 December 5, 1980, Rome, Italy
19. Japan January 1, 1981 February 13, 1980, Tokyo, Japan
20. Korea January 1, 1987 February 21, 1984, Seoul, Korea
21. Malaysia January 1, 1985 April 27, 1982, Manila, Philippines
22. Netherlands January 1, 1992 March 9, 1989, Manila, Philippines
23. New Zealand January 1, 1981 April 29, 1980, Manila, Philippines
24. Norway January 1, 1998 July 9, 1987, Manila, Philippines
25. Pakistan January 1, 1979 February 22, 1980, Manila, Philippines
26. Poland January 1, 1998 September 9, 1992, Manila, Philippines
27. Romania January 1, 1998 May 18, 1994, Bucharest, Romania
28. Russia January 1, 1998 April 26, 1995, Manila, Philippines
29. Singapore January 1, 1977 August 1, 1977, Manila, Philippines
30. Spain January 1, 1994 March 14, 1989, Manila, Philippines
31. Sweden (Renegotiated) January 1, 2004 June 24, 1998, Manila, Philippines
32. Switzerland January 1, 2002 June 24, 1998, Manila, Philippines
33. Thailand January 1, 1983 July 14, 1982, Manila, Philippines
34. United Arab Emirates January 1, 2009 September 21, 2003, Dubai, UAE
35. United Kingdom of Great Britain
January 1, 1979 June 10, 1976, London, United Kingdom
and Northern Ireland
36. United States of America January 1, 1983 October 1, 1976, Manila, Philippines
37. Vietnam January 1, 2004 November 14, 2001, Manila, Philippines
24) What office can we inquire about the said tax treaties?
The International Tax Affairs Division (ITAD).
25) What taxes are covered b Philippine tax treaties?
Income taxes imposed by the domestic laws of the Contracting States, including substantially similar
taxes that may be imposed later, in addition to, or in place, are covered by the tax treaties. In the
Philippines, this is generally limited to Title II (Tax on Income) of the National Internal Revenue Code of
1997, as amended.
26) How is business income treated under our tax treaties?
The business profits of a resident of a Contracting State shall not be taxable in the Philippines unless that
The business profits of a resident of a Contracting State shall not be taxable in the Philippines unless that
enterprise of a resident of a Contracting State carries on business in the Philippines through a permanent
establishment.
27) What is the concept of permanent establishment (PE) as used in tax treaties?
PE is defined as a fixed place of business through which the business of the enterprise is wholly or partly
carried on. The concept of permanent establishment is used to determine the rights of a Contracting
State to tax the business profits of enterprises of the other Contracting State. Under this concept,
profits of an enterprise of a Contracting State are not taxable by the other Contracting State, unless the
enterprise carries on business through a permanent establishment situated in the other Contracting State.
A list of places, circumstances, and activities which constitute a permanent establishment is provided
under the different tax treaties which the Philippines has with other countries.
28) What is the Most-Favored-Nation clause (MFN)?
The appearance of the MFN clause in the tax treaty means that a Contracting State will grant to a
resident of the other Contracting State the same lower rate of tax or exemption the former has granted
to a resident of a third State.
29) What is the tax treatment on immovable property?
Income from an immovable property is taxable in the Contracting State where the property is situated.
This term is generally defined under the domestic laws of the Contracting States. However, this is further
defined in the tax treaties.
30) How are capital gains taxed under our tax treaties?
Gains from the alienation of immovable property or movable property forming part of the business property
of a permanent establishment or pertaining to a fixed base are taxed in the Philippines if the immovable
property or permanent establishment or fixed base is located here.
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:. Tax Information :. Income Tax

:: Capital Gains Tax

Who Are Required To File Income Tax Returns

1. Certificate of Income Tax Withheld on Compensation (BIR Form 2316)

2. Waiver of the Husbands right to claim additional exemption, if applicable

3. Duly approved Tax Debit Memo, if applicable

1. Fill-up BIR Form 1700 in triplicate.

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

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

9. Proof of prior years excess tax credits, if applicable

1. Fill-up BIR Form 1701 in triplicate copies.

NOTE: Pursuant to Revenue Memorandum Circular No. 6 2001, corporations,

1. Accomplish BIR Form 1701 AIF in triplicate.

2. Attach the same to BIR Form 1701.

1. Certificate of Income Tax Withheld at Source (BIR Form 2307), if applicable

2. Certificate of Income Payments not Subjected to Withholding Tax (BIR Form

3. Duly approved Tax Debit Memo, if applicable

1. Fill-up BIR Form 1701Q in triplicate.

April 15 for the first quarter

Annual Income Tax For Corporations And Partnerships

1. Certificate of Income Payments not Subjected to Withholding Tax (BIR Form

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

6. Account Information Form (AIF) and/or the Certificate of the independent

7. Proof of prior years excess tax credits, if applicable

1. Fill-up BIR Form 1702 in triplicate.

Account Information Form For Corporations And Partnerships

NOTE: Pursuant to Revenue Memorandum Circular No. 6 2001, corporations,

1. Accomplish BIR Form 1702 AIF in triplicate.

2. Attach the same to BIR Form 1702.

Quarterly Income Tax For Corporations And Partnerships

1. Certificate of Income Tax Withheld at Source (BIR Form 2307), if applicable

2. Certificate of Income Payments not Subjected to Withholding Tax (BIR Form

3. Duly approved Tax Debit Memo, if applicable

1. Fill-up BIR Form 1702 Q in triplicate.

Corporate Quarterly Declaration or Quarterly Income Tax Return - On or before

Improperly Accumulated Earnings Tax For Corporations

2. Sworn declaration as to dividends declared taken from the covered year's

1. Fill-up BIR Form 1704 in triplicate.

Annual Income Information Form for General Professional Partnerships

Amount of Net Taxable Income Rate

Over But Not Over

P10,000 P30,000 P500 + 10% of the Excess over P10,000

P30,000 P70,000 P2,500 + 15% of the Excess over P30,000

P70,000 P140,000 P8,500 + 20% of the Excess over P70,000

P140,000 P250,000 P22,500 + 25% of the Excess over P140,000

P250,000 P500,000 P50,000 + 30% of the Excess over P250,000

P125,000 + 32% of the Excess over P500,000 in 2000 and

Tax Rate Taxable Base

30% (effective Jan.

b. Minimum Corporate Income Tax* 2% Gross Income

Improperly Accumulated Taxable

Net taxable income provided that the

Net taxable income provided that the

4. GOCC, Agencies &

a. In General 30% Net taxable income from all sources

b. Minimum Corporate Income Tax* 2% Gross Income