How to File and Pay 2019 Annual ITR in the Philippines

 By: Azalea Fayugenia T. Chimmin, CPA

Filing of Income Tax Return (ITR) is a must for everyone, individual and corporate persons, earning income in the Philippines and they are generally classified into two groups – individual taxpayers and corporate taxpayers in Philippines. We discuss below the four basic key points you need to know in filing the correct 2019 Annual ITR in the Philippines.

1. What BIR 2019 ITR Form in Philippines and version to use

There are six (6) Annual ITR Forms in the Philippines and it is important that the taxpayers should be fully aware which annual ITR form to use depending on source of income, method of deduction, and/or taxability such as the following:

Individual taxpayers Philippines:

• BIR Form 1700 – This form is for individual taxpayers earning purely compensation income from an employer-employee relationship.
• BIR Form 1701A – This form is for individual taxpayers earning income from business and/or profession only and are applying the Optional Standard Deduction or the special tax rate of 8% under the TRAIN or Republic Act No. 10963 amendments.
• BIR Form 1701 – This form is for individual taxpayers earning income from business and practice of profession and are applying the itemized method of deduction or individuals who are earning mixed income from business/profession and compensation regardless of method of deduction.

Corporate Taxpayers Philippines:

• BIR Form 1702RT – This form is for corporate taxpayers where all its activities are subject to the Normal Corporate Income Tax, currently at 30%.
• BIR From 1702MX – This form is for corporate taxpayers with activities that are subject to preferential taxes such as 10% for Regional Operating Headquarters, 5% Gross Income Tax for those registered with the Philippine Economic Zone Authority (PEZA) and other special economic zones. The same form shall be used by corporations with activities that are subject to different tax rates.
• BIR Form 1702EX – This form is for corporate taxpayers with activities that are exempt from income tax such as Regional Area Headquarters, Representative Office, charitable institutions, and general professional partnerships.

For 2019, it is important to note that all individual taxpayers are required to file the 2018 version of the returns while corporate taxpayers are required to file the version that is available in their respective filing facilities, i.e. in the Electronic Filing and Payment System (eFPS) or Electronic BIRForms (eBIRForms).

 2. How to file 2019 ITR Philippines

Filing of 2019 ITR in the Philippines would depend on the filing platform the taxpayer is registered into – eFPS, eBIR, or manual filing. Individual and Corporate taxpayers enrolled in the eFPS need to use the same facility in filing the 2019 Annual ITR, except that eFPS facility does not yet contain the 2018 version of BIR Form 1701 and 1701A so taxpayers are advised to file using the eBIRForms and print based on BIR Revenue Memorandum Circular (RMC) No. 37-2020 dated April 06, 2020 (click to view RMC from BIR site). Taxpayers that are mentioned in Section 4 of Revenue Regulations No. 6-2014 and not enrolled in eFPS are required to use the eBIRForms v7.6 facility (downloadable from the BIR’s website) with the 2018 versions. Taxpayers that are not required to use eBIRForms are Senior Citizens, purely compensation income earners, and employees who qualified for substituted filing but are filing for purposes of loans, promotion, scholarship, foreign travel, and the like pursuant to BIR RMC  No. 19-2015 dated April 13, 2015.

To file 2019 ITR in the Philippines via eFPS is to use the EFPS Facility in electronically filing where the Filing Reference Number (FRM) is regenerated as a proof of successful filing. The FRN is automatically indicated at the upper right corner of the ITR after filing.

On the other hand, to file 2019 ITR in the Philippines via eBIR is to use the eBIRForms v7.6 in electronically filing the ITR. After filing, the taxpayer will receive an email from the BIR with the Tax Return Receipt Confirmation (TRRC) as proof of successful filing and this needs to be attached to the 2019 Annual ITR.

3. When to file 2019 ITR in Philippines

For the year-ended December 31, 2019 all Annual ITRs should have been filed last April 15, 2020 and the required attachments of electronically filed returns submitted last April 30, 2020. Due to the COVID-19 pandemic, BIR issued Revenue Regulations No. 11-2020 (click to view RR 11-2020 from BIR site) providing among others that the 2019 Annual ITRs may be filed until June 14, 2020 while the attachments for electronically filed returns until June 30, 2020.

4. How to pay income tax due

Taxpayers that filed 2019 ITR through the eFPS facility need to pay the taxes due through the same facility via electronic payment, while taxpayers who filed through the eBIRForms could electronically pay through the following:

• Landbank of the Philippines’ (LBP) Link.ziz Portal (requires LBP ATM account);
• Development Bank of the Philippines’ (DBP) Pay Tax Online (requires DBP account or Visa/Master credit card);
• Unionbank Online Web and Mobile facility (requires Unionbank account);
• GCash; or,
• Pay Maya.

Notably, BIR eFPS would show penalties for late payments and based on BIR advisory dated March 30, 2020 (click to view Advisory from BIR site), you can simply disregard the penalty and pay the tax due accordingly. On the other hand, taxpayers who want to pay manually must print the 2019 Annual ITR in three (3) copies and proceed to the following for payment:

• the nearest AAB regardless of RDO; or
• the nearest Revenue Collection Officer (RCO) of the nearest RDO even if there are AAB’s for cash payment of not more than PhP20,000.00 or in check of any amount.

Check should be payable to the Bureau of Internal Revenue with or without the IFO, Tax Identification Number of the taxpayer, and the name and branch of the AAB.

5. Attachments to 2019 annual ITR in Philippines

The Philippines follows the pay-as-you-file rule in filing all returns including the 2019 Annual ITR. This includes the required attachments such as Summary Alphalist of Withholding Taxes (SAWT), Creditable Withholding Tax Certificates (BIR Form 2307), and Audited Financial Statements. For 2019 ITR filing and payment in Philippines, BIR issued Revenue Memorandum Circular No. 49-2020 (Click to view RMC from BIR site) giving taxpayers the following options in submitting the required attachments:

• Manually to the Revenue Collection Officer (RCO) of the nearest RDO. The RCO shall stamp the Balance Sheet/ Statement of Financial Position, Income Statement/ Statement of Comprehensive Income, and the Auditor’s Certificate. The RCO shall also stamp the printed copy of the FRN/TRRC of electronically filed ITRs.
• Electronically through the eAFS facility at the BIR’s website after proper enrollment. The documents shall be scanned to PDF and grouped into the following and rename the file accordingly:

Upon submission via the eAFS facility, the taxpayer shall receive a Transaction Reference Number as proof of successful submission. However, the taxpayers are advised to keep the original copies of returns which shall be presented upon request of the BIR.

Finally, BIR also issued Revenue Memorandum Circular No. 42-2020 for 2019 ITR filing and payment guidelines and you may please browse for further reference – RMC 42-2002 from BIR site, and Annex A of RMC No. 42-2020 from BIR site.

About the Author:

Azalea Chimmin is a Certified Public Accountant and is a Principal at the Tax Services Department of G. Pagaspaspas Partner’s & Co. CPAs (a full service arm accounting firm based in Makati City, Metro Manila, Philippines). She has more than 6 years of experience dealing with BIR and PEZA Reporting Compliance, BIR tax audit, Value Added Tax (VAT) Refund, and PEZA Registration for local and foreign corporations, and other related areas of tax and corporate practice in the Philippines such as company registrations with SEC, incentives availment with PEZA and other agency registrations, among others.

Disclaimer: This is for purposes of academic discussions only as personally summarized by the author, not of Tax and Accounting Center, Inc. and is not a substitute for an expert opinion. Please consult your preferred tax and/or legal consultant for the specific details applicable to your circumstances. For comments, you may also please send mail at info(@)taxacctgcenter.ph, or you may post a question at Tax and Accounting Center Forum and participate therein.