Income Taxation for Individuals

Prepared by:
Atty. William P. Manzanares, Jr., CPA, MBA, MPF

Atty. Manzanares
Individual Taxpayers

Individual taxpayers are natural persons deriving

income from within the territorial jurisdiction of a taxing
authority.

Atty. Manzanares
Kinds of Individual Taxpayers

1. Resident Citizen (RC)

2. Nonresident Citizens (NRC)
3. Resident Alien (RA)
4. Nonresident Alien
4.1 Engaged in Trade/Business (NRA-ETB)
4.2 Not Engaged in Trade or Business (NRA-NETB)

Atty. Manzanares
Taxability of Individuals
Situs of Income
Taxpayers Income within Income without Tax Base
Citizens:
Resident
Citizen Taxable Taxable Net Income
Nonresident
Citizen Taxable Not taxable Net Income
Aliens:
Resident Taxable Not taxable Net Income
NRA-ETB Taxable Not taxable Net Income
NRA-NETB Taxable Not taxable Gross Income

Atty. Manzanares
Relevance of Citizenship with Taxation

Filipino citizens are subject to certain Philippine taxes

wherever they are, while aliens are subject to
Philippine taxes when they earn income in the
Philippines.

Atty. Manzanares
Citizens of the Philippines

1. Those who are citizens of the Philippines at the time of the adoption of
the 1987 Constitution;
2. Those whose fathers or mothers are citizens of the Philippines;
3. Those born before January 17, 1973, of Filipino mothers, who elect
Philippine citizenship upon reaching the age of majority; and
4. Those who are naturalized in accordance with law.

Atty. Manzanares
Classification of Individual Taxpayers

I. Resident Citizen (RC) is a Filipino citizen who:

1. Stayed in the Philippines; or

2. Stayed outside the Philippines for less than 183 days during
the taxable year.

*A resident citizen is taxable for all income derived from sources within and
without the Philippines.

Atty. Manzanares
Classification of Individual Taxpayers
II. Nonresident Citizen is a Filipino citizen who:

1. Establishes to the satisfaction of the Commissioner of Internal Revenue the fact of his physical
presence abroad with a definite intention to reside therein;

2. Leaves the Philippines during the taxable year to reside abroad, either as an immigrant or for
employment on a permanent basis;

3. 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; and

4. Has been previously considered as a non-resident and who arrived in the Philippines at any time
during the taxable year to reside permanently in the Philippines shall be considered non-resident
for 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.

Atty. Manzanares
Classification of Individual Taxpayers
II. Nonresident Citizen is a Filipino citizen who:

Overseas Contract Worker – NRC

A Filipino citizen employed in a foreign country, who is physically present

in a foreign country as a consequence of his employment thereat.

*A Nonresident Citizen is taxable only on income derived from sources within

the Philippines.

Atty. Manzanares
Classification of Individual Taxpayers
III. Resident Alien (RA)

An individual whose:

1. Residence is within the Philippines; and

2. Not a citizen of the Philippines

The term includes individuals who have stayed in the Philippines for more
than one year from date of arrival.

Atty. Manzanares
Classification of Individual Taxpayers
IV. Non-Resident Alien (NRA-ETB) – Engaged in Trade or
Business
An individual whose:

1. Residence is not within the Philippines;

2. Not a citizen of the Philippines;
3. Those who have stayed within the Philippines for more than 180 days
during the taxable year; and
4. Engaged in trade or business and has business income in the Philippines.

Atty. Manzanares
Classification of Individual Taxpayers
V. Non-Resident Alien (NRA-NETB) – Not Engaged in Trade
or Business
An individual whose:

1. Residence is not within the Philippines;

2. Not a citizen of the Philippines; and
3. They have stayed in the Philippines for only 180 days or less, and have
no business income derived within the Philippines.

Atty. Manzanares
Types of Income

1. Ordinary or regular income

2. Passive income derived from Philippine sources; and

3. Capital gains subject to capital gains tax

Atty. Manzanares
Types of Income

1. Ordinary or regular income

Ordinary or regular income refers but not limited to the following:
1. Compensation income (salaries or wages)
2. Business income
3. Income from practice of profession
4. Income from sale and/or dealings of property
5. Miscellaneous income
6. Passive income other than those subject to graduated tax table

*Regular incomes are subject to graduated tax table as provided under Section
24(A).

Atty. Manzanares
Types of Income

2. Passive Income derived from Philippine sources

Income earned without rendering active participation to generate such
income. They are subject to final withholding tax as provided for in
Section 24(B) of the Tax Code.

Passive income derived from Philippines:

1. Interest income;
2. Dividend income;
3. Royalties;
4. Prizes; and
5. Other winnings.

Atty. Manzanares
Types of Income

3. Capital gains to Capital Gains Tax

1. Capital gains from sale of shares of stocks of a domestic corporation

not traded in the local stock exchange; and

2. Capital gains from sale of real property in the Philippines

Atty. Manzanares
Applicable tax on type of income

Type of Income Applicable Tax

Regular income Graduated Rate
Passive Income Final Withholding Tax
Capital Gains Capital Gains Tax

Atty. Manzanares
Type of individuals according to income:

1. Compensation earner
 Is an individual deriving income under an employer-employee
relationship.

2. Purely self-employed earner

 Self-Employed/Professional (SEP) is a sole proprietor or an independent
contractor who report income earned from self-employment.

3. Mixed income earner

 Mixed income earners are those who derive income from business or
practice of profession and compensation income

Atty. Manzanares
Type of individuals according to income:

1. Compensation earner
 Is an individual deriving income under an employer-employee
relationship.

2. Purely self-employed earner

 Self-Employed/Professional (SEP) is a sole proprietor or an independent
contractor who report income earned from self-employment.

3. Mixed income earner

 Mixed income earners are those who derive income from business or
practice of profession and compensation income

Atty. Manzanares
Matrix of Taxability
Subject Taxpayer Amount of Income Applicable Tax
1. Compensation earner All compensation income Graduated Tax Rate
1. Graduated Tax Rate; or
2. 8% tax on Gross
Sales/Receipts and other
3M and below operating income in excess of
2. Self-Employed and/or P250,000 IN LIEU of the
Professional (SEP) graduated tax rate and
Section 116
Above 3M Graduated Tax Rate
1. Graduated Tax Rate; or
2. 8% tax on Gross
3M and below Sales/Receipts and other
3. Mixed Income Earner operating income IN LIEU of
(Compensation + SEP the graduated tax rate and
Earner) Section 116
Above 3M Graduated Tax Rate
Atty. Manzanares
Passive Income subject to FWT (IPORD)
1.Interest income;
2.Prizes;
3.Other winnings;
4.Royalties; and
5.Dividend income;

Atty. Manzanares
 PASSIVE INCOME FROM PHILIPPINE SOURCES SUBJECT TO FINAL TAXES
NRC, RA,
TYPE OF PASSIVE INCOME Resident Citizen NRA-ETB NRA-NETB
From Within From Without From Within
1. INTEREST
A. Interest from any currency bank deposit 20% 20% 25%
B. Yield or any monetary benefit from deposit substitute 20% 20% 25%
C. Yield or any monetary benefit from trust fund and other similar arrangements 20% 20% 25%
15% to 35% RA = 15%;
D. Interest income received from a depositary bank under expanded foreign currency deposit system 15% graduated NRC, NRA-ETB = Exempt Exempt
E. Interest income from long-term deposit or investment Exempt rates Exempt 25%
If pre-terminated before fifth year, a final tax shall be imposed based on remaining maturity as follows:
 4 years to less than 5 years 5% 5% 25%
 3 years to less than 4 years 12% 12% 25%
 Less than 3 years 20% 20% 25%
2. PRIZES 15 % to 35%
Prizes more than P10,000 (From 10,001 and up) 20% graduated 20% 25%
Prizes P10,000 or less 20 % to 35% graduated rates rates 20 % to 35% graduated rates 25%
3. OTHER WINNINGS
Regardless of amount 20% 15 % to 35% 20% 25%
PCSO/ Lotto Winnings: graduated
 Amount is P10,000 or less Exempt rates Exempt 25%
NRC, RA = 20%;
 Amount is more than P10,000 (From 10,001 and up) 20% NRA-ETB =20% 25%
4. ROYALTIES 15 % to 35%
A. Royalties in general 20% graduated 20% 25%
B. Royalties on books, as well as other literary works and musical compositions 10% rates 10% 25%
5. CASH and/or PROPERTY DIVIDEND
A. Cash and/or property dividends actually/constructively received from a domestic corp. or from a joint NRC and RA = 10%;
stock co., insurance or mutual fund companies & ROHQ of multinational companies beginning Jan. 2000 10% NRA-ETB = 20% 25%
B. Share of an individual in the distributable net income after tax of a Partnership (Other than GPP) NRC and RA = 10%;
beginning Jan. 1, 2000 10% NRA-ETB = 20% 25%
15 % to 35%
C. Share of an individual in the net income after tax of an Association, a Joint Account, or a Joint Venture NRC and RA = 10%;
graduated
or Consortium taxable as a corporation, which is a member or a co-venture beginning Jan. 1, 2000. 10% NRA-ETB = 20% 25%
rates

Atty. Manzanares
 PASSIVE INCOME FROM PHILIPPINE SOURCES SUBJECT TO FINAL TAXES
NRC, RA,
TYPE OF PASSIVE INCOME Resident Citizen NRA-ETB NRA-NETB
From Within From
Without From Within
1. INTEREST
A. Interest from any currency bank deposit 20% 20% 25%
B. Yield or any monetary benefit from deposit substitute 20% 20% 25%
C. Yield or any monetary benefit from trust fund and other
similar arrangements 20% 20% 25%
D. Interest income received from a depositary bank under 15 % to RA = 15%;
expanded foreign currency deposit system 15% 35% NRC, NRA-ETB = Exempt
graduated Exempt
E. Interest income from long-term deposit or investment Exempt rates Exempt 25%
If pre-terminated before fifth year, a final tax shall be
imposed based on remaining maturity as follows:
 4 years to less than 5 years 5% 5% 25%
 3 years to less than 4 years 12% 12% 25%
 Less than 3 years 20% 20% 25%

Atty. Manzanares
Interest on Bank Deposits
Bank deposits consist of money
placed into banking institutions
for safekeeping. The account
holder has the right to withdraw
deposited funds, as set forth in the
terms and conditions governing
the account agreement. Example
of a bank deposit that earns
income is the Savings Account.

Atty. Manzanares
Yield/Income from Deposit Substitutes
Under the amended Section 95 the It may include but not limited to the
new BSP Charter, the term “deposit following:
substitutes” is defined as an
alternative form of obtaining funds 1. Bankers acceptances,
from the public, other than deposits, 2. Promissory notes,
through the issuance, endorsement, 3. Participations,
or acceptance of debt instruments for 4. Certificates of assignment; and
the borrower’s own account, for the 5. Similar instruments with recourse,
purpose of relending or purchasing and repurchase agreements
of receivables and other obligations

Atty. Manzanares
Trust Fund
Trust is a legal instrument or device
whereby a person called a Trustor
delivers part or all of his properties
to another person called Trustee who
administer and manages the
property/ies for the benefit of
designated person/s called
Beneficiaries.

Atty. Manzanares
Foreign Currency Deposit
Refers to a fund in foreign currency
maintained in an offshore banking
unit or a foreign currency deposit
unit of a local bank or local branch of
a foreign bank authorized by Banko
Sentral ng Pilipinas to engaged in
foreign currency-denominated
transactions

Atty. Manzanares
Long-term Deposit
An interest-bearing bank account
that has a pre-set date of maturity.
The money must remain in the
account for the fixed term in order to
earn the stated interest rate.

Atty. Manzanares
 PASSIVE INCOME FROM PHILIPPINE SOURCES SUBJECT TO FINAL TAXES
NRC, RA,
TYPE OF PASSIVE INCOME Resident Citizen NRA-ETB NRA-NETB
From Within From From Within
Without
2. PRIZES
Prizes more than P10,000 (From 10,001 and up) 20% 15 % to 20% 25%
35%
graduated 20 % to 35%
15 % to 35% rates graduated
Prizes P10,000 or less graduated rates rates 25%
3. OTHER WINNINGS
Regardless of amount 20% 20% 25%
PCSO/ Lotto Winnings: 15 % to
 Amount is P10,000 or less Exempt 35% Exempt 25%
graduated NRC, RA =
rates 20% ;
NRA-ETB
 Amount is more than P10,000 (From 10,001 and up) 20% =20% 25%

Atty. Manzanares
 Prize
A money or something
valuable that is given to
someone who has the best
result in a competition or game,
or as a reward for doing good
work.

Atty. Manzanares
Winnings

The money that someone wins in a

competition or by gambling.

Atty. Manzanares
 PASSIVE INCOME FROM PHILIPPINE SOURCES SUBJECT TO FINAL TAXES
NRC, RA,
TYPE OF PASSIVE INCOME Resident Citizen NRA-ETB NRA-NETB
From
From Within Without From Within
4. ROYALTIES
A. Royalties in general 20% 15 % to 35% 20% 25%
B. Royalties on books, as well as other literary works and musical graduated
compositions 10% rates 10% 25%
5. CASH and/or PROPERTY DIVIDEND
A. Cash and/or property dividends actually/constructively
received from a domestic corp. or from a joint stock co., insurance or
mutual fund companies & ROHQ of multinational companies NRC and RA = 10%;
beginning Jan. 2000 10% NRA-ETB = 20%; 25%
B. Share of an individual in the distributable net income after tax of NRC and RA = 10%;
a Partnership (Other than GPP) beginning Jan. 1, 2000 10% NRA-ETB = 20% 25%
C. Share of an individual in the net income after tax of an 15 % to 35%
Association, a Joint Account, or a Joint Venture or Consortium graduated
taxable as a corporation, which is a member or a co-venture rates NRC and RA = 10%;
beginning Jan. 1, 2000. 10% NRA-ETB = 20% 25%

Atty. Manzanares
 Royalty - books
When a book publisher contracts
with an author to publish a book, in
essence, the author (who is the
copyright holder) grants the
publisher the right to publish the
work for an agreed-upon amount of
money. This money is called
a royalty and is expressed as a
percentage of sales.

Atty. Manzanares
Royalty – Other literary works
Include nondramatic textual works with
or without illustrations. They may be
published or nonpublished. Computer
programs and databases also are
considered literary works.

Atty. Manzanares
Royalty – Musical compositions
or simply composition, can refer
to an original piece or work of
music, either vocal or
instrumental, the structure of a
musical piece, or to the process of
creating or writing a new piece of
music. People who create new
compositions are called
composers.

Atty. Manzanares
Dividends
A dividend is that part or
portion of the profits of a
corporation set aside,
declared and ordered by the
directors to be paid ratably
to the stockholders on
demand or at a fixed time.

Atty. Manzanares
Final Withholding Tax

Is a kind of tax which is prescribed on “certain income” (interest income,

dividends, royalties, prizes and winnings) derived from Philippine
sources and is not creditable against the income tax due of the payee on
income subject to regular rates of tax for the taxable year.

Atty. Manzanares
Deposit Substitutes

An alternative form of obtaining funds from the public other than

deposits, through the issuance, endorsement, or acceptance of debt
instruments for the borrower’s own account, for the purpose of re-
lending or purchasing of receivables and other obligations, or financing
their own needs or the needs of their agent or dealer

Atty. Manzanares
Pre-termination of long-term deposit
Interest income from long-term deposit or investment that is pre-terminated by the
depositor or the investor before the 5th year shall be subject to the following graduated
rates of final withholding tax on the entire income and shall be withheld by the
depository bank from the proceeds of the long-term deposit or investment certificate
based on the remaining maturity (holding period) thereof as follows:

Four (4) years to less than five (5) years 5%

Three (3) years to less than four (4) years 12%

Less than three (3) 20%

Atty. Manzanares
Ordinary Assets
For income taxation purposes, assets are classified either as ordinary
or capital assets.

Under the tax code, the following are ordinary assets: (SOUR)
1. Stock in trade of the taxpayer or other property of a kind which would properly
be included in the inventory of the taxpayer if on hand at the close of the
taxable year
2. Property held by the taxpayer primarily for sale to customers in the Ordinary
course of trade or business
3. Property Used in the trade or business of a character which is subject to the
allowance for depreciation provided in the NIRC
4. Real property used in trade or business of the taxpayer

Atty. Manzanares
Capital Assets
All other properties held by the taxpayer whether or not connected
with his trade or business not classified as ordinary asset, it may
include but not limited to the following:
1. Accounts receivable;
2. Investment in stocks;
3. Goodwill;
4. Real property not used in trade or business; and
5. Personal property not used in trade or business.

Atty. Manzanares
Capital Gains Tax
CAPITAL GAINS SUBJECT TO CGT
Citizens & NRA-ETB NRA-NETB
Residents
1. Capital Gains from sale of shares of
stock of a domestic corporation not traded
in the local stock exchange 15% 15% 15%
2. Sale of Real Property located in the
Philippines

Tax Base: Selling Price or Fair Market

Value, whichever is higher 6% 6% 6%

Atty. Manzanares
Classification of Capital Gains
1. Subject to Capital Gains Tax

a. Shares of stock of domestic corporation sold directly to a buyer (shares

of closely-held or non-listed domestic corporations).

Tax rate = 15% of Capital Gains

b. Sale of real properties located in the Philippines.

CGT= 6% x the higher between Gross Selling Price (GSP) and FMV

Atty. Manzanares
Classification of Capital Gains
Subject to Basic Tax – Examples:
a. Sale of shares of foreign corporations;
b. Sale of real properties located abroad; and
c. Sale of other personal assets other than shares of stock of domestic corporations, such as
cars, jewelries, and the like – subject to the rule on holding period

Taxability
Capital Gains Tax Capital Gains Tax
Kinds of asset Basic Tax (6%) (15%)
Ordinary Asset
Sale of real property by a real estate dealer
and sale of shares/securities by a “dealer in
securities  x x
Capital Assets
Real property x  x
Shares of stocks of a closely-held corp.
(not-traded) x x 
Other assets (subject to the rule on holding
period  x x
Atty. Manzanares
Sale of Principal Residence

Principal residence refers to the dwelling house, including the land on

which it is situated, where the individual and members of his family
reside, and whenever absent, the said individual intends to return.

Atty. Manzanares
Requisites for Exemption to CGT
1. Sale or disposition of the old actual principal residence;
2. By a citizen or resident alien;
3. Proceeds from which is utilized in acquiring or constructing a new principal
residence within 18 calendar months from the date of sale or disposition;
4. Notify the CIR within 30 days from the date of sale or disposition through a
prescribed return of his intention to avail the tax exemption;
5. Can be availed of once every 10 years;
6. The historical cost or adjusted basis of his old principal residence shall be
carried over to the cost basis of his new principal residence;
7. If there is no full utilization, the portion of the gains presumed to have been
realized shall be subject to capital gains tax; and
8. The 6% capital gains tax due shall be deposited with an authorized agent bank
subject to release upon certification by the RDO that the proceeds of the sale
have been utilized.

Atty. Manzanares
Sale of Principal Residence

If there is no full utilization of the proceeds of sale or disposition, the

portion of the gain presumed to have been realized from the sale or
disposition shall be subject to capital gains tax as follows:

Taxable Amount = Unutilized Portion x Gross Selling Price or fair

market value at the time of
Gross Selling Price sale, whichever is higher

Atty. Manzanares
Creditable Withholding Tax

Taxes withheld on certain payments that are intended to equal or at

least approximate the tax due of the payee on said income
computed using the graduated tax rate under Section 24(A) of the
Tax Code.

Atty. Manzanares
Creditable Withholding Tax
Gross compensation income PXxx
Gross business/professional income Xxx
Less: Allowable business/professional
expenses Xxx
Taxable net income Xxx
Income Tax Due (Using the graduated tax
rate) Xxx
Less: Creditable Withholding Taxes
CWT on compensation income Xxx
CWT withheld at source Xxx
Tax payments for the previous quarter(s) Xxx
Tax withheld at source Xxx
Foreign tax credit Xxx Xxx
Income Tax Payable PXxx

Atty. Manzanares
Creditable Withholding Tax
Purchase of/payment for CWT%
Professional fees
Individual payee
• If gross income for the current year ≤ 3M 5%
• If gross income for the current year > 3M 10%
Non-individual payee
• If gross income for the current year ≤ 720k 10%
• If gross income for the current year > 720k 15%
Rentals 5%
Goods 1%
Services 2%
Income payments to beneficiaries of estates/trusts 15%
Income payments to partners of GPPs
• If gross income for the current year ≤ 720K 10%
• If gross income for the current year > 720K 15%
Certain income payments made by credit card
companies 1%
Atty. Manzanares
Quarterly Returns

1st Quarter May 15

Aug. 15 (45 days after the
2nd Quarter end of Quarter)
Nov. 15 (45 days after the
3rd Quarter end of Quarter)
April 15 of the succeeding
Final adjustment year

Atty. Manzanares
Formula
Q1 Q2 Q3 Q4
Gross income (cumulative
amounts) Pxxx Pxxx Pxxx Pxxx
Business expenses (cumulative
amounts (xxx) (xxx) (xxx) (xxx)
Taxable income Pxxx Pxxx Pxxx Pxxx

Basic Income Tax Due Pxxx Pxxx Pxxx Pxxx

Less: Creditable Withholding
Taxes:
Prior year’s excess credit (xxx) (xxx) (xxx) (xxx)
Quarterly withholding taxes (xxx) (xxx) (xxx) (xxx)
Quarterly tax payments (xxx) (xxx) (xxx) (xxx)
Foreign tax credit (xxx) (xxx) (xxx) (xxx)
Income tax payable Pxxx Pxxx Pxxx Pxxx

Atty. Manzanares
Income Tax Due for Married Taxpayers

Under RA 10963, husband and wife, shall compute separately their

individual income tax based on their respective total taxable
income: Provided, that if any income cannot be definitely attributed
to or identified as income exclusively earned or realized by either of
the spouses, the same shall be divided equally between the spouses
for the purpose of determining their respective taxable income.

Atty. Manzanares
Minimum Wage Earners (MWE)
A worker in the private sector paid the statutory minimum wage, or to an
employee in the public sector with compensation income of not more than
the statutory minimum wage in the non-agricultural sector where he/she
is assigned.

Minimum wage earners are exempt from income tax on:

1. Minimum wage
2. Holiday pay
3. Overtime pay
4. Night shift differential
5. Hazard pay

Atty. Manzanares
P90,000 Ceiling
13th month pay and other benefits received by officials and
employees of public and private entities are exempt from income
tax and creditable withholding tax on compensation, provided,
however, that be beginning January 1, 2018, the total exclusions
shall not exceed P90,000.

The excess would form part of an individual’s gross income and

would be subject to income tax and applicable creditable
withholding taxes.

55 Atty. Manzanares
Minimum Wage Earners (MWE)
Taxpayer Income Tax Creditable Withholding Tax
1. Purely MWE Exempt Exempt
2. MWE with additional
benefits from the employer
exceeding tax-exempt
threshold (P90,000) Exempt Exempt
Min. Wage = Exempt Min. Wage = Exempt
3. MWE with additional Bus. Income = Subject to Bus. Income = Subject to basic
business income basic tax tax

Atty. Manzanares
Senior Citizens and Persons with Disabilities
(PWDs)

Generally, qualified Senior Citizens and PWDs deriving returnable

income during the taxable year, whether from compensation or
otherwise, are required to file their income tax returns and pay the
tax as they file the return

Atty. Manzanares
Benefits of Senior Citizens and/or PWDs

1. 20% discount and exemption from VAT on their purchase of

specified goods and services;
2. P500 monthly social pension, for indigent senior citizens;
3. Death benefit assistance;
4. 5% discount on utilities; and
5. Income tax exemption for minimum wage earners or for senior
citizens/PWDs whose annual taxable income is not more that
P250,000.00

Atty. Manzanares
Filing of Income Tax Return (ITR)
Basic Tax
 For purely compensation income earners
- On or before April 15 of the succeeding year.

 For business income earners including practice of profession:

The individual taxpayer is required to file a quarterly tax return as follows:

1st Quarter May 15

2nd Quarter Aug. 15
3rd Quarter Nov. 15
Final adjustment April 15 of the
succeeding year

Atty. Manzanares
Filing of Income Tax Return (ITR)
Final Withholding Tax on Passive Income
• Not later than the last day of the month following the close of the
taxable quarter during which the withholding was made.

Capital Gains Tax

a. Shares of stock
- Ordinary return – 30 days after each transaction
- Final consolidated return – on or before April 15 of the following year
b. Real property – 30 days following each sale or other disposition

Atty. Manzanares
Manner of Filing

Filing of ITR may be made through:

1. Manual Filing
2. Electronic Filing and Payment System (EFPS)
3. eBIR Forms

Atty. Manzanares
Place of Filing Income Tax Return

The income tax return shall be filed and paid with any of the following:
1. Authorized agent banks;
2. Revenue District Officer;
3. Collection agent; or
4. Duly authorized city or municipal treasurer in which the taxpayer has
his legal residence or principal place of business in the Philippines or
if there be no legal residence or place of business in the Philippines,
with the Office of the Commissioner of Internal Revenue.

Atty. Manzanares
Payment

Generally, the income tax payable shall be paid at the time the return is
filed (Pay as you file system). TRAIN law provides that when the tax due
is in excess of P2,000, the individual taxpayer may elect to pay the tax in
two equal installment as follows:
• 1st installment: at the time of filing the annual ITR
• 2nd installment: on or before October 5 following the close of the
calendar year.

Atty. Manzanares
Payment

Generally, the income tax payable shall be paid at the time the return is
filed (Pay as you file system). TRAIN law provides that when the tax due
is in excess of P2,000, the individual taxpayer may elect to pay the tax in
two equal installment as follows:
• 1st installment: at the time of filing the annual ITR
• 2nd installment: on or before October 5 following the close of the
calendar year.

Atty. Manzanares
Payment

For “With Payment” Return

File the return in the Authorized Agent Bank (AAB) of the place where the taxpayer is registered
or required to be registered.

For “ No Payment” Return

File the return with the concerned RDO where the taxpayer is registered. However, “no payment”
returns filed late shall be accepted by the RDO but shall be filed with an AAB of Collection Officer
for payment of necessary penalties.

Atty. Manzanares
Persons required to file Income Tax Return:
1. Individuals engaged in business and/or practice of profession, regardless of the results of
operations.
2. Individual deriving compensation from two or more employers concurrently or successively
at any time during the taxable year.
3. Employees deriving 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 resulting to collectible or refundable return.
4. Individuals deriving other non-business, non-profession-related income in addition to
compensation income not otherwise subject to final tax.
5. Individuals receiving purely compensation income from a single employer, although the
income tax of which has been correctly withheld, but whose spouse is required to file income
tax return.
6. Non-resident alien engaged in trade or business in the Philippines deriving purely
compensation income, or compensation income and other non-business, non-profession-
related income.

Atty. Manzanares
Persons not required to file Income Tax Return
(RR 8-2018)

1. An individual earning purely compensation income whose taxable

income does not exceed P250,000.
2. An individual whose income tax has been correctly withheld by his
employer.
3. An individual whose sole income has been subjected to final
withholding tax.
4. Minimum wage earners, the Certificate of Withholding filed by the
respective employers, duly stamped “Received” by the Bureau.

Atty. Manzanares
Substituted filing of Income Tax Return (ITR)

Under RA 9504 and RR 10-2008, individual taxpayers may no longer file

income tax return on or before April 15 of the following taxable year
provided the taxpayer is/has:

1. Receiving purely compensation income, regardless of amount.

2. The amount of income tax withheld by the employers is correct
3. Only one employer during the taxable year.
4. If married, the employee’s spouse also complies with all three
aforementioned conditions, or otherwise receives no income.

Atty. Manzanares
 THE END
T H A N K Y O U ! ! !

Atty. Manzanares