BIR Form 2316 or Certificate of Compensation Payment / Tax Withheld For Compensation Payment is a certificate issued by the employer to all employees receiving salaries, wages, and other forms of remuneration during the calendar year. It contains the total amount paid by the employer to the employee and the taxes withheld during the calendar year. It is issued by the employer to the employee on or before January 31 of the following year or in case of termination of employment, it is issued together with the last payment of salaries. (RR 2-98 section 2.83.1)
What employers need to know
Employers should keep in mind the following dates in relation to BIR Form 2316.
- January 31st of the following calendar year
- February 28th of the following calendar year
JANUARY 31st. As stated above, Employers must provide employee with original and duplicate copy of the BIR Form 2316 on or before January 31 of the following year. Failure to do so may result to a ground for mandatory audit of payors income tax liabilities (RR 11-2013).
FEBRUARY 28th. BIR Form 2316 must be signed by both the employer and the employee. Once signed, Form 2316 of all employees under substituted filing, must be submitted by the employer to BIR not later than February 28th of the following calendar year. (RR 11-2013). Failure to do so will result to the following penalties:
- Penalty of P1,000 for each failure subject to a maximum amount of P25,000 for all failures during the calendar year.
- Failure to abide for two consecutive years will be punished by a fine not less than P10,000 and imprisonment of not less than 1 year but not more than 10 years.
- In settlement under this situation, compromise fee shall be P1,000 for each BIR form 2316 not filed without any maximum threshold.
UPDATE: RR No 2-2015 requires ALL TAXPAYERS REGISTERED WITH THE LARGE TAXPAYERS SERVICES (LTS) to provide BIR with soft copies of the BIR FORM 2316 in pdf format using a DVD-R, instead of hard copies. Non-LTS registered taxpayer can choose to submit hard copies or soft copies of BIR FORM 2316, BUT once they opt for soft copies, they will no longer be allowed to submit in hard copies thereafter.
In submission of soft copies of bir form 2316, the following procedures shall be strictly observed:
- Scan the BIR FORM 2316.
- One employee/bir form 2316 per PDF File
- PDF files should follow the following filename:
- e.g. Buenaventura_123456789_12312016
- The PDF files should be arranged alphabetically
- Use a Digital Versatile Disk-Recordable (DVD-R) in saving the pdf files and for submission to BIR
- Label the DVD-R using the format prescribed in Annex B of RR No. 2-2015
- Prepare a NOTARIZED CERTIFICATION prepared according to Annex C of RR No. 2-2015 and have it signed by the authorized representative of the taxpayer.
- This is to certify that the soft copies of the said bir form contained in the DVD-R are complete and exact copies of the original thereof.
- Submit the DVD-R and notarized certification to BIR where the taxpayer is duly registered not later than February 28.
In addition to this, employers must also make sure that the figures in BIR Form 2316 are tally with the figures reported in the Alphalist of employees attached in BIR FORM 1604CF. In this case, the BIR Program Alphalist Data Entry and Validation Module will be handy.
What employees need to know
To know the use of this form, employees must be fully informed whether they are qualified under substituted filing or not.
Substituted filing is when the employer’s annual return (BIR Form 1604CF) may be considered as the “substitute” Income Tax Return (ITR) of employee since the information that will be provided by his income tax return (BIR Form 1700) is also the same information contained in the employers BIR Form 1604CF.
If qualified, they can keep the form 2316 for their own reference or for the purpose of the following (RMC 01-2003):
- as proof of financial capacity for purposes of loan, credit card, or other application
- as proof of payment of tax or for availing tax credit in the employee’s home country
- in securing travel permits and travel tax exemptions when necessary; and
- for other purposes to meet the requirements of various government/private agencies.
If the employee is not qualified under substituted filing, the BIR Form 2316 will be used as attachment to BIR Form 1700 (Annual Income Tax for Individuals Earning Purely Compensation Income) or BIR Form 1701 (Annual Income Tax for Self Employed Individuals, Estates and Trusts) in case the employee had other sources of income in addition to his compensation income.
Employees must know that it is their right to receive and demand for their Form 2316.