If you’re looking for an online tax guide in the Philippines, this blog strives to provide you that. We know that taxation is an essential part of doing business. We also understand that it may involve anyone who earns income, whether it’s from business, profession or compensation. Taxes are not to be ignored; they should be prioritized to avoid future financial, moral, civil and even criminal troubles. Thus, we need to adequately be oriented and educated with our tax responsibilities with the government.
We have already published several tax articles, tips and guidelines, which aim to provide our concerned readers the necessary information they need to manage their tax obligations. In order to realize that goal, we have listed and summarized the following articles on Philippine taxation for your convenience.
Registration:
If you are not yet registered with the Bureau of Internal Revenue as a self-employed taxpayer, who is either engaged in sole proprietorship business or in the practice of profession, you may read our article titled, “How to register your business with the BIR.” That article also includes registration of corporations with the Bureau. Moreover, the BIR has published a “Tax guide for Professionals” in their website for more information related to the registration requirements and taxability of a professional.
Taxes to pay:
If you’re a registered self-employed taxpayer or if your want to register such, you may read our article, “What taxes should I pay in the Philippines for self-employed individual” to learn the tax liabilities you should settle on time.
Business taxes:
Business taxes include Value Added Tax and percentage taxes. The following articles will give you an idea on their nature and how to compute for your business taxes in doing business and practicing your profession in the Philippines:
- Business taxes in the Philippines
- How to compute VAT payable in the Philippines
- How to compute Percentage tax in the Philippines
Income tax:
For computing annual income tax and preparing the related returns (ie., BIR forms 1701 or 1702), the following articles will guide you to accomplish those tasks, whether it is for individual, corporation or taxable partnerships.
- How to compute income tax (self-employed)
- How to compute income tax for corporations and partnerships
- How to file income tax return in the Philippines
- Deductible expenses and allowable deductions
Tax avoidance:
To legally avoid unnecessary taxes, reduce possibility of a BIR audit, and save your money from additional charges, such as penalties, interest, surcharge and compromise, these articles can help you.
Withholding taxes:
If you employs people who are required to pay their income tax, and or if you pay for rentals, or other income payments subjects to expanded withholding tax, these articles will help you compute the amount of taxes you should withhold and remit with the BIR:
Deadlines:
Do you wonder when should you file and pay your annual and quarterly income taxes? You should learn when before it is too late. We have posted the “BIR Tax filing and payment deadlines for income taxes here.
Penalties:
So you haven’t made it on the due date? Now you don’t have any clue how much total penalties you should pay for the late filing of your tax return? Here is a simple guide to compute the extra charges you should pay with the BIR: Penalties for late filing of tax returns in the Philippines.
There you are, I hope those articles and information above will guide you on your way to managing your tax obligations. We will continuously write tax articles and fill this post with important information that will guide every taxpayer in our nation. For now, have a great day and we hope for your best results and success!
Victorino Q. Abrugar is a marketing strategist and business consultant from Tacloban City, Philippines. Vic has been in the online marketing industry for more than 7 years, practicing problogging, web development, content marketing, SEO, social media marketing, and consulting.
Hi Vic,
I’m happy that there’s a blog / tax resource website as this.
Our Company is in contract with a foreign company with no office in the Philippines. We are providing services for them for a certain % and they reimburse all related expenses. We send them monthly billing for the service fee and reimbursable expenses. We are a VAT registered Company so we declare the Service Fee as a VAT SALE transaction. Here are my questions:
1). Can we claim input tax out from reimbursements?
2). Proof of payments (OR) for reimbursements are named after our Company and not with the reimbursing party, are we liable to withhold EWT for this? or are we subject to Income Tax?
3). Related to item 3 are we supposed to advise supplier to name OR’s after the reimbursing party so as not to withhold EWT and be subject to EWT? what are the related BIR regulations for these?
4). For collection of Service Fee Income, are we supposed to include in the OR to be issued to the reimbursing company the expenses reimbursed by them other than the service fee?
5). In the billing that we send them, are we suppose to use VAT Invoice for the Service Fee and a separate Non VAT invoice for expenses reimbursement?
Hoping to hear from you.
thanks alot!
Alexis
Hi Alexis,
This is a common scenario but is quite complicated. I am worried that the reimbursement scenario, recording and documentation does not go with each other and I fear it may later create an issue. Under reimbursement scheme, documents shall be named in favor of the principal (the foreign company) so the agent (your company) does not claim any expense. As such, payment by principal is not subject to withholding tax and agent cannot claim any input tax therein. If agent claims it as expense, claim input taxes therein, and impose withholding taxes, then, it should form part of the income. However, there should be no VAT (0%) on your company’s sales to the foreign entity if dollar denominated and payment made through banking system going into the Philippines.
Hope the above explanation helps.
Hi, I need help. Im quite confused with BIR taxes. We just started are business and I didn’t know this will give much hassle.
We joined the seminar at BIR, but still have no clue on how to do this correctly.
What if I’m both employed and business owner.
-COR – Registration, Monthly Percentage and Income Tax – what are taxes I have to file and forms to use.
-1701Q – how will I compute for quarterly income tax if again im employed and a business owner
-2551M – is 3% of total sales – is this from my receipts?
-and is there any way you could discuss on how to fill up books of accounts. Iv been given 3, one ledger and a comlumnar 14 and columnar 5. I don’t have any idea on what to do with it. Show samples as well.
Hi Tin
-The taxes you need to file are stated in you COR:
For percentage tax use 2551M, for Annual income tax use 1701, for -Quarterly income ta use 1701Q, and for annual registration fee use BIR form 0605
-We have written an article on how to compute quarterly income tax for self-employed individual and mixed earner.. please visit and read this link: http://businesstips.ph/how-to-compute-quarterly-income-tax-return-philippines/
-For 2551M computation please visit and read http://businesstips.ph/how-to-compute-percentage-tax-payable-bir-philippines/
-3% percentage tax is generally based on gross sales/receipts
– You can read our article on how to make journal entries: http://businesstips.ph/how-to-make-accounting-journal-entries/
– With regard to further discussion on accounting… it needs a lot of time to discuss. You can make specific questions on our forum BusinessForum.ph
– If you really want to learn accounting for non-accountants you can attend seminars and training. One of our commenter and friend Ghar of AcctgTaTutorial can provide you with trainings. You can click the link on his name above.
Thanks.
1701 Q – you do not have to add your income from employment as your employer already withholds the tax for you.
Percentage tax is 3% of your gross receipts, so if you have sales that do not have receipts, it is better to not add those.
And lastly, I believe will need an accountant to teach you how to do those special journals. I am an accounting major in PUP and we spent 2 years to fully understand that.
There are some accountants who will teach you one on one how to fill those up, you can check advertisement sites like sulit or ayosdito for adverts that offer accounting services and ask them if they can teach you how to and what their rate is. Forums are great, also as Vic suggested. 🙂
Gud PM sir Vic, naa lang ko ask about taxes..nag open ko gamay nga business. ingun man ako kaila na naa daw monthly tax, quarterly tax ug annual tax? kadaghan d i sa mga taxes ana.. nya gamay ra halin, dili maka cover sa mga expenses..thank u sir vic..
Hi,
Paano po ba magpalit nang status sa BIR? What are the requirements po? Kasi ang status ko po sa tax is Single. papalitan ko po sana sya to Head of the Family. Ano din po ang kelangan kapag isinama ko sa list of dependents ko ang kapatid na 13 yrs. old. Thanks. po!
Hi. Single and head of the Family now have the same amount of personal exemption (both 50,000). Also your sibling may not be allowed to be claimed as your dependent child. Hence, no need to update your status with the BIR.
Hello!
I really find this site helpful!!! will you be very kind enough to assist me on what should i do with the books given by BIR to a business? where will i get the information/details on how to start writing in the books? Because I am currently starting another job as an internal accountant but i previously worked in a bank so everything is so different. i am an accountancy graduate but i guess my recent job experience made me forget things.
i would really appreciate your response on this matter.
thanks and Godbless!
Hi. We have some basic and simple guide articles about recording journal entries, posting them to the general ledger, making adjusting journal entries, and other related matters. You can browse them on our accounting category page. However, they are only simple guides. I suggest that you attend a seminar about BIR accounting and bookkeeping for more extensive training. You may visit TaxAcctgCenter.Org – care of Belle – for seminars on these topics. It is always better when teaching is done in personal. 🙂
Hi Vanessa! Yes, I suggest you attend our basic BIR bookkeeping seminars to refresh your accounting knowledge and align with the existing rules. We do have CPA participants in the past with the same objectives.
Hi, I have a small business whose gross receipts does not exceed 1,500,000 annually, I am confused on what how to file my taxes, I know that the income in my sole proprietorship will be subject to 3% percentage tax, I am wondering whether my income from the business will also be subjected to graduated income tax and whether I am allowed to deduct the percentage tax in my income tax return?
what if the freelancer earns below minimum wage? is he free from paying income tax? or is RA No. 9504 only for private and public employees earning below minimum wage only?
thank you very much!
“Republic Act No. 9504 exempts minimum wage earners in the private sector and their counterparts in the public sector (casual employees) from paying income tax.” (newsinfo.inquirer.net/inquirerheadlines/nation/view/20080618-143296/Minimum-wage-earners-get-tax-relief)
Hi Sir Vic ,
I’ve been reading your past topics recently and I’m very thankful for everything i learn in every topics being discussed here.
I do have a Tax problem right now and Id like to seek advise from you.
there was this friend of mine who has a clinic diagnostic business and to cut the story short she is a registered non vat percentage tax business and she commenced operation during Oct 2012 of last and she didnt file any percentage return since then. My question is can she file the percentage tax subject gross receipts under Individual Income Tax to avoid penalty charges on those previous months she didnt file any OPT return? Or should we file those 2551M separately ?thanks and more power Sir Vic.
Hi Sir Vic,
This is our scenario, we have a telephone billing named on one of our employee. Our company pays that telephone bill thru bank.
1st Q: The bank issues a printed paper with our payment details, is that considered as official receipt?
2nd Q: Can our company claim the input tax from a telephone billing?
Thanks,
Hi sir vic,
This is a query on the filing of business taxes for my branches. I opened two branches, one is the same line of business as the head office while the other is different from my Head Office, both of which are located in the same revenue district office. My question is, in filing the monthly business tax how many 2551M should I accomplish? Will i prepare individual 2551M return for each of the branches and the head office or shall i prepare one return for my head office and my branch with the same line of business and another return for my branch with different line of business or only shall i accomplish one return for my three stores? In addition, should i keep different set of books for each store or only one record for all?
Hi!
Can someone help me? pls?..
I’m quite new in business area so i dnt know how tax goes..
im employeed and also put up a sole proprietor business.. it was registered under nonvat receipt.
heres my few questions..
1. what form should i used in declaring our tax?
2. how would i know when is the deadline to pay my business tax?
please help..
i really had no idea.
thanks
Is OFW sole proprietor need to file 1701Q and 1701? No compensation income generate within the Phillipines.
An OFW although not earning compensation within the Philippines, as long as he is earning income from his proprietorship within the Philippines, has to pay income tax and file the necessary income tax returns (1701Q/1701). You may not taxed from your compensation income outside the Philippines, but you are taxed from your business/proprietorship income earned within the Philippines.
Hello!
Yung tita nung friend ko may house rental business 3units sya commercial pero di nakaregister sa BIR ano mangyayari? Di naasikaso ng parents dahil na rin sa katandaan di rin alam nung mga anak na di pala nakarehistro sa bir ung business. May penalty po ba pag ganun? Nagstart sila magpuapa almost 10 yrs ago. Bali ang monthly income nila 24k.
Eto ung price ng bawat unit:
11,000
7,500
5,500.
From the start di sila nakakapagtaas ng upa kasi di nga nakakapagbayad ng tax. Ano po ba ang dapat gawin? Once ba na irehistro hahabulin pa ba yung mga taon na di nila nabayaran na tax? Thank You.
Hi Sir..
I’m hoping you can give me advice kung ano po sa tingin ang options ko. I have an internet shop but failed to secure mayor’s permit dahil po sa unresolved issues sa isang city ordinance. The city licensing officer told us to continue operation while the issue is being resolve. With that, nag-operate po kami beginning Feb 2014, sayang po kasi ang investments ng parents ko. Problem is na-tax map po kmi, and the bir officer issue a ticket for FAILURE TO REGISTER last November 2014. Since hindi pa rin po kmi mabigyan ng mayor’s permit, hindi ko rin po masettle ang sa BIR. Someone advice me po na ibenta na itong business. Kung sakali po kaya na ibenta ito, may liabilities pa rin po kaya ako sa BIR kung gusto kong pumasok sa ibang linya ng negosyo? o kung isesettle ko po ito reasonable pa po kaya ung penalties na kailangan kong bayaran?
Thank you po in advance.
Good day!
Hi,
I just want to ask, what is the correct account to be used when I make an entry for the compromise we paid to BIR for this reason: No POS machine at the place of business upon inspection.
Hope to get a reply from you.
Thank you.
Nemia
What type of taxpayer does a resident alien who has a modelling contract with a talent agency fall under?
Is said model a self-employed taxpayer subject to 5%-32% income tax plus applicable percentage tax, or a professional subject to 10%-20% income tax and other applicable taxes?
I have a question regarding BOI. If the registration for the BOI has already expired within the year, what will be the tax rate that the company will apply? Will they apply 30% or is there a prefereinial rate? If there is a preferential rate, are there any qualifications?
Thank you in advance.
Hi Hannah,
BOI registration grants companies tax holidays (3-8 years tax holidays). But in order to be qualified for the tax holidays, they should comply with an Income Tax Holiday Application from the BOI. http://boiown.gov.ph/wp-content/uploads/2015/05/checklist_of_application_for_income_tax_holiday.pdf
For corporations with different income tax rates, I think the BIR advised to use a special income tax form (BIR Form No. 1702-MX version June 2013 ENCS (Annual Income Tax Return for Corporations, Partnerships and Other Non-Individual with Mixed Income Subject to Multiple Income Tax Rates or with Income Subject to Special/Preferential Rate).
For more clarifications, please consult with the in charge officer at the offices of BOI and BIR.
Operating a computer shop with 3 computer with an average income of 250 -300pesos a day and most of time high tide in our place at Valenzuela City,Philippines. My question with this new tax reform is there is still a need to pay a business permit when filing?
Hello. Yes self-employed and business owners still have to pay the applicable rates for registering and renewing business permits. They are also still subject to the normal VAT or percentage taxes. The new tax law will mostly affect employees, employers (on filing withholding tax on compensation, and businesses which are required to pay excise tax.
Hello, nag pa register po ako ng business sa Philippines last 2015 pero di pa po sya nag ooperate since wala pong mag aasikaso. Ano po ang pwede kong gawin para ma exempt po sa tax since wala pa naman pong income. Salamat po.