{{ToolName:CrossMarketing Argument:ProductKey=ddt}}

Tax Year

The standard tax year in the Philippines is the calendar year. Alternate 12-month tax years are allowed.

Tax Return Filing

Quarterly returns must be filed within 60 days following the close of each of the first three quarters of a tax year. The final (annual) return is due by the 15th day of the 4th month following the close of the tax year (15 April following the calendar year).

Audited financial statements must be included with the final (annual) return if the gross quarterly sales, earnings, receipts, or output exceeds PHP 150,000.

Non-residents with no establishment in the Philippines, are not required to file income tax returns as income payments to them are subject to a final withholding tax.

COVID-19 Emergency Measures

In response to the COVID-19 pandemic, the Philippines government extended the due date for filing tax returns by 30 days. The extension applies for taxpayers within the jurisdiction of regional and district revenue offices which are categorized as alert level 3 or higher for COVID-19. It is clarified that the extension applies to all returns including tax returns and information returns, submission of all required documents, and registration of books of accounts.

Additional Returns

When deriving capital gains from the sale or exchange of shares, a return must be filed within 30 days after each transaction. Return of taxes withheld must be submitted by the 20th day following the close of the calendar quarter in which tax was withheld.

Tax Payments

Tax payments are required when the quarterly summary declarations are filed. Any outstanding tax due at the end of the tax year is paid when the final (annual) tax return is filed.

If the quarterly payments exceed the final tax liability for the year, the excess may be carried forward and applied to taxes due in the following year, or a claim for a refund or tax credit may be made.

Enterprises selling online with earnings not exceeding PHP 250,000 annually are not required to pay income tax.

COVID-19 Emergency Measures

In response to the COVID-19 pandemic, the Philippines government extended the due date for tax payments and for applying for tax refunds by 30 days. The extension applies for taxpayers within the jurisdiction of regional and district revenue offices which are categorized as alert level 3 or higher for COVID-19.

Tax Amnesty Scheme

On 9 April 2019, the tax authorities published a tax amnesty scheme for all persons, whether natural or juridical, having internal revenue tax liabilities for the taxable year 2017 and prior years. The tax amnesty on delinquencies can be availed within one year from the effective date of the regulations (i.e., by 24 April 2020). The tax amnesty scheme provides for the application of the following rates:

Delinquent accounts and assessments which have become final and executory - 40% of the basic tax assessed;
Tax cases subject to final and executory judgment by the courts - 50% of the basic tax assessed;
Pending criminal cases filed with the DOJ/ Prosecutor's Office or the courts for tax evasion and other criminal offenses - 60% of the basic tax assessed; and
Withholding agents who withheld taxes but failed to remit the same to the Philippines tax authority - 100% of the basic tax assessed, regardless of falling within any of the above cases.

The persons availing the tax amnesty, upon compliance with the procedure and conditions, will be immune from all legal proceedings and actions, including payment of corresponding delinquency and all civil, criminal, and administrative cases and other penalties. On 22 May 2019, the government published a circular clarifying certain issues with respect to the tax amnesty scheme in the form of FAQs. The circular provides specific instances under which taxpayers may avail of the amnesty scheme. The circular also covers the procedures for availing of the tax amnesty, application of the amnesty in several specific cases, and other matters.

COVID-19 Emergency Measures

In response to the COVID-19 pandemic, the Philippines announced the following:

The deadline for availing the tax amnesty on delinquencies is extended until 30 June 2021 (extended from 31 December 2020); and
Introduction of the Voluntary Assessment and Payment Program (VAPP) under which qualified taxpayers can voluntarily pay additional taxes related to the tax year 2018 that would otherwise be collected through the audit and enforcement process. The VAPP applies to all taxes covering the taxable year ending 31 December 2018 and the fiscal year 2018 ending on the last day of the months of July 2018 to June 2019. Qualified taxpayers are issued a "certificate of availment" and will not be audited for 2018 for the tax types covered by VAPP. The program applies until 30 June 2021 (previously until 31 December 2020), unless extended. The VAPP covers all taxes, including taxes on one-time transactions (ONETT), related creditable withholding tax (CWT), and documentary stamp tax (DST). Taxpayers who have erroneously paid their tax liabilities or failed to file tax returns/pay taxes may avail of the VAPP benefits, except those falling under certain categories as specified in the VAPP regulations.

The amount of voluntary tax to be paid under the VAPP depends on the tax type. For Income Tax (IT), Value-Added Tax (VAT), Percentage Tax (PT), Excise Tax (ET), and DST other than DST on ONETT, voluntary tax to be paid is as follows depending on the increase/decrease of total taxes due from 2017 to 2018:

Net increase of not more than 10% - voluntary tax is the higher of:

3% of 2018 gross sales; or
7% of 2018 taxable net income

Net increase of more than 10% up to 30% - voluntary tax is the higher of:

2% of 2018 gross sales; or
6% of 2018 taxable net income

Net increase of more than 30% - voluntary tax is the higher of:

1% of 2018 gross sales; or
5% of 2018 taxable net income

Net decrease of not more than 10% - voluntary tax is the higher of:

4% of 2018 gross sales; or
8% of 2018 taxable net income

Net decrease of more than 10% - voluntary tax is the higher of:

5% of 2018 gross sales; or
9% of 2018 taxable net income

However, the voluntary tax to be paid may not be less than the following:

Corporations:

with a subscribed capital of more than PHP 50 million – minimum PHP 1,000,000;
with a subscribed capital of more than PHP 20 million up to PHP 50 million – minimum PHP 500,000;
with a subscribed capital of more than PHP 5 million up to PHP 20 million – minimum PHP 250,000; and
with a subscribed capital of PHP 5 million and less – minimum PHP 100,000.

Other juridical entities, including but not limited to cooperatives, foundations, general professional partnerships – minimum PHP 75,000.

For final withholding taxes (on compensation, fringe benefits, etc.) and CWT other than CWT on ONETT, the amount to be paid is 5% of the total basic withholding tax remittance for the taxable year 2018.

For taxes on ONETT, such as estate tax, donor’s tax, CGT, ONETT-related CWT/expanded withholding tax, and DST, the amount to be paid is the basic tax due of the unfiled tax return/unpaid tax due plus 5%.

Availability of E-Filing

Taxpayers can file returns and make payments via the Electronic Filing and Payment System (EFPS).

E-filing is mandatory for large taxpayers meeting one of the following conditions in the previous tax year:

VAT paid or payable for any quarter of at least PHP 100,000;
Excise tax paid or payable of at least PHP 1 million;
Income tax paid or payable of at least PHP 1 million; or
Withholding tax paid or payable of at least PHP 1 million.

Powerful Tax Solutions

Tax Rules Engine

Collaboration Tools

Latest Tax News