How Tax Filing Works
Businesses of all sizes submit their tax returns at the end of each fiscal year. It is mandated by law to track any sizable income. If your business exceeds a certain threshold, you must submit the tax returns. In the Philippines, tax filing is a yearly habit. They do this to ensure that funds will be available for government projects to improve quality of life.
Being new to tax filing can be confusing at first. You must ensure you have the required documents and correct information to submit. In addition, being late to the yearly tax returns results in penalties until you submit them. Therefore, you should be a responsible citizen to file your due taxes.
Here is how tax filing works in the Philippines.
What Is An Income Tax Return?
An income tax return is a tax on a person’s income. It includes emoluments, profits from the property, professional compensation, or items of gross income. However, a tax return is the excess taxes paid during a given fiscal period. All income tax returns are required to be filed annually, either by the company or the individual.
Who Is Responsible For Filing An ITR?
All Philippine citizens are required to file an income tax return. It applies to anyone receiving income from within or outside the Philippines. Most of the time, the company you work for will file for you. However, if you are a business owner or freelancer, you should file them yourself. Fortunately, you can get BIR filing and accounting services so that you can get help from professionals.
How Do You File Your Income Tax Return?
There are multiple methods to file your income tax return. With the availability of technology, it becomes easier for individuals or companies to file their yearly returns.
- Manual Filing – From the name itself, you file the forms to BIR offices. The good thing is that you can download the forms online and print them. Once you have the papers, you can file the income tax returns before the deadline. If you are an employee purely earning income, you use BIR Form 1701 and Form 2316. If you are self-employed or deriving mixed-income, use BIR Form 1701, Form 2316, and Form 2304.
- Electronic Filing and Payment System (eFPS) – The eFPS is the electronic filing of income tax returns. If you are a taxpayer, you should enroll through the BIR e-Lounge or BIR website and maintain a bank account for filing.
- Electronic BIR Forms – The eBIRForms provide non-taxpayers and accredited tax agents a way to file taxes. It is a tax-preparation software that lets taxpayers fill out their forms. However, it does not compute the exact amount of taxes.
- Electronic Tax Service Providers – These are tax software providers accredited by the BIR. It bridges the gap between taxpayers who want to file their taxes electronically without the extra hassle.
Tax filing is the process of filing your tax returns. Every citizen in the Philippines is required to file their tax returns to avoid penalties. If this is your first time filing, you can let the company do the filing. On the other hand, you can file them yourself or have tax service providers do the work for you. Ultimately, filing your taxes on time ensures that you are responsible for the income you receive.
Angelo Castelda works as a contributor for a news magazine in Asia. He loves to learn and understand diverse cultures and aims to share through his writing his experiences around the world.