How to File Income Tax Return in the Philippines?

There are two certain things in the world, they say. Death and taxes. If you’re transitioning into adulthood and have started working, you might come across the term ‘income tax return’. And will probably wonder what that means.

Don’t worry, this article will help you understand income tax return better. So let’s get straight to it!

What is income tax?

According to the Bureau of Internal Revenue (BIR), Income Tax “is a tax on a person’s income, emoluments, profits arising from property, practice of profession, conduct of trade or business or on the pertinent items of gross income specified in the Tax Code of 1997 (Tax Code)”

This means that both individuals and businesses must pay a portion of their earnings to the government, whether from employment, business operations, professional services, or passive income such as rent or dividends.

These earnings are reported through an Income Tax Return (ITR), which outlines your total income, allowable deductions, and the corresponding tax due for a specific period.

What is an income tax return?

An Income Tax Return (ITR) is a formal document filed with the Bureau of Internal Revenue (BIR) that reports all income earned within a specific tax year. Its main purpose is to declare total income and calculate the corresponding tax liability.

The annual ITR provides a summary of all income-related transactions over the calendar year, helping determine how much tax is owed—or if a refund is due.

What incomes are taxable?

These income items include interest, dividends, rents, royalties, and payments for technical services, as well as salaries, wages, premiums, annuities, emoluments, and other fixed or periodic gains, profits, income, and capital gains. All of these are considered taxable if received within the taxable year from sources within the Philippines.

Let’s say you’re working as an employee or running your own business. The salary you earn or the profit your business generates is considered taxable income. At the end of the year, you’re required to report this income in your Income Tax Return (ITR) so the government can determine how much tax you need to pay or if you’re eligible for a refund.

How to file income tax return in the Philippines online?

If you’re asking, “Can I file my income tax return online?”, the answer is yes. BIR has an Online eBIRForms System.

The Online eBIRForms System is a digital platform that allows taxpayers to submit their tax returns online. It also automatically calculates penalties for returns filed past the deadline.

The system provides secure accounts for taxpayers, Accredited Tax Agents (ATAs), and Tax Software Providers (TSPs). It enables ATAs to file tax returns on behalf of their clients and allows TSPs to test and certify data generated by their tax software (certification is done by form). The system also accepts returns submitted using certified TSP-prepared software.

To eFILE your tax return, simply use the eBIRForms package: fill out the required form, validate the entries, and click the “FINAL COPY” button to complete your submission.

Who is required to file an income tax return in the Philippines?

Individuals

Resident citizens earning income from sources within or outside the Philippines

Employees receiving purely compensation income from two or more employers, whether concurrently or successively at any time during the taxable year

Employees earning purely compensation income—regardless of the amount or number of employers—whose income tax has not been correctly withheld (i.e., the tax due does not match the tax withheld), resulting in a collectible or refundable return

Self-employed individuals earning income from the conduct of trade or business and/or practice of profession

Individuals earning mixed income (i.e., compensation income and income from business or professional practice)

Individuals receiving other non-business, non-professional income in addition to compensation income that is not subject to final tax

Employees receiving purely compensation income from a single employer, where tax has been correctly withheld, but whose spouse is not qualified for substituted filing

Non-resident citizens earning income from sources within the Philippines

Aliens, whether resident or non-resident, earning income from sources within the Philippines

Non-Individuals

Corporations, including partnerships, regardless of how they are created or organized

Domestic corporations earning income from sources within and outside the Philippines

Foreign corporations earning income from sources within the Philippines

Estates and trusts engaged in trade or business

Who is not required to file income tax return in the Philippines?

An individual earning purely compensation income whose annual taxable income does not exceed ₱250,000.00

An individual whose income tax has been correctly withheld by a single employer during the entire taxable year

An individual whose sole income is subject to final withholding tax or is exempt from income tax under the Tax Code or other special laws

An individual who qualifies as a minimum wage earner

Those who are qualified under “substituted filing”. However, substituted filing applies only if all of the following requirements are present:

the employee received purely compensation income (regardless of amount) during the taxable year;

the employee received the income from only one employer in the Philippines during the taxable year;

the amount of tax due from the employee at the end of the year equals the amount of tax withheld by the employer;

the employee’s spouse also complies with all 3 conditions stated above;

the employer files the annual information return (BIR Form No. 1604-CF); and

the employer issues BIR Form No. 2316 to each employee.

Individual Income Tax Rates

Less than P250,000	0%
P250,000 – P400,000	15% on the excess over PHP 250,000
P400,001 – P800,000	PHP 22,500 + 20% of the excess over PHP 400,000
P800,001 – P2,000,000	PHP 102,500 + 25% of the excess over PHP 800,000
P2,000,000 – P8,000,000	PHP 402,500 + 30% of the excess over PHP 2,000,000
Income over P8,000,000	PHP 2,202,500 + 35% of the excess

In Summary

Filing an income tax return may seem intimidating at first, especially if you’re new to earning or handling your own finances. But understanding the basics like what income tax is, who needs to file, and how to file online can make the process much simpler and less overwhelming.

Regardless if you’re an employee, a business owner, or a professional, staying compliant with BIR requirements helps ensure you avoid penalties and keep your financial records in good standing.

Remember, taxes are a part of adulting—but with the right information, they don’t have to be a burden.

Need Help Filing Your Income Tax Return? Let Babylon2K Handle It for You.

Tax filing doesn’t have to be a hassle. At Babylon2k, we specialize in making income tax return preparation simple and stress-free. For a salaried employee, a freelancer, or a business owner, our team of experts is here to ensure your taxes are filed accurately and on time.

DISCLAIMER:This article is developed by subject matter experts at Babylon2k. This is for general information only and does not constitute expert advice. It is based on current regulations and may not account for all related topics. Any tax or compliance guidance provided cannot be used to avoid penalties or promote specific actions. Laws and interpretations may change over time, which could affect the accuracy of this report. We are not obligated to update this advisory if new regulations arise.