May 15 is deadline for filing of BIR Form 1701Q, availment of 8% income tax rate option

The Bureau of Internal Revenue (BIR) reminds the taxpaying public that the filing of the Quarterly Income Tax Return for Individuals, Estates and Trusts (BIR Form No. 1701Q) is on or before May 15, 2023.

The deadline is also the last day for availment of the eight percent

(8%) Income Tax Rate option by self-employed individuals and professionals whose gross sales/receipts do not exceed P 3,000,000.00 this taxable year.

The said deadlines are specified in the Tax Reform for Acceleration and Inclusion (TRAIN) Law, which was implemented since 2018.

Income Tax Rate Option

Generally, the income of self-employed individuals, which include Single Proprietors, Professionals and Mixed Income Earners, is subject to the graduated Income Tax rates provided under the Tax Code.

After the enactment of the TRAIN Law, self-employed individuals/professionals were given the option to avail the Graduated Income Tax Rates or the 8% Income Tax Rates. To qualify for the availment of the 8% Income Tax Rate option, the following criteria should all be satisfied by the taxpayer:

  • Taxpayer is a self-employed individual and/or professional whose gross sales/receipts and other non-operating income did not exceed P3,000,000.00 during the taxable year;
  • Taxpayers earning both compensation income and income from business or practice of profession (mixed income earners) whose gross sales/receipts from business or practice of profession and other non-operating income do not exceed P3,000,000.00 during the taxable year; and
  • Taxpayer must have signified his/her intention to elect the 8% Income Tax rate thru any of the following:
  1. For New Business Registrant
    1. Upon registration using BIR Form 1901; or
    2. On the initial quarter return, i.e., BIR Form No. 2551Q and/or 1701Q of the taxable year after the commencement of a new business/practice of profession.
  1. For Existing Individual Business Taxpayers
    1. Filing of BIR Form No. 1905 at the beginning of the taxable year; or
    2. 1stQuarterly Percentage Tax Return; and/or
    3. 1stQuarterly Income Tax Return.

Once the Income Tax rate option is elected, it shall be irrevocable and no amendment of option is allowed to be made during the current taxable year.

Meanwhile, for Quarterly Income Tax Return, individual business taxpayers (Electronic Filing and Payment System (eFPS) and non-eFPS filers) are required to file their BIR Form No. 1701Q using the Offline eBIRForms Package Version 7.9.4 downloadable from the BIR website (www.bir.gov.ph) and pay the corresponding taxes due thereon in their respective Authorized Agent Banks (AABs) or the ePayment channels of these AABs.

As to the required attachments, any of the following or all of the documents shall be submitted via eSubmission or Electronic Audited Financial Statement (eAFS), whichever is applicable, i.e. Certificate of Tax Withheld at Source (BIR Form No. 2307); duly approved Tax Debit Memo; and/or Summary Alphalist of Withholding Agents of Income Payments Subjected to Withholding Tax at Source (SAWT).

Penalties, including surcharges and interests, shall be mandatorily imposed to taxpayers who will fail to file the required returns and pay the corresponding taxes due thereon within the prescribed deadline.

For further clarifications and inquiries, taxpayers may call the BIR hotline number 8538-3200 or send an email to contact_us@bir.gov.ph.

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