Tax Articles

Tax Filing Reminders

By: Atty. Mabel L. Buted

Happy New Year!

New years are exciting as they bring us hope and opportunity to plan, try, start and live new beginnings. For most of us, these are considered as the best times to improve on our ourselves and become better persons. We leave some pasts behind and embrace a new direction.

For taxpayers, the first few months of the new year give them the last chance to get things for the past year right, as they prepare and complete their remaining tax obligations in the coming periods.

Here are some few reminders that would help them comply with their tax obligations. Starting with the filings that are due in January, taxpayers are set to finalize and pay their withholding tax obligations on income payments made in the previous year. These include the income tax still payable on the compensation income of employees which are due to be remitted on January 15 (for non-eFPS registered taxpayers) and January 20 (for those registered with the eFPS). The income tax on compensation must be computed based on the total income earned for the year by the employee. Unless these are exempt from tax, all compensation income of the employees are subject to the withholding tax. These even include the accrued bonuses and other employee benefits recorded in the books in the past year, even if the payment will be done this year. Upon annualization of the total taxable compensation income and computing the total taxes due, the remaining withholding taxes due shall form part of the withholding tax obligation to be remitted by the employer to the tax authority in January.

The employer should furnish the employees their Certificate of Income Taxes Withheld on Compensation (BIR Form No. 2316) on or before January 31. This will provide the employee complete information on the total amount of income taxes withheld on his salaries and compensation. The BIR Form No. 2316 must also be submitted to the BIR on or before February 28.

The other types of withholding taxes - fringe benefits tax (“FBT”), expanded withholding tax (“EWT”) and final tax - must be paid to the BIR not later than January 31. Similar to the withholding tax on compensation, those that are subject to FBT, EWT and final tax include all expenses reported for the year (unless exempt), including the unpaid and accrued ones.

The taxpayer incurring these expenses may deduct from gross income only the expenses, including the accruals, that were subjected to withholding taxes. Particularly on the expenses accrued in the previous year, the taxpayer may not, in the subsequent year, subject these to withholding tax upon payment and deduct the same as expense (G.R. No. 167679, July 22, 2015, CTA Case No. 8372, March 31, 2016). A taxpayer may not choose what taxable period it may pay the withholding taxes and claim the related expenses.

In case of over-withholding of tax on compensation, the excess must be refunded to the employee not later than January 25. For the other types of withholding taxes, the taxpayer can claim for a refund with the BIR within two years from payment.

Taxpayers are also reminded to renew their business permits and pay their local business taxes based on preceding year’s gross receipts not later than January 20.

The filing of VAT return for the last taxable quarter must be made on or before January 25.

Next week, the filing of the Annual Income Return (“ITR”) will also begin with the taxpayers whose fiscal years ended on September 30, 2022. The deadline for the filing of Annual ITR is January 15, which is 105 days from the end of the taxable year. Most of the taxpayers, however, are using the calendar year. These taxpayers will need to file their ITR and pay their income taxes on or before April 15.

Other than the filing of returns and payment of taxes, taxpayers are obliged to comply with certain requirements. For example, those using loose-leaf books of accounts have also the obligation to submit bounded books of accounts annually to the BIR, within 15 days following the close of the taxable year-end. On the other hand, taxpayers using computerized books of accounts must submit to the BIR the books in optical media devices on or before January 30. For those establishments leasing or renting out spaces for commercial use, they need to submit on or before January 31 a list of their tenants as of December 31 of the previous year.

It is important for taxpayers to settle their remaining tax obligations for the previous year. The new year is after all the end of the previous year for complying with tax obligations.