New Income Tax Forms

September 5, 2011 REVENUE MEMORANDUM CIRCULAR NO. 040-11 SUBJECT : New Income Tax Forms TO : All Internal Revenue Officials, Employees and Others Concerned Notice is hereby given to all concerned that for income tax filing covering and starting with calendar year 2011, which are due for filing on or before April 15, 2012, the following revised forms are to be used: ACcEHI 1. BIR Form 1700 version June 2011 (Annual Income Tax Return for Individuals Earning Purely Compensation Income) 2. BIR Form 1701 version June 2011 (Annual Income Tax Return for Self-Employed Individuals, Estates and Trusts) 3. BIR Form 1702 version June 2011 (Annual Income Tax Return for Corporation, Partnership and Other Non-Individual Taxpayer) All juridical entities following fiscal year of reporting are likewise required to use the new BIR Form 1702 starting with those covered by fiscal year ending January 31, 2012. All Revenue Officials are hereby enjoined to give this Circular as wide a publicity as possible. HTCESI (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue ATTACHMENT BIR FORM NO. 1700 BIR FORM NO. 1700 - INFORMATION RETURN/ANNUAL INCOME TAX RETURN For Individuals Earning Purely Compensation Income (Including Non-Business/Non-Profession Income) BIR Form No. 1700 - page 4 GUIDELINES AND INSTRUCTIONS Who Shall File Income Tax Return (ITR)/Supplemental Information This return shall be filed by every resident citizen deriving compensation income from all sources, or resident alien and non-resident citizen with respect to compensation income from within the Philippines, except the following: 1. An individual whose gross taxable compensation income does not exceed his total personal and additional exemptions; 2. An individual receiving purely compensation income, and whose annual taxable income does not exceed Five Hundred Thousand Pesos (P500,000) from only one employer in the Philippines for the calendar year and the income tax of which has been correctly withheld by the said employer (tax due equals tax withheld); 3. An individual whose income has been subjected to final withholding tax (alien employee as well as Filipino employee occupying the same position as that of the alien employee of regional or area headquarters and regional operating headquarters of multinational companies, petroleum service contractors and sub-contractors, and offshore banking units; non-resident alien not engaged in trade or business) not exceeding One Hundred Twenty Five Thousand Pesos (P125,000.00); and 4. An individual who is exempt from income tax. However, individual with respect to pure compensation income, as defined in Section 32 (A) (1) , derived from sources within the Philippines, the income tax on which has been correctly withheld under the provisions of Section 79 of the Tax Code, as amended, whose annual taxable income exceeds Five Hundred Thousand Pesos (P500,000); Provided, That an individual deriving compensation concurrently from two or more employers at any time during the taxable year shall file an income tax return and also accomplish the supplemental information. Provided further, the following individuals shall file their return by accomplishing Part I and Part IV of this return: 1. Individuals whose sole income has been subjected to final withholding tax under Section 57 (A) of the Tax Code, as amended, with aggregate final tax withheld exceeding One Hundred Twenty Five Thousand Pesos (P125,000.00) annually, whether or not remitted to the BIR; and aEHADT 2. Individuals whose sole income is exempt from income tax and whose total annual income (exempt) exceeds Five Hundred Thousand Pesos (P500,000.00). In case of married individuals who are still required to file returns or in those instances not covered by the substituted filing of returns, only one return for the taxable year shall be filed by either spouse to cover the income of the spouses, which return shall be signed by the husband and wife, unless it is physically impossible to do so, in which case signature of one of the spouses would suffice. "Fair market value" as determined in accordance with Section 6 (E) of the Tax Code, as amended, shall be used in reporting the non-cash income and receipts in the Supplemental Information. The term "individual" whose compensation income has been subjected to "final withholding tax" shall include aliens or Filipino citizens occupying the same positions as the alien employees, as the case may be, who are employed by regional operating headquarters, regional or area headquarters, offshore banking units, petroleum service contractors and sub-contractors, pursuant to pertinent provisions of Sections 25 (C) , (D) , E) and 57 (A), including those subject to Fringe Benefit Tax (FBT) under Section 33 of the Tax Code, as amended, Republic Act No. 8756 , Presidential Decree No. 1354 , and other pertinent laws. The "Registered Address" refers to the preferred address ( i.e., residence or employer's business address) provided by the taxpayer upon registration with the BIR using BIR Form No. 1902 (Application for Registration-For Individuals Earning Purely Compensation Income and Non-Resident Citizens/Resident Alien Employee). When and Where to File and Pay 1) For Electronic Filing and Payment System (eFPS) Taxpayer The return shall be e-filed and the tax shall be e-paid on or before the 15th day of April of each year covering income for the preceding taxable year using the eFPS facilities thru the BIR website http://www.bir.gov.ph. 2) For Non-Electronic Filing and Payment System (Non-eFPS) Taxpayer The return shall be filed and the tax shall be paid on or before the 15th day of April of each year covering income for the preceding taxable year with any Authorized Agent Bank (AAB) located within the territorial jurisdiction of the Revenue District Office (RDO) where the taxpayer is registered. In places where there are no AABs, the return shall be filed and the tax shall be paid with the concerned Revenue Collection Officer (RCO) under the jurisdiction of the RDO. In case of "NO PAYMENT RETURNS", the same shall be filed with the RDO where the taxpayer is registered or with the concerned RCO assigned under the same RDO. 3) For Installment Payment When the tax due exceeds P2,000, the taxpayer may elect to pay in two equal installments, the first installment to be paid at the time the return is filed and the second, on or before July 15 of the same year. 4) For Non-Resident Taxpayer In case taxpayer has no legal residence or place of business in the Philippines, the return shall be filed with the Office of the Commissioner thru Revenue District Office No. 39, South Quezon City. Gross Taxable Compensation Income The gross taxable compensation income of the taxpayer does not include SSS, GSIS, Medicare and Pag-IBIG Contributions, and union dues. The non-business/non-profession related income reported under "other taxable income" should reflect only the net taxable amount. IATHaS Premium Payment on Health and/or Hospitalization Insurance The amount of premiums not to exceed Two Thousand Four Hundred Pesos (P2,400) per family or Two Hundred Pesos (P200) a month paid during the taxable year for health and/or hospitalization insurance taken by the taxpayer for himself, including his family, shall be allowed as a deduction from his gross income: Provided, That said family has a gross income of not more than Two Hundred Fifty Thousand Pesos (P250,000) for the taxable year: Provided, finally, That in the case of married taxpayers, only the spouse claiming the additional exemption for dependents shall be entitled to this deduction. Personal and Additional Exemptions Individual taxpayer, whether single or married, shall be allowed a basic personal exemption of Fifty Thousand Pesos (P50,000). In the case of married individuals where only one of the spouses is deriving gross income, only such spouse shall be allowed the personal exemption. An individual, whether single or married, shall be allowed an additional exemption of P25,000 for each qualified dependent child, not exceeding four (4). The additional exemption for dependents shall be claimed by the husband, who is deemed the proper claimant unless he explicitly waives his right in favor of his wife. "Dependent Child" means a legitimate, illegitimate or legally adopted child chiefly dependent upon and living with the taxpayer if such dependent is not more than twenty-one (21) years of age, unmarried and not gainfully employed or if such dependent, regardless of age, is incapable of self-support because of mental or physical defect. In the case of legally separated spouses, additional exemptions may be claimed only by the spouse who has custody of the child or children: Provided, That the total amount of additional exemptions that may be claimed by both shall not exceed the maximum additional exemptions allowed by the Tax Code. Change of Status If the taxpayer marries or should have additional dependent(s) during the taxable year, the taxpayer may claim the corresponding personal or additional exemption, as the case may be, in full for such year. If the taxpayer dies during the taxable year, his estate may still claim the personal and additional exemptions for himself and his dependent(s) as if he died at the Close of such year. If the spouse or any of the dependents dies or if any of such dependents marries, becomes twenty-one (21) years old or becomes gainfully employed during the taxable year, the taxpayer may still claim the same exemptions as if the spouse or any of the dependents died, or as if such dependents married, became twenty-one (21) years old or became employed at the close of such year. Penalties There shall be imposed and collected as part of the tax: 1. A surcharge of twenty five percent (25%) for each of the following violations: a) Failure to file any return and pay the amount of tax or installment due on or before the due date; b) Unless otherwise authorized by the Commissioner, filing a return with a person or office other than those with whom it is required to be filed; c) Failure to pay the full or part of the amount of tax shown on the return, or the full amount of tax due for which no return is required to be filed on or before the due date; d) Failure to pay the deficiency tax within the time prescribed for its payment in the notice of assessment. ADEacC 2. A surcharge of fifty percent (50%) of the tax or of the deficiency tax shall be imposed in case of willful neglect to file the return within the period prescribed by the Tax Code and/or by rules and regulations or in case a false or fraudulent return is filed. 3. Interest at the rate of twenty percent (20%) per annum, or such higher rate as may be prescribed by rules and regulations, on any unpaid amount of tax, from the date prescribed for the payment until it is fully paid. 4. Compromise penalty, pursuant to existing/applicable revenue issuances. Excess Withholding Tax Over withholding of income tax on compensation shall be refunded by the employer, except if the over withholding is due to the employee's failure or refusal to file the withholding exemption certificate, or supplies false or inaccurate information, the excess shall not be refunded but shall be forfeited in favor of the government. Attachments Required 1. Certificate of Income Tax Withheld on Compensation (BIR Form No. 2316). 2. Sworn Declaration and Waiver of Right to Claim Exemptions of Qualified Dependent Children, if applicable. 3. Duly approved Tax Debit Memo, if applicable. 4. Proof of Foreign Tax Credits, if applicable. 5. For amended return, proof of tax payment and the return previously filed. 6. Proof of other tax payment/credit, if applicable. 7. Authorization letter, if filed by authorized representative. Note: All Background Information must be properly filled up. All returns filed by an accredited tax agent on behalf of a taxpayer shall bear the following information: A. For CPAs and others (individual practitioners and members of GPPs); a.1 Taxpayer Identification Number (TIN); and a.2 Certificate of Accreditation Number, Date of Issuance, and Date of Expiry. B. For members of the Philippine Bar (individual practitioners, members of GPPs); b.1 Taxpayer Identification Number (TIN); and b.2 Attorney's Roll number or Accreditation Number, if any. BIR FORM NO. 1701 BIR FORM NO. 1701 - INFORMATION RETURN/ANNUAL INCOME TAX RETURN [For Self-Employed Individuals, Estates and Trusts (Including those with both Business and Compensation Income)] BIR Form No. 1701 - page 6 GUIDELINES AND INSTRUCTIONS Shall File this Form This return shall be filed by the following individuals regardless of amount of gross income: 1.) A resident citizen engaged in trade, business, or practice of profession within and without the Philippines. 2.) A resident alien, non-resident citizen or non-resident alien individual engaged in trade, business or practice of profession within the Philippines. DSIaAE 3.) A trustee of a trust, guardian of a minor, executor/administrator of an estate, or any person acting in any fiduciary capacity for any person, where such trust, estate, minor, or person is engaged in trade or business. 4.) An individual engaged in trade or business or in the exercise of their profession and receiving compensation income as well. All individuals, estates and trusts above required under the law and existing issuances to file this return should also fill up Part VIII hereof. Said individuals, estates and trusts shall declare such income subject to final tax and those exclusions from gross income under Section 32 (B) of the Tax Code, as amended. Married individuals shall file a return for the taxable year to include the income of both spouses, computing separately their individual income tax based on their respective total taxable income. Where it is impracticable for the spouses to file one return, each spouse may file a separate return of income. If any income cannot be definitely attributed to or identified as income exclusively earned or realized by either of the spouses, the same shall be divided equally between the spouses for the purpose of determining their respective taxable income. The income of unmarried minors derived from property received from a living parent shall be included in the return of the parent except (1) when the donor's tax has been paid on such property, or (2) when the transfer of such property is exempt from donor's tax. If the taxpayer is unable to make his own return, the return may be made by his duly authorized agent or representative or by the guardian or other person charged with the care of his person or property, the principal and his representative or guardian assuming the responsibility of making the return and incurring penalties provided for erroneous, false or fraudulent returns. When and Where to File and Pay 1. For Electronic Filing and Payment System (eFPS) Taxpayer The return shall be e-filed and the tax shall be e-paid on or before the 15th day of April of each year covering income for the preceding taxable year using the eFPS facilities thru the BIR website http://www.bir.gov.ph. 2. For Non-Electronic Filing and Payment System (non-eFPS) Taxpayer The return shall be filed and the tax shall be paid on or before the 15th day of April of each year covering income for the preceding taxable year with any Authorized Agent Bank (AAB) located within the territorial jurisdiction of the Revenue District Office (RDO) where the taxpayer is registered. In places where there are no AABs, the return shall be filed and the tax shall be paid with the concerned Revenue Collection Officer (RCO) under the jurisdiction of the RDO where the taxpayer is registered. In case of "NO PAYMENT RETURNS", the same shall be filed with the RDO where the taxpayer is registered/has his legal residence or place of business in the Philippines or with the concerned RCO under the same RDO. 3. For Installment Payment When the tax due exceeds Two Thousand Pesos (P2,000), the taxpayer may elect to pay in two equal installments, the first installment to be paid at the time the return is filed and the second, on or before July 15 of the same year. 4. For Non-Resident Taxpayer In case taxpayer has no legal residence or place of business in the Philippines, the return shall be filed with the Office of the Commissioner or Revenue District Office No. 39, South Quezon City. Gross Taxable Compensation Income The gross taxable compensation income of the taxpayer does not include SSS, GSIS, Medicare and Pag-IBIG Contributions, and Union Dues. Taxable Income Taxable income means the pertinent items of gross compensation and/or business income specified in the Tax Code of 1997, as amended, less the deductions and/or additional exemptions, if any, authorized for such types of income by the Code or other special laws. ACTISD Premiums on Health and/or Hospitalization Insurance The amount of premiums not to exceed Two Thousand Four Hundred Pesos (P2,400) per family or Two Hundred Pesos (P200) a month paid during the taxable year for health and/or hospitalization insurance taken by the taxpayer for himself, including his family, shall be allowed as a deduction from his gross income: Provided, That said family has a gross income of not more than Two Hundred Fifty Thousand Pesos (P250,000) for the taxable year: Provided, finally, That in the case of married taxpayers, only the spouse claiming the additional exemption for dependants shall be entitled to this deduction. Personal and Additional Exemptions Individual taxpayer, whether single or married, shall be allowed a basic personal exemption amounting to Fifty Thousand Pesos (P50,000). In the case of married individuals where only one of the spouses is deriving gross income, only such spouse shall be allowed the personal exemption. An individual, whether single or married, shall be allowed an additional exemption of Twenty Five Thousand Pesos (P25,000) for each qualified dependent child, not exceeding four (4). The additional exemption for dependents shall be claimed by the husband, who is deemed the proper claimant unless he explicitly waives his right in favor of his wife. "Dependent Child" means a legitimate, illegitimate or legally adopted child chiefly dependent upon and living with the taxpayer if such dependent is not more than twenty-one (21) years of age, unmarried and not gainfully employed or if such dependent, regardless of age, is incapable of self-support because of mental or physical defect. In the case of legally separated spouses, additional exemptions may be claimed only by the spouse who has custody of the child or children: Provided, That the total amount of additional exemptions that may be claimed by both shall not exceed the maximum additional exemptions allowed by the Tax Code. Exemption Allowed to Estates and Trusts There shall be allowed an exemption of Twenty thousand pesos (P20,000) from the income of the estate and trust. Change of Status If the taxpayer marries or should have additional dependent(s) as defined above during the taxable year, the taxpayer may claim the corresponding personal or additional exemption, as the case may be, in full for such year. If the taxpayer dies during the taxable year, his estate may still claim the personal and additional exemptions for himself and his dependent(s) as if he died at the close of such year. If the spouse or any of the dependents dies or if any of such dependents marries, becomes twenty-one (21) years old or becomes gainfully employed during the taxable year, the taxpayer may still claim the same exemptions as if the spouse or any of the dependents died, or as if such dependents married, became twenty-one (21) years old or became employed at the close of such year. Allowable Deductions A taxpayer engaged in business or in the practice of profession shall choose either the optional or itemized deduction (described below). He shall indicate his choice by marking with "X" the appropriate box, otherwise, he shall be deemed to have chosen itemized deduction. The choice made in the return is irrevocable for the taxable year covered. Optional Standard Deduction (OSD) A maximum of 40% of their gross sales or gross receipts shall be allowed as deduction in lieu of the itemized deduction. This type of deduction shall not be allowed for non-resident aliens engaged in trade or business. An individual who opts to avail of this deduction need not submit the Account Information Form (AIF)/Financial Statements. Regular Allowable Itemized Deductions There shall be allowed as deduction from gross income all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on or which are directly attributable to, the development, management, operation and/or conduct of the trade, business or exercise of a profession including a reasonable allowance for salaries, travel, rental and entertainment expenses. aAHSEC Itemized deductions include also interest, taxes, losses, bad debts, depreciation, depletion, charitable and other contributions, research and development, pension trust, premium payments on health and/or hospitalization insurance. Special Allowable Itemized Deductions There shall be allowable deduction from gross income in computing taxable income, in addition to the regular allowable itemized deduction, as provided under existing regular and special laws, rules and issuances such as, but not limited to 'Rooming-in and Breast-feeding Practices under RA 7600, Adopt-a-School Program under RA 8525, Senior Citizen Discount under RA 9257, Free Legal Assistance under RA 9999. Tax Relief Availment Taxpayer availing of any tax relief under the Tax Code and/or any prevailing special laws [ e.g. , Income Tax Holiday (ITH), preferential income tax rate, income tax exemption, additional special deductions, etc.] must completely fill up Part VII hereof. Fair market value "Fair market value" as determined in accordance with Section 6 (E) of the Tax Code, as amended, shall be used in reporting the non-cash income and receipts in Part VIII. Individual whose compensation income has been subjected to final withholding tax The term "individual whose compensation income has been subjected to final withholding tax" shall include aliens or Filipino citizens occupying the same positions as the alien employees, as the case may be, who are employed by regional operating headquarters, regional or area headquarters, offshore banking units, petroleum service contractors and sub-contractors, pursuant to pertinent provisions of Sections 25 (C), (D), (E) and 57 (A), including those subject to Fringe Benefit Tax (FBT) under Section 33 of the Tax Code, as amended, Republic Act No. 8756, Presidential Decree No. 1354, and other pertinent laws. Penalties There shall be imposed and collected as part of the tax: 1. A surcharge of twenty five percent (25%) for each of the following violations: a) Failure to file any return and pay the amount of tax or installment due on or before the due dates; b) Filing a return with a person or office other than those with whom it is required to be filed; c) Failure to pay the full or part of the amount of tax shown on the return, or the full amount of tax due for which no return is required to be filed, on or before the due date; d) Failure to pay the deficiency tax within the time prescribed for its payment in the notice of Assessment (Delinquency Surcharge). 2. A surcharge of fifty percent (50%) of the tax or of the deficiency tax shall be imposed in case of willful neglect to file the return within the period prescribed by the Tax Code and/or by rules and regulations or in case a false or fraudulent return is filed. 3. Interest at the rate of twenty percent (20%) per annum, or such higher rate as may be prescribed by rules and regulations, on any unpaid amount of tax, from the date prescribed for the payment until it is fully paid. 4. Compromise penalty, pursuant to existing/applicable revenue issuances. HcTDSA Excess Withholding Tax Over withholding of income tax on compensation shall be refunded by the employer, except if the over withholding is due to the employee's failure or refusal to file the withholding exemption certificate, or supplies false or inaccurate information, the excess shall not be refunded but shall be forfeited in favor of the government. Attachments Required 1. Account Information Form and the Certificate of the independent CPA duly accredited by the BIR except for taxpayers who opted for the Optional Standard Deduction. (The CPA Certificate is required if the gross quarterly sales, earnings, receipts or output exceed P150,000). 2. Certificate of Income Tax Withheld on Compensation (BIR Form No. 2316). 3. Certificate of Income Payments Not Subjected to Withholding Tax (BIR Form No. 2304). 4. Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307). 5. Duly Approved Tax Debit Memo, if applicable. 6. Waiver of husband's right to claim additional exemption, if applicable. 7. Proof of prior years' excess credits, if applicable. 8. Proof of Foreign Tax Credits, if applicable. 9. For amended return, proof of tax payment and the return previously filed. 10. Authorization letter, if filed by authorized representative. 11. Proof of other tax payments/credit, if applicable. 12. Proof of Tax Payments for the First Three Quarters. 13. Summary Alphalist of Withholding Agents of Income Payments Subjected to Withholding Tax at Source (SAWT), if applicable. 14. Statement of Management's Responsibility (SMR) for Annual Income Tax Return. 15. Schedules of the following which must be part of the Notes to the audited Financial Statements: a. Sales/Receipts/Fees b. Other Taxable Income c. Cost of Sales/Services d. Taxes and Licenses e. Itemized Deductions (if taxpayer did not avail of OSD) f. Other information prescribed to be disclosed in the Notes to Financial Statements Note: All Background information must be properly filled up. All returns filed by an accredited tax agent on behalf of a taxpayer shall bear the following information: A. For CPAs and others (individual practitioners and members of GPPs); a.1 Taxpayer Identification Number (TIN); and a.2 Certificate of Accreditation Number, Date of Issuance, and Date of Expiry. SHEIDC B. For members of the Philippine Bar (individual practitioners, members of GPPs); b.1 Taxpayer Identification Number (TIN); and b.2 Attorney's Roll number or Accreditation Number, if any. BIR FORM NO. 1702 BIR FORM NO. 1702 - ANNUAL INCOME TAX RETURN For Corporation, Partnership and Other Non-Individual Taxpayer BIR Form No. 1702 - page 4 GUIDELINES AND INSTRUCTIONS Who Shall File Every corporation, partnership no matter how created or organized, joint stock companies, joint accounts, associations (except foreign corporation not engaged in trade or business in the Philippines and joint venture or consortium formed for the purpose of undertaking construction projects or engaging in petroleum, coal, geothermal and other energy operations), government-owned or controlled corporations, agencies and instrumentalities shall render a true and accurate income tax return in accordance with the provisions of the Tax Code. The return shall be filed by the president, vice-president or other principal officer, and shall be sworn to by such officer and by the treasurer or assistant treasurer. Every general professional partnership (GPP) shall file this return setting forth the items of gross income and of deductions and the names, TINs, addresses and shares of each of the partners. When and Where to File and Pay A. For Electronic Filing and Payment System (eFPS) Taxpayer The return shall be e-filed and the tax shall be e-paid on or before the 15th day of the fourth month following the close of the taxpayer's taxable year using the eFPS facilities thru the BIR website http//www.bir.gov.ph. B. For Non-Electronic Filing and Payment System (Non-eFPS) Taxpayer The return shall be filed and the tax shall be paid on or before the 15th day of the fourth month following the close of the taxpayer's taxable year with any Authorized Agent Bank (AAB) located within the territorial jurisdiction of the Revenue District Office (RDO) where the taxpayer's principal office is registered. In places where there are no AABs, the return shall be filed and the tax shall be paid with the concerned Revenue Collection Officer (RCO) under the jurisdiction of the RDO. In case of "NO PAYMENT RETURNS" the same shall be filed with the RDO where the taxpayer's principal office is registered or with the concerned RCO under the same RDO. Rate of Income Tax The regular/normal rate of income tax is 30% of net taxable income. However, preferential/special rate is accorded to a taxpayer pursuant to the provisions of the Tax Code and/or any prevailing special laws. Minimum Corporate Income Tax (MCIT) A minimum corporate income tax (MCIT) of two percent (2%) of the gross income is imposed upon any domestic corporation and resident foreign corporation beginning on the fourth (4th) taxable year (whether calendar or fiscal year, depending on the accounting period employed) immediately following the taxable year in which such corporation commenced its business operation. The MCIT shall be imposed whenever the corporation has zero or negative taxable income or whenever the amount of minimum corporate income tax is greater than the normal income tax due from such corporation. Any excess of the MCIT over the normal income tax shall be carried forward and credited against the normal income tax for the three (3) immediate succeeding taxable years. The computation and the payment of MCIT shall apply each time a corporate income tax return is filed, whether quarterly or annual basis. TCIHSa Deductions A corporation shall choose either the itemized or optional standard deduction. It shall indicate the choice by marking with "X" the appropriate box, otherwise, the corporation shall be considered as having availed of the itemized deduction. Such choice made in the initial quarterly return during the taxable year is irrevocable for the said year for which the return is made. Optional Standard Deduction (OSD) A maximum of 40% of the gross income shall be allowed as deduction in lieu of the itemized deduction. However, a corporation who availed and claimed this deduction is still required to submit its financial statements when it files its annual tax return and to keep such records pertaining to its gross income. Regular Allowable Itemized Deduction There shall be allowed as deduction from gross income all the ordinary and necessary trade and business expenses paid or incurred during the taxable year in carrying on or which are directly attributable to the development, management, operation and/or conduct of the trade and business. Itemized deduction includes also interest, taxes, losses, bad debts, depreciation, depletion, charitable and other contributions, research and development and pension trust. Special Allowable Itemized Deduction There shall be allowable deduction from gross income in computing taxable income, in addition to the regular allowable itemized deduction, as provided under the existing regular and special laws, rules and issuances such as, but not limited to, Rooming-in and Breast-feeding Practices under R.A. 7600, Adopt-a-School Program under R.A. 8525, Senior Citizen Discount under R.A. 9257, Free Legal Assistance under R.A. 9999. Tax Relief Availment Taxpayer availing of any tax relief under the Tax Code and/or any prevailing special laws [ e.g. , Income Tax Holiday (ITH), preferential income tax rate, income tax exemption, additional special deductions, etc.] must completely fill-up Schedule 1 showing the details for each and every registered activity and/or program. In case the columns provided in Schedule 1 in the tax form proper are not adequate to cover all the registered activities, additional sheets of Schedule 1 must be accomplished, clearly indicating therein the number of sheets used in the said schedules, and the same must be filed together with the tax form proper. Other Special Tax Credit refers to tax credit allowed under special laws, rules and issuances such as, but not limited to, 50% of training expenses under R.A. 7916. Tax Refund/Credit An excess of the total tax credits/payments over the actual income tax due computed in the final adjusted return may be refunded or issued with the Tax Credit Certificate to the taxpayer or credited against its estimated income tax liabilities for the quarters of the succeeding taxable years. The taxpayer shall exercise its option by marking with an "x" the appropriate box, which option shall be considered irrevocable for that taxable period. Thus, once the taxpayer opted to carry-over and apply the excess income tax against income tax due for the succeeding taxable year, no application for cash refund or issuance of a tax credit certificate shall be allowed. In case the taxpayer fails to signify its choice, the excess payment shall be automatically carried-over to the next taxable period. Penalties There shall be imposed and collected as part of the tax: 1. A surcharge of twenty five percent (25%) for each of the following violations: a) Failure to file any return and pay the amount of tax or installment due on or before the due dates; b) Unless otherwise authorized by the Commissioner, filing a return with a person or office other than those with whom it is required to be filed; c) Failure to pay the full or part of the amount of tax shown on the return, or the full amount of tax due for which no return is required to be filed, on or before the due date; d) Failure to pay the deficiency tax within the time prescribed for its payment in the notice of assessment. DcICEa 2. A surcharge of fifty percent (50%) of the basic tax or of the deficiency tax shall be imposed in case of willful neglect to file the return within the period prescribed by the Tax Code and/or by rules and regulations or in case a false or fraudulent return is filed. 3. Interest at the rate of twenty percent (20%) per annum on any unpaid amount of tax, from the date prescribed for the payment until it is fully paid. 4. Compromise penalty, pursuant to existing/applicable revenue issuances. Attachments Required 1. Certificate of independent CPA duly accredited by the BIR (The CPA Certificate is required if the gross quarterly sales, earnings, receipts or output exceed P150,000). 2. Account Information Form (AIF) and/or Financial Statements (FS), including the following schedules prescribed under existing revenue issuances which must form part of the Notes to the audited FS: a. Sales/Receipts/Fees b. Cost of Sales/Services c. Non-Operating and Taxable Other Income d. Itemized Deductions (if taxpayer did not avail of OSD) e. Taxes and Licenses f. Other information prescribed to be disclosed in the notes to FS 3. Statement of Management's Responsibility (SMR) for Annual Income Tax Return. 4. Certificate of Income Payments not subjected to Withholding Tax (BIR Form No. 2304). 5. Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307). 6. Duly approved Tax Debit Memo, if applicable. 7. Proof of prior years' excess credits, if applicable. 8. Proof of Foreign Tax Credits, if applicable. 9. For amended return, proof of tax payment and the return previously filed. 10. Certificate of Tax Treaty Relief/Entitlement issued by the concerned Investment Promotion Agency (IPA). 11. Summary Alphalist of Withholding Agents of Income Payments Subjected to Withholding Tax at Source (SAWT), if applicable. 12. Proof of other tax payment/credit, if applicable. 13. Schedule for returns filed by General Professional Partnership. Name TIN Address Share of Each Partner _____________ _______ _______________ _____________ Note: All Background information must be properly filled up. All returns filed by an accredited tax agent on behalf of a taxpayer shall bear the following information: A. For CPAs and others (individual practitioners and members of GPPs); a.1 Taxpayer Identification Number (TIN); and SHCaDA a.2 Certificate of Accreditation Number, Date of Issuance, and Date of Expiry. B. For members of the Philippine Bar (individual practitioners, members of GPPs); b.1 Taxpayer Identification Number (TIN); and b.2 Attorney's Roll number or Accreditation Number, if any.