Philippines

Taxable period

The tax year runs from 1 January to 31 December.

Tax returns

Unless impracticable, a husband and wife must file one consolidated income tax return, but the tax is computed separately. Income that cannot be definitely attributed or identified as exclusive income of either spouse is divided equally between them. Generally, this results in lower combined tax liability than when the tax is jointly computed.

Substituted filing is available for qualified employees. In such case, the Certificate of Compensation Payment/Tax Withheld (Bureau of Internal Revenue [BIR] Form 2316) filed by the employer and duly stamped 'received' by the BIR shall be tantamount to substituted filing of the Annual Income Tax Return of the employees.

Substituted filing shall apply only to employees who meet all of the following conditions:

• the employee receives purely compensation income (regardless of amount) during the taxable year,
• the employee receives the income only from 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, and
• the employee’s spouse also complies with all three mentioned conditions.

Substituted filing, however, will not apply to non-resident aliens engaged in trade or business in the Philippines.

All individual taxpayers who do not qualify for substituted filing are required to file their returns on a calendar-year basis. The return must be filed on or before 15 April of the succeeding year.

Payment of tax

Generally, the income tax withheld from the salaries or compensation of aliens, resident or not, should equal their final tax liability on such compensation. If not, the balance must be paid at the time the annual return is filed. In certain cases, income tax liability may be paid in two equal instalments.

Any payment of the remaining tax liability beyond the due date shall be subject to certain penalties.