Here in the Philippines, individuals and businesses alike are subject to taxes of different shapes and forms. For small businesses, freelancers, or sole proprietors, the complex nature of these taxes usually come as a burden. In this article, we highlight key information on Quarterly Percentage Tax (BIR Form 2551Q) with the aim of making filing a breeze. Show
Completing a BIR form is a daunting task that is why we built a software to automate this and weve been using it since 2012. You can also use this tool for your taxes to save time and so you can focus on more important things. Check it out ContentsPercentage Tax in the Philippines: An OverviewPercentage tax is a business tax for taxpayers whose annual gross sales do not exceed three million pesos (Php3,000,000.00) and are exempt from value-added tax (VAT) under the tax laws. It is often referred to as NON-VAT. Who Are Required To File?According to the Bureau of Internal Revenue (BIR), the following entities are subject to a quarterly percentage tax:
Changes Brought About by TRAIN LawThe Tax Reform for Acceleration and Inclusion (TRAIN) Law brought several welcome changes aiming to simplify and level the country’s tax system. It took effect last 2018, with some changes gradually rolling out even up until 2024. How Did TRAIN Law Affect Percentage Taxes?Prior to the passing of the law, businesses were required to file for percentage taxes monthly. With this in effect, percentage taxes will only have to be filed quarterly, saving you a few trips to your local Regional District Office (RDO). The law also introduced a new form to be used for Quarterly Percentage Taxes which is the BIR Form 2551Q (more on this later). However, the greater change brought by the TRAIN Law is the introduction of the 8% Gross Income Tax (GIT) Rate. In summary, this gives small businesses like yours an option for a simpler tax arrangement. Instead of going through the complexities of calculating, filing, and settling your income and percentage taxes, you can opt to use a fixed rate of 8% as an alternative. Read more: 8 Benefits of 8% Gross Income Tax Rate Calculating Percentage Tax for Your BusinessIf you opted against using the 8% GIT Rate, here’s how you compute for your small business’ percentage tax. Browse the table below and see which category your business falls under. Each category has a different taxable base and tax rate. The former simply refers to the amount that is subject to percentage tax. Meanwhile, the latter dictates the percentage that you should multiply to this amount.
For sample manual copy of the form, download it here: BIR Form 2551Q Just a side note, since 2015, it has been encouraged to do electronic preparation of BIR Forms using eBIRFORM. But nonetheless, here’s a quick guide on how to prepare the BIR Form 2551Q manually: Page 1 of the BIR Form 2551Q:
Page 2 of the BIR Form 2551Q:
Methods for Filing Percentage TaxIn general, once the BIR Form 2551Q is filed, you will only need the following as attachments:
But in special circumstances, if applicable, aside from the above stated, you may need to prepare the following supporting documents for your percentage tax filing:
After preparing these files, you have three options for filing: ManualAs the name suggests, the manual method is to physically hand over your accomplished BIR Form 2551Q along with supporting documents to your local RDO. To do so:
eFPSeFPS stands for Electronic Filing and Payment System—it is the BIR’s fully digital platform for tax filing and payments via BIR’s websites (www.efps.bir.gov.ph). Sounds great, right? A completely digital option for tax management. However, not all taxpayers can voluntary use this platform. Currently, only those who receive notification from BIR to use EFPS are allowed to register as of this writing. The basis of BIR in selection will be: a) industry and/or b) classification as large taxpayer or included in the TAMP (Tax Account Management Program) of the BIR. Once you receive the notification letter to use EFPS from the BIR, proceed with registering in the system and submit the necessary documents to your RDO (Regional District Office). Also, coordinate to Authorised Agent Bank (AAB), or your bank who has BIR eFPS Facility, to enrol for online payment connected to BIR EFPS. If your business is not included in the list above, it might seem that you will have to stick to the manual method of filing. Well, not really. eBIR FormsTo cater to small businesses, BIR launched eBIRForms in 2015. It is sort of a hybrid between manual and eFPS filing. eBIRForms is an application that is available for download and offline use. Check it out here: eBIRForms
Available Payment ChannelsThanks to BIR’s digitization efforts, taxpayers can now enjoy more options for settling taxes. Learn more about them below: Over-the-Counter PaymentIf you’ve been following the manual method of filing for your Quarterly Percentage Tax, then you already know how to pay for your taxes through Authorized Agent Banks (AABs)
eFPSBusinesses who are required to use the eFPS platform should also pay their percentage taxes via EFPS. Just a side note, ensure that the company’s bank account should be connected and registered to the EFPS prior to payment date or deadline.
Online PaymentPerfect for switching to paperless transactions, BIR has partnered with several platforms for online tax payment. These are:
To use these platforms:
Learn more: ePay Deadline for Filing Quarterly Percentage TaxQuarterly percentage taxes are due on the 25th day of the month following the applicable quarter. This means you have to file them on or before the 25th of April, July, October, and January of the succeeding year, as follows:
Remember that it is good practice to settle your taxes early—don’t wait ’til the deadline! Penalties for Late or Incorrect FilingYour business can suffer penalties from the late filing of percentage taxes. Taxpayers are subject to an interest of 20%, 25% surcharge and compromise fee for:
Avoid these extra charges by triple-checking your BIR Form 2551Q and being mindful of tax deadlines. SummaryThere you go—a comprehensive guide for calculating, filing, and paying for your quarterly percentage taxes. With a variety of options to choose from, you will surely be able to find the method that works best for your business. Thinking of saving yourself time and effort in tax preparation? Let us help. Click the button below to learn more about our products. |