Substituted Filing of ITR and BIR Form 2316

BIR Form 2316 is often confused as the Income Tax Return for Individuals. It is not. Although such confusion is justifiable since filing of BIR Form 2316 could be tantamount to ITR when one is qualified for substituted filing.

Substituted filing of ITR (simply referred to as “substituted filing”) is when the filing of Certificate of Compensation Payment and Tax Withheld (BIR Form 2316) done by the employer of an individual taxpayer can become a “substitute” to the filing of the Annual Income Tax Return for Individuals Earning Purely Compensation Income (BIR Form No. 1700 or ITR). Individual taxpayers qualified for substituted filing are those:

  • receiving purely compensation income, regardless of amount
  • with only one employer in the Philippines for the calendar year
  • the income tax of which has been withheld correctly by the said employer (tax due equals tax withheld)

Not qualified for substituted filing

The following individuals, however, are not qualified for substituted filing and therefore, still required to file Income Tax Return in accordance with existing regulations:

(A) Individuals deriving compensation from two or more employers concurrently or successively at any time during the taxable year.

(B) Employees deriving compensation income, regardless of the amount, whether from a single or several employers during the calendar year, the income tax of which has not been withheld correctly (i.e. tax due is not equal to the tax withheld) resulting to collectible or refundable return.

(C) Individuals deriving other non-business, non-professional-related income in addition to compensation income not otherwise subject to a final tax.

(D) Individuals receiving purely compensation income from a single employer, although the income tax of which has been correctly withheld, but whose spouse falls under (A), (B) and (C) of these regulations.

(E) Non-resident aliens engaged in trade or business in the Philippines deriving purely compensation income, or compensation income and other non-business, non-professional-related income.

Filing procedure

To avail of the substituted filing of ITR, qualified individual taxpayers shall signify his intention to avail of such by affixing their signatures in the three copies of BIR Form 2316 and returning the signed copies to the employer for signature. Employers go crazy about this, so I think it is important to note that it is the responsibility of the employees to signify their intention to avail of substituted filing of ITR.

Substituted filing declaration – BIR Form No. 2316 July 2008 (ENCS)

This portion is in addition to the signature portion for employer and employee agreeing to the written declaration that the Certificate is made under the penalties of perjury.

The employer then shall give back to the employee qualified for substituted filing of ITR the original copy while the duplicate copy shall be submitted by the employer to the concerned BIR office not later than February 28 of the succeeding year.

The forms shall be accompanied with Certified List of Employees Qualified for Substituted Filing of ITR, reflecting the amount of income payment, the tax due and tax withheld. This list shall be stamped “Received” by the concerned BIR office, which shall be tantamount to the substituted filing of ITR by the qualified employees.

Need for stamped-“Received” copy of BIR Form 2316

In the event that the employee will need his/her BIR Form 2316 stamped “Received”, he/she shall request the concerned BIR office to have the Certificate stamped “Received” accompanied with the submission of the employer’s certification that he/she was included in the list submitted by such employer to the BIR.

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