Corporate AITR Regulations in the Philippines
Under Section 76 of the National Internal Revenue Code (NIRC), corporations must file an annual reporting their net taxable income, reconcile quarterly payments, and compute your final tax due.
Corporate Income Tax Rates
Corporate income tax rates in the Philippines vary by company type and size under the CREATE Act. Domestic and resident foreign corporations generally face a 25% rate on net taxable income, with a 20% preferential rate for qualifying MSMEs.
Taxable Income for Companies
Taxable income is computed by subtracting allowable deductions from gross income, then applying the applicable CIT rate (20-25%) or MCIT if higher.
Key Components
- Gross Income: Total receipts from trade/business minus cost of sales/services; excludes VAT, returns, and discounts.​
- Deductions: Itemized (e.g., salaries, interest, taxes, bad debts, charitable contributions) or Optional Standard Deduction (OSD) of 40% of gross income (irrevocable once elected).​
- Exclusions: Non-taxable items like intra-company transfers or exempt dividends under CREATE Act incentives
Special Rules
Minimum Corporate Income Tax (MCIT) applies at 2% of gross income if regular tax is lower, from the fourth year onward.
Non-resident foreign corporations are taxed on gross Philippine-sourced income without deductions. Report via BIR Form 1702 schedules with audited statements
Required BIR Forms and Documents
When filing your company’s annual income tax return, you must prepare specific BIR forms, audited financial statements. These requirements ensure accurate reporting of net taxable income and reconciliation of quarterly payments.
BIR Forms
- 1702-RT: For regular corporations using itemized deductions
- 1702-MX: For corporations electing 40% Optional Standard Deduction (OSD)
- 1702-EX: For exempt corporations (e.g., non-profits under special laws)
- 1702Q: Supporting quarterly ITR forms; must precede the annual filing to reconcile payments.
Documents
- Audited financial statements: Balance sheet, income statement, cash flow; required if gross sales > PHP 3M
- Schedule of itemized deductions: Detailed breakdown of allowable expenses (e.g., salaries, rents)
- Trial Balance and General Ledger: Supporting books of accounts for audit verification
- Certificate of Registration (COR): Updated BIR Form 2303 confirming taxpayer status
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How We Can Help your Business
With over 14 years of experience, our local team of BIR-accredited professionals ensures full compliance, and streamlines AITR filing whether you’re a domestic or foreign-owned business entity.
Full BIR Compliance
Ensure strict compliance with all latest BIR regulations (CREATE, EOPT Acts), minimizing audit risks and penalties.
Optimize Tax Liability
Identify and apply all legal deductions and incentives to ensure you only pay the minimum required tax, protecting your net profit.
Meet All Filing Deadlines
Actively manage all quarterly and annual deadlines, preventing late filing surcharges and subsequent penalties.
Efficient Digital Submission
Manage the entire digital filing process using BIR’s eFPS/eBIRForms for efficient and secure submission.
FAQs About Annual Income Tax Return in the Philippines
The standard CIT rate is 25% of net taxable income for domestic and resident foreign corporations, as mandated by the CREATE Act. However, smaller corporations (with net taxable income PHP 5 million and total assets PHP 100 million are eligible for a reduced rate of 20%.
The MCIT is a rate of 2% of a corporation’s gross income. It is applied starting from the 4th taxable year immediately following the year the business commenced. Your company is required to pay the higher amount between the regular 25% CIT (on net income) and the 2% MCIT (on gross income).
The AITR must be filed on or before the 15th day of the 4th month following the close of your fiscal year. For most companies operating on a calendar year, this deadline falls on April 15th. Quarterly returns are also required to be filed within 60 days after the end of the first three quarters.
Yes, generally, corporate taxpayers are mandated to file electronically using platforms like eFPS or eBIRForms, especially following the implementation of the EOPT Act. Manual filing is restricted to specific, limited exceptions. We manage the entire digital submission process for you.
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