Who are exempted from filing income tax returns?

Natashya Gutierrez
Who are exempted from filing income tax returns?
A list of employed and self-employed individuals who do not have to brave long lines on April 15 to submit ITRs

MANILA, Philippines – The Bureau of Internal Revenue (BIR) constantly reminds the public of the annual April 15 deadline for the filing of income tax returns (ITRs).

This year’s filings and payments are for taxable year ending December 31, 2013.

The Tax Reform Act of 1997 states that individuals deriving income from sources within the Philippines are required to pay taxes. (READ: Why do we pay taxes?)

The BIR, however, exempts the following individuals from filing ITRs:

  1. Those who are minimum wage earners (see list of current minimum wage rates per region here)
  2. Those whose gross income do not exceed the personal and additional exemptions dictated by BIR. All taxpayers are entitled to P50,000 personal exemption, while those with dependents have additional exemption of P25,000 for each qualified dependent – but the number of dependents should not exceed 4. (READ: What to consider in computing income tax)
  3. Those whose annual salary from just one employer will not exceed P60,000
  4. Those whose income has been subjected to final withholding tax filed by the employer
  5. Those who are qualified under “substituted filing.” Substituted filing is when the employer’s annual tax return may be considered as the “substitute” ITR as they contain the same information.

Business tax exemption

Self-employed individuals who are categorized as marginal income earners (MIEs) are still subject to income tax, but they are exempted from paying business taxes, such as value added tax (VAT) and percentage tax.

The MIEs, according to BIR’s description, are:

  • individuals whose businesses do not exceed P100,000 in annual gross sales or receipts
  • individuals who are not deriving income from an employer
  • individuals whose activities should be principally for subsistence or livelihood, such as:
    • farmers/fishermen selling directly to consumers
    • small sari-sari stores
    • small carinderias or “turo-turos”
    • drivers/operators of a single-unit tricycle

Self-employed taxpayers pay VAT and percentage taxes on monthly (20th day of succeeding month) and quarterly (25th day of the month following the end of a particular quarter) basis. – Rappler.com

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