New ITR Forms for 2012

September 26th, 2011 | In news |

On 5 September 2011, the Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular No. 40-2011, prescribing new tax return forms for the following taxpayers: (1) Individuals Earning Purely Compensation Income (BIR Form 1700); (2) Self-Employed Individuals, Estates and Trusts (BIR Form 1701); and (3) Corporations, Partnerships and Other Non-Individual Taxpayers (BIR Form 1702).

The forms are to be used for income tax filings for the year 2011, which are due for filing on or before 15 April 2012.  Juridical entities following a fiscal year are required to use the new form starting those covered by fiscal year ending 31 January 2012.

All taxpayers earning purely compensation income, whose taxable income exceeds P500,000 are now required to file BIR Form 1700, except those exempted by law and those qualified under the “substituted filing scheme.”

The new BIR Forms 1700 and 1701 provide for a new section requiring the taxpayer to disclose the following income subject to final withholding tax: royalties, dividends, prizes and winnings, fringe benefits, compensation subject to 15% preferential rate and sale/exchange of real properties and shares of stock, among others.  The forms also incorporate two new sections on taxpayer activity profile and tax relief availment.

Earlier this year, the BIR issued Revenue Regulations (RR) No. 2-2011, which mandates the filing of an annual information return (AIR), together with the income tax return for individuals, estates and trusts.  The AIR (BIR Form 1705) requires the taxpayer to disclose, among others, passive income such as interests, royalties, prizes and winnings, income from sale/exchange of real properties, properties received through gifts, bequests and devises, among others. RR No. 2-2011, however, was later suspended by the Secretary of Finance, due to complaints that the AIR would violate private individuals’ constitutional right to privacy as well as the provisions of the Bank Secrecy Law.