Income tax; new requirement.

Tax Services Department
Isla Lipana & Co.
A member firm of PricewaterhouseCoopers
March 07, 2011


Tax Alert 2011 –02 Revenue Regulations (RR) 2-2011- Filing of Income Tax Return and/or Annual Information Return by Individuals, Including Estates and Trusts




The BIR has recently issued RR 2-2011 dated March 01, 2011 requiring individual taxpayers, estates and trusts to file Annual Information Returns (AIR/ BIR Form No. 1705) as either additional attachments to their income tax returns (ITRs) and/or separate filing by those ITR-exempt individual taxpayers and other entities. Salient features of this RR are as follows:

1. Individuals, estates and trusts required by law to file an ITR should file AIR/BIR Form No. 1705 as an attachment to the ITR. The AIR shall include income subject to final withholding tax and exclusions from gross income under Section 32(B) of the Tax Code.

2. Individuals who are not required to file a tax return or are qualified for substituted filing but opt to file an ITR for loan, travel and other purposes, should also file AIR/BIR Form No. 1705.

3. The following persons are not required to file an ITR but are required to file AIR/BIR Form No. 1705:

a) Pure compensation income earners whose annual taxable income derived from sources within the Philippines exceeds P500,000.00, the income tax on which has been correctly withheld. (Provided, that an individual deriving compensation concurrently from two or more employers at any time during the taxable year shall file an ITR)

b) Individuals, estates and trusts whose sole income has been subjected to final withholding tax, with aggregate final tax withheld exceeding P125,000.00 annually, whether remitted or not to the BIR.

c) Individuals whose sole income is exempt from income tax and whose total annual income (exempt) exceeds P500,000.00.



4. The deadline for filing the returns shall be on or before April 15 of each year for those filing the ITR (BIR Form No. 1700 or 1701) and AIR, and May 15 of each year for those filing the AIR only.
These regulations will cover income earned for taxable year 2010. For more detailed information, attached for your reference are copies of RR 2-2011 and BIR Form 1705.