What do you need to know about filing BIR Form No. 2551Q or Quarterly Percentage Tax?
- Who needs to file BIR Form No. 2551Q?
- How to Calculate Quarterly Percentage Tax?
- When and where you can you file?
- How can payments be made?
- What penalties will be imposed upon failure of filing?
Taxation in the Philippines has undergone major transformations and new laws were implemented at the beginning of the fiscal year 2018. For those that use an online tax calculator in the Philippines, don’t be too alarmed. We’re sure companies will learn to adapt and change their algorithm appropriately.
That said, even if you do use online tax calculators or don’t handle your own taxes, you still have to remain informed. The TRAIN law changed a lot of things regarding tax computations and filing. One change in particular and the one we’ll be discussing today is the revised BIR Form No. 2551Q or the quarterly percentage tax return.
The BIR released this form last April 25, 2018 – the last day of filing quarterly percentage tax return – and many were left confused. If you’re a freelancer or sole proprietor, then we can definitely help you out. Below is a simplified yet comprehensive version for freelancers and sole proprietors which aims to simplify the guidelines and instructions that the BIR released.
Hopefully, this helps you understand everything about BIR Form No. 2551Q. Read on!
Who Can File BIR Form No. 2551Q?
If you haven’t opted for the 8% Income Tax Rate on Gross Sales / Receipts Option, then your COR (Certificate of Registration) should indicate that you are required to file for percentage tax. With the manual process, BIR Form No. 2551Q should be filed in triplicate by:
- Non-VAT taxpayers with gross annual revenues not exceeding P3M ( most freelancers and sole proprietors who are just starting out fall under this category).
- Domestic and international carriers except those who use bancas and animal-drawn vehicles
- Franchisees of the either of the following: gas or water utilities; radio and/or TV broadcasting companies whose gross annual revenues do not exceed P10M; services that send overseas dispatch, messages, or conversations from the Philippines
- Proprietors, lessees, or operators of cockpits, cabarets, racetracks, night or day clubs, professional basketball games, etc.
- Banks, non-bank financial intermediaries and finance companies
- Life insurance companies and agents of foreign insurance companies
How to Calculate Quarterly Percentage Tax?
As a freelancer or sole proprietor, quarterly percentage tax is calculated by multiplying 3% of your quarterly gross income receipts. By “Gross Receipts”, this would mean all the earnings / revenues you have actually received from your client / business.
Sample computation of Percentage Tax Due and Payable
Let’s say you’re running a consultancy business, earning less than 3M annually, and receive a quarterly income of P180,000. In that case, if you’ve opted for the quarterly percentage tax option (as reflected in your COR), then the calculation would be something like this:
Quarterly Percentage Tax Due = Gross Receipts x 3%
=P180,000 x 3%
Hence, P5,400 would be your total quarterly percentage tax payable.
When and Where You Can You File?
BIR Form No. 2551Q shall be filed and the tax shall be paid within twenty-five days after the end of each taxable quarter. So, from the 15th of January, April, July, and October, the deadline has been moved to the 25th of January, April, July, and October.
You shall do this with any Authorized Agent Banks (AAB) of the Revenue District Office (RDO) where you are registered or are conducting business. In case there are no AABs, then this form shall be filed with the Revenue Collection Officer (RCO) of your RDO.
If you’re the owner of a franchise, you can file a separate return for your head office and for each branch or you can file a consolidated return for the head office and included branches.
Note, that this is how you do it if you opt to do it the manual way. If you prefer to do it online, check out this local app that simplifies the whole filing process.
How Can Payment Be Made?
Payment can be made manually or electronically. If you’re opting for manual payment, you can do what was mentioned above. Head to the AAB located in your area that is within the jurisdiction of the RDO or file your return with the RCO.
Online payment, on the other hand, can be accomplished using GCash Mobile Payment, Landbank’s Linkbiz Portal or DBP’s Tax Online. Note that you would still have to manually calculate your corresponding tax dues, as these channels require you to already enter said tax due amount.
If you prefer to skip the manual calculations, you can try out Taxumo, a local web-based tax app, that auto-calculates your tax dues, auto-fills your tax forms and lets you file online with just a click of a button.
What Penalties Will Be Imposed Upon Failure of Filing?
The taxpayer will incur an interest of 25% plus surcharge plus compromise fee in cases where he/she:
- Failed to file and pay their quarterly percentage tax return on or before the deadline
- Filed a return with the wrong person or officer
- Failed to pay the full or part of the amount of tax due; or
- Failed to pay deficiency tax
The taxpayer will incur a surcharge of 25% plus surcharge plus compromise fee in cases where he/she:
- Willfully neglected to file the quarterly percentage tax within the prescribed period; or
- Willfully made a false and fraudulent return
Outside of the math and computations, that’s practically everything you need to know about BIR Form No. 2551Q. Whether or not you use an online tax calculator in the Philippines, it is important that you are aware of the changes made in how we file our taxes.
The BIR has yet to iron out other processes, so more changes are sure to come over the year. If you don’t stay on top of things, then you might find yourself struggling with the transition. And always remember that one misstep can land you in a lot of trouble, so stay informed and updated!
You may also want to check out our other articles below:
Hungry for more? Visit our Taxumo blog HERE.