QuestionsQuestions (CSC MEMORANDUM CIRCULAR NO. 32)
RR No. 7-93 prescribes the procedures for filing quarterly income tax returns and paying quarterly income tax by individuals who receive self-employment income.
All individuals, including estates and trusts, who receive self-employment income, are covered and must file the required returns and pay the corresponding taxes under the procedures in RR No. 7-93.
A return of summary declaration of gross income and deductions (BIR Form No. 1701Q) must be filed for each of the first three quarters.
A final or adjustment return (BIR Form No. 1701) must be filed on or before April 15 of the following year.
First quarter: May 15; Second quarter: August 15; Third quarter: November 15; Final return: April 15 of the following year.
The income tax, computed based on actual income and deductions for the quarter, must be paid at the same time the corresponding return is filed.
They must file with and pay at an accredited bank in the city/municipality where their principal place of business is located; if there are no accredited banks, filing and payment are done with the collection officer or authorized Municipal Treasurer.
Only gross income subject to tax under Section 21(f) of the NIRC is included—i.e., income from practice of profession or conduct of trade or business as a sole proprietor or member of a general partnership.
Income taxable under Sections 21(a) to (e) of the NIRC (e.g., compensation income and passive income) are not included in the gross income computation for these quarterly self-employment returns.
No. For the first three quarters, deductions shall not include personal and additional exemptions; these exemptions can only be claimed as deductions in the last quarter.
Gross income and deductions are computed on a cumulative basis for the quarter and any preceding quarters.
It is computed according to Section 21(f) of the NIRC based on the cumulative taxable income for the quarter and prior quarters, then the balance is determined after deducting taxes previously paid and taxes withheld under the Expanded Withholding Tax System.
The amount payable is the balance of the income tax computed for the cumulative period minus (1) total quarterly income taxes previously paid and (2) any taxes withheld under the Expanded Withholding Tax System on items of gross income reported for the period.
The excess may be (1) issued a tax refund or tax credit certificate, or (2) applied as a credit against quarterly income tax liabilities for the succeeding year (option for taxpayers who do not want to wait for refund processing).
Any remaining amount must be claimed for refund or further credit pursuant to Section 204 of the NIRC.
Because the estimated tax system under Section 67 (where estimated tax is based on the prior year final income tax return) may not reasonably approximate the correct tax for the current year, which can disadvantage taxpayers when current income is lower (or a loss).
Penalties under Sections 248 and/or 249 of the NIRC apply depending on the specific violation (e.g., failure to file, late filing, failure to pay the shown tax on time, or underpayment).
Nonresident Filipino citizens with respect to income from without the Philippines, and nonresident aliens not engaged in trade or business in the Philippines are not required to render the declaration described in the regulations.
It took effect immediately upon adoption/issuance on January 4, 1993.