Tax rules for marginal income earners

Aims to alleviate poverty by promoting full employment and improving living standards.
Marginal income earners receive special tax treatment to support subsistence and livelihood activities.
Registration with the Bureau of Internal Revenue (BIR) is encouraged without charge and minimal documentary requirements.
Seeks to integrate marginal income earners into the formal tax system.

Defined as self-employed individuals not under an employer-employee relationship.
Gross sales or receipts must not exceed P100,000 within any twelve-month period.
Activities are primarily for subsistence, not considered engaging in trade or business aimed at profit.
Exempt from 10% Value Added Tax (VAT) and any percentage tax under the Tax Code.
Registration fee is waived, but registration as a taxpayer is mandatory for potential income or withholding tax compliance.

Marginal income earners eligible for specific privileges and simplified tax compliance:

A. Registration and Bookkeeping:

Exempt from paying registration fees under Section 236(B) of the Tax Code.
Issuance of Taxpayer Identification Number (TIN) and TIN card upon minimal documentary submission.
Exempt from issuing registered receipts or commercial invoices as per Section 237 of the Tax Code.
No requirement to maintain books of accounts.
No need to attach financial statements or account information forms to income tax returns.

B. Filing of Tax Returns:

Required to file Annual Income Tax Return using Form No. 1700 reflecting income from all sources.
Income tax liability depends on presence of net taxable income.
The Commissioner of Internal Revenue or authorized representative retains the authority to verify claimed status and assess accurate taxes under Section 6 of the Tax Code.

All inconsistent rules or regulations, or parts thereof, are amended or repealed to conform to these regulations.

Regulations take effect fifteen (15) days after publication in the Official Gazette or a newspaper of general circulation.