Filing of annual info return optional under new BIR rule

MANILA, Philippines - The Bureau of Internal Revenue has issued a new regulation, making the filing of the annual information return (AIR), which asks for information on taxpayers’ extra income, optional this year.

Politicians and local business groups have criticized the BIR for issuing rules that are in direct violation of the constitution and the bank secrecy laws, among others.

They have long been objecting to this requirement which makes the filing of  supplemental information report (SIR) as part of the annual income tax return (ITR) mandatory.

These additional information includes passive income, gains from sale/exchange of real properties, properties received through gifts, bequests, and devises, income from other sources other than those reported in the ITR and payment to heirs in the case of estates and trust.

These are income that are either tax-exempt or have already been subjected to final tax.

According to the local business community, the imposition of the SIR is not a valid requirement and in fact, is even contrary to the provisions of the Tax Code.

Apart from the additional burden to taxpayers, the disclosure requirement also violates an individual’s right to privacy, the private businesses said.

Local businesses said the needed information is already available in the BIR and can be culled from the reports/ITRs submitted by taxpayers.

The BIR, however, argued that the additional disclosure requirement should give taxpayers the opportunity to explain their sources of income without being subjected to audit by the government’s main tax collection agency.

Individual income tax filers using forms no. 1700 and 1701 are, however, required to file supplemental information.

BIR form 1700 is for taxpayers who earn purely from compensation while 1701 is for the self-employed.

Thus, taxpayers are advised to demand from their payors and properly document their form 2307 and other pieces of evidence for final taxes withheld.

Likewise, taxpayers should properly receipt and book their tax-exempt income, the BIR said.

In any returns filed with the BIR, individual taxpayers are given the option to use either their community tax certificate, passport or driver’s license.