What is BIR Form 2551Q?
BIR Form 2551Q, or the Quarterly Percentage Tax Return, is a tax form used in the Philippines for self-employed individuals, professionals, and businesses to declare their percentage tax due on a quarterly basis.
Who is required to file BIR Form 2551Q?
This form is typically filed by individuals or entities whose income is not subject to VAT (Value Added Tax). This includes professionals, freelancers, and small business owners with annual gross sales or receipts not exceeding the VAT threshold.
What is the 3% Percentage Tax?
The 3% percentage tax is a tax imposed on the gross sales or receipts of a business or professional practice. This tax rate is applicable to those who are VAT-exempt under the Philippines' tax laws.
How do I compute the 3% tax due for Form 2551Q?
To compute the 3% tax due, follow these steps:
Determine your total gross sales or receipts for the quarter.
Multiply the total gross sales or receipts by 3% (0.03).
Example: If your gross sales for the quarter are PHP 100,000, your tax due is PHP 100,000 x 0.03 = PHP 3,000.
Are there any deductions or tax credits?
Tax credits or deductions that apply specifically to the percentage tax may be available. These could include taxes withheld by your clients (creditable withholding tax) or other allowable credits under Philippine tax laws. To apply these:
Calculate your total applicable tax credits for the quarter.
Deduct this amount from the computed 3% tax.
Example: If your computed tax is PHP 3,000 and you have PHP 500 in tax credits, your tax payable would be PHP 3,000 - PHP 500 = PHP 2,500.
How do I compute surcharge, interest, and compromise for late or incorrect filing?
If you file your Form 2551Q late or with errors, you may be subject to a surcharge, interest, and a compromise penalty.
Surcharge: A surcharge is a penalty imposed for late filing or payment. The standard surcharge is 25% of the tax due if the form is filed or paid after the due date. If the form is incorrectly filed, the surcharge is typically 50% of the tax due.
Interest: Interest is charged on any unpaid amount at the rate of 12% per annum. It is computed from the deadline of the payment until the actual payment date. To calculate interest:
Determine the annual interest by multiplying the tax due by 12%.
Divide the annual interest by 365 to get the daily interest rate.
Multiply the daily interest rate by the number of days late.
Example: For a PHP 3,000 tax due, if the payment is 45 days late:
Annual interest: PHP 3,000 x 12% = PHP 360.
Daily interest: PHP 360 / 365 ≈ PHP 0.9863.
Total interest for 45 days: PHP 0.9863 x 45 ≈ PHP 44.38.
Compromise Penalty: This is a penalty for violations of the tax code other than those involving fraud. The amount of the compromise penalty varies depending on the nature of the violation and is determined by the BIR.
Example of Calculation: Suppose you owe PHP 3,000 in taxes but filed late. Your surcharge (25% of PHP 3,000) would be PHP 750, and a 45-day late interest (PHP 44.38). If a compromise penalty of PHP 200 is applied, the total amount payable would be PHP 3,000 + PHP 750 + PHP 44.38 + PHP 200 = PHP 3,994.38.
Which rates should I use?
Under the CREATE law, the percentage tax rate has been reduced from 3% to 1% for the period spanning from July 2020 to 30 June 2023. Therefore, if you are filing within this timeframe, it is advisable to apply the 1% percentage tax rate instead of the previous 3%.