When you register with BIR, you can choose between being VAT-registered or non-VAT-registered. This choice will determine how your taxes are calculated.
 

VAT-registered: You pay 12% VAT on the difference between your output tax (sales) and input tax (expenses).
 

Non-VAT registered: You pay a 3% tax on your gross sales.

Consider your projected gross revenue and expenses:

• Gross revenue of P3 million or less: You can choose between VAT and non-VAT.

• Gross revenue over P3 million: You must be VAT-registered.

If your business incurs a lot of expenses, VAT registration may be beneficial. You can deduct taxes from these expenses (input tax) from your total tax payable to the BIR.

Yes, but you must apply by submitting supporting documents and the BIR Form 1900 (Application for Authority to Adopt Computerized Accounting System). Find the form here.

These taxes are common for all types of business:

• Income Tax: Sole proprietors or self-employed individuals pay a graduated tax (5%–32%) based on their income. Corporations pay a fixed 30% tax on corporate income.

• Business Tax: VAT-registered businesses pay 12% VAT on their sales, while non-VAT businesses pay 3%.

• Withholding Tax: Applicable to businesses with salaried employees or third-party contractors, including rent payments.

The Minimum Corporate Income Tax (MCIT) is 2% of gross income for corporations with net losses or zero taxable income after the 4th year of operation.

You can file taxes in three ways:

• Online: Through the Electronic Filing and Payment System (eFPS).

• Offline: At your local BIR office and authorized agent banks.

• Hybrid: Using eBIRForms, which allows you to fill out forms digitally but still pay at authorized agent banks.

Here are the documentary requirements for the annual filing of income tax:

• BIR Form 2307 (Certificate of Creditable Tax Withheld at Source), if applicable

• Approved Tax Debit Memo, if applicable

• BIR Form 2304 (Certificate of Income Payments Not Subjected to Withholding Tax), if applicable

• Proof of Foreign Tax Credits, if applicable

• Previously filed income tax return and proof of payment (if amended)

• Account Information Form (AIF) or CPA certificate with audited financial statements if gross income exceeds P3 million

• Proof of the prior year’s excess tax credits, if applicable

• Complete BIR Form 1702 (Annual) or 1702Q (Quarterly)

• Pay electronically by selecting "Proceed to Payment," filling out the necessary fields, and submitting

• You'll receive a payment confirmation for successful e-filing and e-payment

• Fill out BIR Form 1702 (Annual) or 1702Q (Quarterly)

• Print the form

• Visit a BIR-authorized agent bank with the form, required attachments, and payment

• Receive your stamped form or electronic Revenue Official Receipt (eROR)

• Complete BIR Form 1702 in triplicate

• Submit the form with attachments at your registered RDO or a Tax Filing Center

• Receive a stamped copy of the form

• BIR Form 2307 (Certificate of Creditable Tax Withheld at Source), if applicable

• Summary Alphalist of Withholding Agents of Income Payments Subjected to Withholding Tax at Source (SAWT), if applicable

• Approved Tax Debit Memo, if applicable

• Approved Tax Credit Certificate, if applicable

• Previously filed return and proof of payment (for amended returns)

• Authorization letter, if filed by an authorized representative

To file a VAT declaration with payment:

1. Complete BIR Form 2550M (Monthly) or BIR Form 2550Q (Quarterly)

2. Submit the VAT declaration and attachments, and pay the VAT due at a BIR-authorized agent bank

3. Accomplish the BIR-prescribed deposit slip

4. Receive a stamped and machine-validated tax return as proof of filing and payment

In areas without a BIR-authorized agent bank, file your VAT declaration at the RDO.

If there’s no payment due:

• Complete BIR Form 2550M (Monthly) or BIR Form 2550Q (Quarterly)

• Submit the VAT return and attachments at the RDO/LTDO/Large Taxpayers Assistance Division where your business is registered

Here’s what you need for filing percentage tax:

• BIR Form 2307 (Certificate of Creditable Tax Withheld at Source), if applicable

• Approved Tax Debit Memo, if applicable

• For amended returns, proof of payment and previously filed return

• Authorization letter, if filed by an authorized representative
   

To file percentage tax through eFPS:

1. Fill out BIR Form 2551M (Monthly) or BIR Form 2551Q (Quarterly)

2. Indicate taxable amount for quarterly filing (gross sales/receipts for the quarter)

3. If applicable, reflect any creditable tax withheld in Item No. 20A

4. Submit and proceed to online payment

To file percentage tax using eBIRForms:
 

1. Complete BIR Form 2551M (Monthly) or BIR Form 2551Q (Quarterly)

2. Reflect taxable amount (for quarterly filing, it’s total gross sales/receipts)

3. Include creditable percentage tax withheld, if applicable

4. Print the form and submit it to any BIR-authorized agent bank

5. Pay the tax and receive an eROR (electronic Revenue Official Receipt)

6. If no BIR-authorized agent bank is available, go to the RCO or city/municipal treasurer’s office for payment

For manual filing of percentage tax:

1. Complete BIR Form 2551M (Monthly) or BIR Form 2551Q (Quarterly) in triplicate

2. Submit the form at a BIR-authorized agent bank with payment and BIR-prescribed deposit slip

3. In the absence of an agent bank, visit the RCO, MRCOS facility, or the city/municipal treasurer's office

4. Receive your validated copy of the form and payment confirmation (eROR)

You can also pay through GCash, LandBank Link BizPortal, or DBP Tax Online.

Follow these steps for filing withholding tax:

1. Submit BIR Forms 1902 and/or 1905 within 30 days of receipt from employees

2. Withhold the tax from employee salaries as per the tax table

3. Remit the tax withheld within the prescribed due date

4. Do year-end adjustments

5. Submit BIR Forms 1604-C, 1604-F, and 1604-E (Annual Information Return) by January 31

6. Refund excess tax withheld if applicable

Yes. Once your BIR Certificate of Registration is issued, you are required to file tax returns, even if you haven’t made a profit or are not operating yet.