BIR firm on mandatory AIR filing

MANILA, Philippines - The Bureau of Internal Revenue (BIR), the government’s main revenue collection agency, is determined to make the filing of annual information return (AIR) mandatory after shelving the plan last year.

In a recent interview, BIR Commissioner Kim Henares said it remains a priority for the tax agency and that all taxpayers should prepare for the mandatory filing of the AIR. She did not provide a specific date for the implementation of the new form.

 “To be safe, everyone should assume that it will be required,” Henares said.

The BIR issued the regulation requiring the filing of the AIR but the agency was forced to shelve it after lawmakers complained.

Under the BIR regulation, individuals, estates and trusts required by law to file an income tax return or ITR should file the return together with the AIR. The AIR shall include income subjected to final withholding tax and exclusions from gross income. These include passive income such as winnings, dividends and prizes.

 “Individuals who are not required to file a tax return or those qualified for substituted filing may, however, file a tax return for loan, travel and other purposes in which case they should also file the AIR,” the BIR said.

Last year, the agency made the filing of the AIR optional for taxable year 2010 to give affected taxpayers – mostly rich people – to prepare for the regulation.

Henares said that after making the AIR filing optional, the BIR would soon be making it mandatory.

She said with the filing of the AIR, discrepancies in one’s statement of assets, liabilities and net worth (SALN) can be avoided.

She disclosed that the new regulation was issued precisely to address two issues.

One is the non-inclusion in the list of top individual taxpayers of famous and wealthy personalities, many of whom earn income which are either subject to final withholding tax or exempt from income tax. The other reason is the impending government requirement of income tax returns as basis for the granting of loans, licenses, franchises, and the like.

Others not required to file an ITR but are required under the regulations to file an AIR only are pure compensation income earners whose annual taxable income derived from within the Philippines exceeds P500,000 tax and on which income the correct income tax has been correctly withheld; individuals, estates and trusts whose sole income has been subjected to final withholding tax in excess of P125,000 annually, whether remitted or not to the BIR; and individuals whose sole income is exempt where the aggregate amount exceeds P500,000 annually.

Pure compensation income earners who derive income from two or more employers are required to file an ITR together with the AIR.

Under the regulation, the deadline for filing is April 15 each year for those filing the ITR and the AIR, and May 15 each year for those filing the AIR only.

Those filing their returns electronically shall, in the meantime, submit in hard copies the e-filed ITR and the AIR within 10 days from the filing of the electronic return until such time that electronic filing of the AIR becomes available.