Attention Employers in the Philippines! January is just around the corner… again!
For PH companies with employees during 2020, it’s time to start preparing for the annual filing of the BIR Form 2316 in January 2021.
If you have already started preparing for the filing of BIR Form 2316 – great! If you haven’t, we recommend you start – January is always a busy month for PH businesses from a compliance perspective!
To make things a little easier, we have provided below an Explainer on the requirements of filing BIR Form 2316 in the Philippines in 2021!
- 1 BIR Form 2316
- 2 What is the Purpose of BIR Form 2316?
- 3 Who is Required to File BIR Form 2316?
- 4 When Must BIR Form 2316 be Filed?
- 5 Employees and Termination
- 6 What Information Must be Provided?
- 7 Preparing for the Submission of BIR Form 2316
- 8 Monthly Insights from the CloudCfo Team
- 9 CloudCfo – Accounting Services, Bookeeping Services and Payroll Services in Metro Manila and the Philippines
BIR Form 2316
The Certificate of Compensation Payment/Tax Withheld, commonly known as BIR Form 2316, is a form that must be prepared and filed by employers in the Philippines with the BIR at the beginning of each calendar year.
BIR Form 2316 should be prepared, completed and issued to each employee that receives a salary, wage or any other form of remuneration from the employer. The Form should identify the total amount of compensation paid to each employee and the total taxes withheld from each employee during the previous calendar year.
So, for the purposes of 2021, the information contained in BIR Form 2316 should relate to the 2020 calendar year.
What is the Purpose of BIR Form 2316?
The filing of BIR Form 2316 is one mechanism for the BIR to monitor taxpayer employers in the Philippines. The BIR can use this form to understand if an employer has actually remitted (to the BIR) the compensation tax withheld during a particular year!
BIR Form 2316 also provides information to employees in relation to the amount of tax that has been withheld from their salaries during that year.
Finally, if an employee transitions from one employer to another employer during the same calendar year, the new employer should request the BIR Form 2316 that the employee received from the previous employer (at the time they were leaving their previous employment). The new employer can then understand the amount of the taxes that have already been withheld from that employee and use this when computing withholding tax requirements for the employee for the rest of the year.
Who is Required to File BIR Form 2316?
The ultimate responsibility for filing BIR Form 2316 is with the employer.
Both the employer and the employee are required to sign the form. However, it is the employer, usually the employer’s HR team or maybe the employer’s outsourced payroll services provider in the Philippines, that will manage the entire process – from preparation, to signing, to filing with the BIR.
Employers need to remember that they are required to file 3 original copies of BIR Form 2316 with the BIR – one copy for the BIR, one for the employer and then one for the employee!
When Must BIR Form 2316 be Filed?
BIR Form 2316 must be prepared, completed and sent to all covered employees on or before 31 January of the year following the year in which the compensation was paid to (and the compensation tax withheld from) employees.
Once it has been signed by both employer and each employee, the employer is then required to file BIR Form 2316 with the BIR before 28 February each year.
Employees and Termination
If an employee is terminated or resigns, they obviously would not be in employment at the end of the year or in a position to receive and sign BIR Form 2316.
In cases where an employee has been terminated or resigned, BIR Form 2316 should be issued to the employee when they receive their final pay/salary.
As mentioned in Section 2 above, the new employer should then request the form during the onboarding process of that new employee for that same calendar year.
What Information Must be Provided?
Completing BIR Form 2316 can take alot of time!
There must be a separate BIR Form 2316 for each individual employee and they all need to sign! The employer also has to be sure that the details included in the form (salary paid, tax withheld, etc) is 100% accurate!
Below are some of the key details that need to be provided in BIR Form 2316. You can find the full list of details here.
- Employer Details – Alot of this information can be found on the company’s BIR Form 2303, commonly known as the Certificate of Registration (COR). Here’s our article on everything you need to know about BIR Form 2303.
- Employee Details – Employee’s name, Tax Identification Number or TIN, address, date of birth, contact number, salary, etc
- Total compensation paid – A computation of the total amount of compensation paid by an employer to an employee during the previous calendar year.
- Total tax withheld – A computation of the total amount of tax withheld from a particular employee during that same year.
- Non-Taxable/Exempt Compensation Income – E.g. De minimis benefits, contributions for SSS, Philhealth, Pag-IBIG, etc.
Preparing for the Submission of BIR Form 2316
Below are a few essential tips for employers when preparing the filing of BIR2316 each year.
- Start the preparations early! There is a significant level of work required to complete BIR Form 2316 – particularly when there are many employees!
- Make sure you are using the correct version of BIR Form 2316. The correct version should say “January 2018 (ENCS)” in the top left corner. The form can also be completed using the BIR’s online module (provided the online module is functional).
- The employer must ensure that the information for each employee is accurate and up to date.
- Each employee must sign their own respective form!
- The employer must also sign a BIR Form 2316 for each of their individual employees.
- The completed BIR Form 2316 must be completed and issued to each employee by 31 January.
- Once signed by both employee and employer, 3 original signed versions of the BIR Form 2316 must be filed with the BIR. The BIR retains one, the employer keeps another and each of the respective employees will be provided with their own copy.
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