When To Issue a BIR Form 2316

I came across this question and decided to write the case here.

The presented scenario is:

"May new employee po kami nag start sya ng August 2015. He claimed that wala raw syang 2316 dahil 2307 daw po binibigay sa kanya monthly as consultant. Question: 1- qualified po ba sya sa Personal deduction? 2- qualified po ba sya sa substituted filing? 3- kailangan pa po ba naming kunin ung lahat ng 2307 na na receive nya sa previous work nya?"

Since the new employee claimed that instead of 2316, the previous employer issues 2307, it can be assumed that the payment as their consultant is charged to Professional Fee (PF) subject to EWT.

Issuance of 2316 is exclusive for Withholding Tax on Compensation.

1. Is the taxpayer qualified for personal deduction?

All compensation earners can claim their personal exemption of P50,000.00 and additional exemption of 25,000.00 for every qualified dependent up to 4 dependents.

2. Is the taxpayer qualified for substituted filing?

The taxpayer is not qualified since he does not meet all the requirement stated in RMC 01-2003:

Substituted filing applies only to individuals who meet all the following conditions:
a. The employee receives purely compensation income (regardless of amount) during the taxable year
b. The employee receives the income only from one employer in the Philippines during the taxable year
c. The amount of tax due from the employee at the end of the year equals the amount of tax withheld by the employer
d. The employee’s spouse also complies with all three (3) conditions stated above.
e. The employer files the annual information return (BIR Form No. 1604- CF)
f. The employer issues BIR Form 2316 (Oct 2002 ENCS) version to each employee

3. Do we need to ask for all the 2307 that he received from his previous work?

There is no need to ask for the 2307 since as consultant his EWT is under Professional Fee.