1. Sole Proprietors & Professionals (Non-Incorporated)
Primary ITR Form
BIR Form 1701 / 1701A
- 1701A
For purely self-employed individuals
Using 8% Income Tax Rate or OSD
No mixed income (no compensation income) - 1701
For mixed-income earners (business + employment)
For those using Itemized Deductions
Key Accounting Basis
- Books of Accounts (Cash or Accrual)
- Sales Invoice for Income
- Expenses Invoices for deductions
CPA Tip: Many sole proprietors use the wrong form, resulting in incorrect tax computation.
2. Professionals Using the 8% Income Tax Rate
Applicable Form
BIR Form 1701A
- Flat 8% tax on gross income (above ₱250,000)
- No expense deductions allowed
- Simplified compliance—but still requires proper sales records
Common Mistake: Using 8% but still deducting expenses—this is disallowed.
3. Partnerships (General or Professional Partnerships)
ITR Form
BIR Form 1702-EX
- Partnership itself is not taxed
- Income is passed on to partners
- Partners file their own ITRs separately
Supporting Requirements
- Audited or unaudited financial statements
- Partners’ profit-sharing schedule
4. Corporations (Domestic & Resident Foreign)
ITR Form
BIR Form 1702-RT
- Subject to Regular Corporate Income Tax (RCIT)
- Filed annually with:
- Audited FS
Tax Base
- Net taxable income
- Subject to normal tax rules and adjustments
5. Corporations Under Special Tax Regimes
ITR Form
BIR Form 1702-MX
Used by corporations enjoying:
- PEZA incentives
- BOI incentives
- Special income tax rates
CPA Reminder: Wrong form = wrong tax computation = audit risk.
6. Employees (Purely Compensation Income)
ITR Form
BIR Form 1700
- For employees with:
- Multiple employers
- Not qualified for substituted filing
Most employees do not file if qualified for substituted filing.