BIR Form 1701A – Annual Income Tax Return (8% Flat Rate / OSD)
BIR FORM 1701A
Annual Income Tax Return — Individuals Earning Purely from Business/Profession (8% Flat Rate or OSD)
Bureau of Internal Revenue | NIRC Section 24(A)(2)(b) | TRAIN Law (RA 10963) | Due: April 15
PART I — TAXPAYER INFORMATION
Taxable Year: [Taxable Year]
Taxpayer Name: [Taxpayer Name] | TIN: [TIN]
RDO: [RDO Number]
Elected Tax Regime: [Tax Regime]
PART II — INCOME AND TAX COMPUTATION
Gross Sales/Receipts and Other Non-Operating Income: [Gross Sales/Receipts]
Tax Base: [Tax Base]
Income Tax Due: [Income Tax Due]
Less: EWT Credits (BIR Form 2307): [EWT Credits]
Tax Still Due / (Overpayment): [Tax Payable]
Note: Taxpayers on the 8% flat rate are NOT required to file quarterly BIR Form 1701Q or quarterly BIR Form 2551Q (Percentage Tax). The annual BIR Form 1701A is the sole income tax and percentage tax return for the year.
CERTIFICATION
I, [Taxpayer Name], declare under the penalties of perjury that this return has been made in good faith, verified by me, and to the best of my knowledge and belief is true and correct pursuant to Section 267 of the National Internal Revenue Code.
[Taxpayer Name]
Taxpayer
Taxpayer
________________
Signature
What Is a BIR Form 1701A – Annual Income Tax Return (8% Flat Rate / OSD)?
A BIR Form 1701A – Annual Income Tax Return in the Philippines sets out the taxpayer's computation and supporting particulars for filing with the revenue authority.
BIR Form 1701A replaced the single consolidated BIR Form 1701 for taxpayers who qualify for and elect the 8% flat rate — creating a simpler return that computes income tax directly as 8% of gross sales, receipts, and other non-operating income, without any deductions. This simplification was the TRAIN Law's deliberate policy choice to reduce the compliance burden on small business owners, freelancers, and solo practitioners with annual gross income not exceeding PHP 3,000,000.
The 8% rate option under BIR Form 1701A covers both income tax and the 3% Percentage Tax under Section 116 of the NIRC — by electing 8%, the taxpayer is exempt from the 3% percentage tax, eliminating the need to file quarterly BIR Form 2551Q. However, the 8% option is not available to VAT-registered taxpayers (those with annual gross sales/receipts exceeding PHP 3,000,000), to mixed income earners (who use BIR Form 1701 instead), to partnerships and corporations (who file BIR Form 1702), or to taxpayers with gross receipts from employment subject to regular graduated rates.
BIR Form 1701A is due on or before April 15 of the year following the taxable year, consistent with the general deadline under Section 51(A)(1) of the NIRC. Payment of the balance due is made simultaneously with the return filing through the Authorized Agent Bank (AAB) or BIR online payment channels (GCash, PayMaya, Land Bank, DBP).
The legal framework governing the BIR Form 1701A – Annual Income Tax Return (8% Flat Rate / OSD) in Philippines draws on several key statutes and regulatory bodies. Under Philippine law, the Civil Code of the Philippines (Republic Act No. 386) governs contractual obligations. The Revised Corporation Code (Republic Act No. 11232) regulates corporate entities through the Securities and Exchange Commission (SEC). The Labor Code of the Philippines (Presidential Decree No. 442) and Department of Labor and Employment (DOLE) govern employment matters. The Data Privacy Act of 2012 (Republic Act No. 10173) and the National Privacy Commission (NPC) protect personal data. The Bureau of Internal Revenue (BIR) administers tax obligations under the National Internal Revenue Code. Parties executing a BIR Form 1701A – Annual Income Tax Return (8% Flat Rate / OSD) in Philippines should confirm the document reflects current law, including any amendments enacted since the original drafting date. The National Internal Revenue Code (RA 8424) sets the foundational requirements.
When Do You Need a BIR Form 1701A – Annual Income Tax Return (8% Flat Rate / OSD)?
BIR Form 1701A is the correct annual ITR form in the Philippines for self-employed individuals and professionals who qualify for and elected the 8% flat income tax rate.
BIR Form 1701A is required for a freelance web developer, content writer, graphic designer, or IT consultant who: (a) is not VAT-registered; (b) has annual gross receipts from all clients not exceeding PHP 3,000,000; (c) elected the 8% flat rate at registration (BIR Form 1901) or in their first quarterly return (BIR Form 1701Q); and (d) earns income solely from self-employment with no compensation income from any employer.
BIR Form 1701A is required for a licensed physician, dentist, architect, engineer, or certified public accountant in private practice who meets the PHP 3,000,000 gross receipts threshold for the 8% option and elected that rate at the beginning of the taxable year.
BIR Form 1701A is required for a small business owner operating a sole proprietorship under a DTI Business Name Certificate with annual gross sales below PHP 3,000,000 — for example, a home-based food business, an online retailer, or a neighborhood service provider — who elected the 8% option instead of the graduated rates with itemized deductions.
BIR Form 1701A is required for a Philippine-based digital nomad or remote worker earning income from foreign clients via platforms like Upwork, Fiverr, or Toptal — provided the total annual income does not exceed PHP 3,000,000 and the taxpayer has no employment income from any Philippine employer.
BIR Form 1701A is NOT the correct form when the taxpayer is a mixed income earner (with both employment and self-employment income), when gross income exceeds PHP 3,000,000, or when the taxpayer registered for VAT. Such taxpayers must use BIR Form 1701 instead.
What to Include in Your BIR Form 1701A – Annual Income Tax Return (8% Flat Rate / OSD)
BIR Form 1701A for the Philippines under the 8% flat income tax rate option must include the following essential elements for correct computation and filing.
Taxpayer Information and RDO: Full legal name, TIN, RDO number, principal business address, and nature of business or profession. The RDO must match the taxpayer's registered RDO from BIR Form 1901 registration — changes of address require prior RDO transfer.
Elected Income Tax Regime: Clearly indicate whether the taxpayer elected the 8% Flat Income Tax Rate under Section 24(A)(2)(b) of the NIRC (for non-VAT registered taxpayers with gross receipts not exceeding PHP 3,000,000) or the Optional Standard Deduction (OSD) of 40% under Section 34(L) of the NIRC under the graduated rates. Both options use BIR Form 1701A.
Gross Sales/Receipts and Other Non-Operating Income: Total gross receipts from all business or professional activities plus other non-operating income (interest, royalties, dividends) during the taxable year, stated in Philippine pesos (PHP ₱). Under the 8% option, the tax base is the total of these amounts before any deduction.
Computation of Tax Due (8% Option): Income Tax Due = (Gross Sales/Receipts + Other Non-Operating Income) × 8%, applied on amounts exceeding PHP 250,000. The first PHP 250,000 of gross income is not subject to the 8% tax under the TRAIN Law threshold for the zero bracket.
Creditable Withholding Taxes (BIR Form 2307): Withholding taxes on professional fees and business payments deducted by clients and documented in BIR Form 2307 certificates issued by withholding agents. These reduce the 8% tax computed on gross income.
Prior Year Excess Credits and Quarterly Payments: Prior year carryover credits and advance quarterly income tax payments (if any) paid via BIR Form 1701Q during the year are deducted from the tax due. Note: taxpayers on the 8% option are not required to file quarterly income tax returns (BIR Form 1701Q) — the 8% tax is settled only in the annual BIR Form 1701A.
Balance Due or Overpayment: If the 8% tax on gross income exceeds the creditable withholding taxes, pay the balance with the return by April 15. If EWT credits exceed the computed tax, the taxpayer elects carryover or refund under Section 76 of the NIRC.
Additional compliance elements for a BIR Form 1701A – Annual Income Tax Return (8% Flat Rate / OSD) used in Philippines include: Under Philippine law, the Civil Code of the Philippines (Republic Act No. 386) governs contractual obligations. The Revised Corporation Code (Republic Act No. 11232) regulates corporate entities through the Securities and Exchange Commission (SEC). The Labor Code of the Philippines (Presidential Decree No. 442) and Department of Labor and Employment (DOLE) govern employment matters. The Data Privacy Act of 2012 (Republic Act No. 10173) and the National Privacy Commission (NPC) protect personal data. The Bureau of Internal Revenue (BIR) administers tax obligations under the National Internal Revenue Code. Forms-legal.com provides this template as a starting point for Philippines-compliant documentation.
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Forms Legal. (2026). BIR Form 1701A – Annual Income Tax Return (8% Flat Rate / OSD) (Philippines) [Legal document template]. Forms Legal. https://forms-legal.com/philippines/government/tax-forms/bir-form-1701a-philippines
"BIR Form 1701A – Annual Income Tax Return (8% Flat Rate / OSD) (Philippines)." Forms Legal, 2026, https://forms-legal.com/philippines/government/tax-forms/bir-form-1701a-philippines.
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}Frequently Asked Questions
BIR Form 1701A in the Philippines is available exclusively to self-employed individuals and professionals who meet all of the following conditions under the TRAIN Law (Republic Act No. 10963, 2017) and BIR Revenue Regulations No. 8-2018: (1) earns income purely from business or professional practice — no compensation income from any employer, which would require BIR Form 1701 instead; (2) annual gross sales or receipts from business/profession do not exceed PHP 3,000,000 — the VAT registration threshold under Section 109 of the NIRC; (3) elected the 8% flat income tax rate under Section 24(A)(2)(b) of the NIRC or the Optional Standard Deduction (OSD) of 40% under Section 34(L); and (4) is not VAT-registered. Mixed income earners (employees with additional business income) cannot use BIR Form 1701A and must file BIR Form 1701. Corporations, partnerships, and other juridical entities file BIR Form 1702 and cannot use BIR Form 1701A. Estates and trusts file BIR Form 1701, not BIR Form 1701A.
Whether the 8% flat income tax rate (BIR Form 1701A) is better than the graduated income tax rates (BIR Form 1701) depends on the taxpayer's profit margin — the ratio of net income to gross income. The 8% option taxes gross income directly (before expenses), while the graduated rates tax net taxable income (gross income minus allowable deductions). The 8% option is better when the taxpayer's allowable deductions are small relative to gross income — for example, a software consultant with minimal overhead. The graduated rates are better when the taxpayer has large deductible expenses — for example, a contractor with high material costs, labor costs, and equipment depreciation. As a rough guide: if the taxpayer's profit margin is above 22.5% of gross income, the 8% option produces a lower tax for taxpayers in the PHP 250,001–PHP 400,000 income bracket. The 8% option also saves the 3% Percentage Tax (BIR Form 2551Q), which would otherwise be payable quarterly under Section 116 of the NIRC. Taxpayers should compute their expected tax under both methods using actual or projected financials before electing.
Taxpayers filing BIR Form 1701A under the 8% flat income tax rate option are NOT required to file quarterly income tax returns (BIR Form 1701Q) during the year, unlike taxpayers on the graduated income tax rates who must pay quarterly under Section 74 of the National Internal Revenue Code. Under BIR Revenue Regulations No. 8-2018, taxpayers on the 8% option settle their entire income tax liability in the annual BIR Form 1701A due April 15. They are also exempt from filing quarterly Percentage Tax returns (BIR Form 2551Q) under Section 116 of the NIRC — the 8% rate is in lieu of both income tax and percentage tax. However, if the taxpayer's clients withhold Expanded Withholding Tax (EWT) on professional fees or business payments and issue BIR Form 2307, the taxpayer must still acknowledge these withholdings in BIR Form 1701A and can use them as tax credits. Taxpayers who registered for VAT — having exceeded the PHP 3,000,000 threshold — lose the 8% option and must file BIR Form 1701 quarterly and annually, plus monthly BIR Form 2550M and quarterly BIR Form 2550Q for VAT.
When a self-employed individual's or professional's gross sales or receipts exceed the PHP 3,000,000 VAT threshold under Section 109 of the National Internal Revenue Code, the taxpayer becomes mandatorily VAT-registered and loses the eligibility to file BIR Form 1701A and avail of the 8% flat income tax rate for that taxable year and all subsequent years. Under Section 109(1)(BB) of the NIRC as amended by TRAIN Law (Republic Act No. 10963), a taxpayer who exceeds PHP 3,000,000 in gross annual sales within any 12-month period must register for VAT within 30 days of the end of the quarter when the threshold was crossed, using BIR Form 1905 (Application for Registration Information Update). After VAT registration, the taxpayer must file BIR Form 2550M (monthly VAT declaration) and BIR Form 2550Q (quarterly VAT return) for the remainder of the year, and switch to BIR Form 1701 for the annual income tax return, applying the graduated income tax rates. Failure to register for VAT upon crossing the threshold subjects the taxpayer to a 12% VAT on all taxable transactions from the date the threshold was crossed, plus surcharges and penalties under Section 248 of the NIRC.
A BIR Form 1701A – Annual Income Tax Return (8% Flat Rate / OSD) does not legally require a lawyer in Philippines, and individuals and businesses may draft and execute the document independently. The National Internal Revenue Code (RA 8424) does not mandate legal representation for the creation or signing of this type of document. However, seeking independent legal advice from a qualified Philippines lawyer is recommended for transactions involving substantial financial value, complex regulatory requirements, or cross-border elements where multiple legal jurisdictions may apply. A lawyer can verify that the document complies with all applicable statutory requirements, identify potential risks specific to the transaction, and confirm that the terms adequately protect the interests of all parties involved. The Supreme Court of the Philippines has jurisdiction over disputes arising from this type of document, and Securities and Exchange Commission (SEC Philippines) may impose additional compliance obligations depending on the nature of the underlying transaction. Professional legal review is particularly advisable where the document will be submitted to government agencies or used as evidence in legal proceedings.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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BIR Form 1701 – Annual Income Tax Return (Self-Employed / Mixed Income)
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BIR Form 2551Q – Quarterly Percentage Tax Return
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BIR Form 1901 – Application for Registration (Self-Employed / Mixed Income)
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