BIR Form 1702 – Annual Income Tax Return (Corporations and Partnerships)

A BIR Form 1702 – Annual Income Tax Return in the Philippines sets out the taxpayer's computation and supporting particulars for filing with the revenue authority.

The corporate income tax rates applicable to BIR Form 1702 were amended by the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE Act, Republic Act No. 11534, 2021). Under Section 27(A) of the NIRC as amended by CREATE: domestic corporations with net taxable income not exceeding PHP 5,000,000 AND total assets not exceeding PHP 100,000,000 (excluding land on which the business entity's office, plant, and equipment are situated) pay 20% Regular Corporate Income Tax (RCIT); all other domestic corporations pay 25% RCIT. Foreign corporations doing business in the Philippines pay 25% on net taxable income from Philippine sources under Section 28(A)(1) of the NIRC.

The Minimum Corporate Income Tax (MCIT) of 2% of gross income applies beginning from the fourth taxable year immediately following the year of commencement of business operations, when the MCIT is greater than the RCIT under Section 27(E) of the NIRC as amended by CREATE. Registered Business Enterprises (RBEs) with the Board of Investments (BOI) or Philippine Economic Zone Authority (PEZA) that availed of the CREATE Act incentives may instead pay the Special Corporate Income Tax (SCIT) at 5% of gross income earned.

BIR Form 1702 has three variants: BIR Form 1702-RT (for regular taxpayers subject only to RCIT with no special tax relief); BIR Form 1702-EX (for corporations wholly exempt from income tax such as non-profit hospitals and educational institutions under Section 30 of the NIRC); and BIR Form 1702-MX (for corporations with mixed income — some income taxable at RCIT and some at preferential rates or exempt). All three variants follow the same general structure but include different schedules.

The legal framework governing the BIR Form 1702 – Annual Income Tax Return (Corporations and Partnerships) 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 1702 – Annual Income Tax Return (Corporations and Partnerships) 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.

BIR Form 1702 is required annually for every corporation, partnership, and other non-individual taxpayer registered with the BIR in the Philippines.

BIR Form 1702 is required for a Philippine stock corporation registered with the Securities and Exchange Commission (SEC) under the Revised Corporation Code (Republic Act No. 11232, 2019) that earned taxable income during the calendar year (January 1 to December 31) or fiscal year. The return must be filed at the RDO and the corporate income tax paid by April 15 for calendar-year filers.

BIR Form 1702 is required for a general professional partnership (GPP) — such as a law firm or accounting firm — that distributes its income to individual partners who then report their share in their individual ITRs (BIR Form 1701). The GPP itself is not subject to income tax under Section 22(B) of the NIRC, but must still file BIR Form 1702-EX to report its income and demonstrate its exempt status.

BIR Form 1702 is required for a PEZA-registered IT-BPO company or manufacturing enterprise that previously paid the 5% SCIT on gross income earned (GIE) under the EPZA Law and now avails of the 5% SCIT under the CREATE Act fiscal incentives during the income tax holiday transition period.

BIR Form 1702 is required for a foreign bank's Philippine branch registered with the Bangko Sentral ng Pilipinas (BSP) under the General Banking Law (Republic Act No. 8791), which is subject to 25% RCIT on its Philippines-sourced income plus 15% Branch Profit Remittance Tax under Section 28(A)(5) of the NIRC on profits remitted to the foreign head office.

BIR Form 1702 is required for a cooperative registered with the Cooperative Development Authority (CDA) under Republic Act No. 9520, filing BIR Form 1702-EX if the cooperative transacts exclusively with members and qualifies for income tax exemption under Section 109(L) of the NIRC.

BIR Form 1702 for Philippine corporations must include the following essential schedules and information for correct corporate income tax computation.

Corporate Identification: Full registered name of the corporation, TIN, SEC registration number, principal business address, RDO number, taxable year (calendar or fiscal), and type of BIR Form 1702 variant (1702-RT, 1702-EX, or 1702-MX). The variant determines which schedules apply.

Gross Income: Total gross revenues from all sources — sales of goods (net of returns and discounts), services income, interest, dividends, royalties, and other non-operating income — in Philippine pesos (PHP ₱). For trading and manufacturing companies, compute gross income as net sales minus cost of goods sold. For service companies, gross income equals total service revenues.

Deductible Expenses: Allowable business deductions under Section 34 of the NIRC — cost of sales; compensation and wages; rent; interest expense; taxes and licenses; depreciation and amortization; bad debts; charitable contributions (subject to limits under Section 34(H)); research and development; and other ordinary and necessary business expenses. Expenses must be substantiated by official receipts, invoices, and supporting documents.

Net Taxable Income: Gross income minus total deductible expenses equals net taxable income. Apply the CREATE Act rates: 20% RCIT for qualifying SMEs (net taxable income ≤ PHP 5,000,000 AND total assets ≤ PHP 100,000,000 excluding land); 25% RCIT for all other domestic corporations.

MCIT Computation: From the fourth taxable year onwards, compute MCIT as 2% of gross income under Section 27(E) of the NIRC. Pay whichever is higher — RCIT or MCIT. Excess MCIT over RCIT may be carried forward and credited against RCIT for the immediately succeeding 3 taxable years.

Quarterly Corporate Tax Payments: Deduct quarterly income tax payments (BIR Form 1702Q filed for the 1st, 2nd, and 3rd quarters) and creditable withholding taxes (EWT per BIR Form 2307 from clients who withheld on payments to the corporation). The balance is payable with BIR Form 1702.

CPA Certification: Corporations with gross annual sales exceeding PHP 3,000,000 must attach financial statements certified by an independent CPA under BIR Revenue Regulations No. 15-2010.

Additional compliance elements for a BIR Form 1702 – Annual Income Tax Return (Corporations and Partnerships) 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.