Are you a company or business entity with salaried employees in the past year? If that is the case, you will need to fill out and complete BIR Form 2316 for each individual employee.
This document is mandatory as it shows the earnings of the employee and the total tax withheld from their gross income.
Employees who work for an employer normally receive financial compensation. As such, they will also need a copy of the BIR 2316 Form from their employers. This form also serves as an official document for various purposes.
This article will provide adequate information regarding the Certificate of Compensations Payment/Tax Withheld and its importance.
Related:
- BIR Form Types For Employers and Employees
- What is the BIR Form 1601C and its purpose
- BIR Alphalist Guide
What is BIR Form 2316, or Certificate of Compensation Payment/Tax Withheld?
BIR Form 2316, also known as the Certificate of Compensation Payment/Tax Withheld, is an official document that breaks down an employee’s annual income for the entire calendar year.
Suppose the requesting person is no longer in the company. In this case, the document should still be filled out and completed by the previous employers, as mandated by the government.
Next, the employer must also submit the form to the Bureau of Internal Revenue, the country’s tax-collecting body, before the due date.
Why is BIR Form 2316 an Important Document?
The BIR Form 2316 documents your employee’s gross income and shows the appropriate taxes withheld for the previous financial year.
The form is essential to ensure that an accurate tax amount is subjected to employers and their companies.
Suppose an employee changed jobs within the same calendar year. In this case, they need to obtain a copy of the from their former employer.
Then, they need to submit a copy of this document to their present employer. This ensures proper accounting and correct tax computation for the rest of the calendar year.
Individuals should also need to provide a BIR Form 2316 when applying for credit card subscriptions and loans.
How to Request BIR Form 2316 from Your Previous Employer
You can download a blank copy of BIR Form 2316 from the Bureau of Internal Revenue website.
Make sure to fill out the required information correctly and accurately.
After that, you can either mail it to your past employer for their signatures or visit their accounting office to have your document checked and signed.
However, you can also request a completed copy of BIR Form 2316 from your previous employer by sending a written request or via email.
The employer should release the fulfilled copy on or before January 31 of the succeeding year.
In cases of resignation or employment termination, the document is provided to the requesting party on the same day as the release of the individual’s last compensation or back pay.
How to Process and Complete BIR Form 2316
If you are an employer, here’s what you need to do when fulfilling the BIR Form 2316 for your employees who requested this document:
First, download a blank copy of the form from the Bureau of Internal Revenue website’s Certificates page.
First: Personal information
This portion should show employee information, including his or her complete name.
Fill out the “From” section to indicate the start date for employees hired before the filing date.
For employees hired within the same year as the filing date, indicate the exact date of hire.
In addition, items 9 to 11 should only be filled out if the requestor is a minimum wage earner.
Second: Employer information
Parts 2 and 3 of the form should include complete and accurate employer information.
If you are the employer, you can find the complete information on your business’ Certificate of Registration or Form 2303.
If the requesting individual is a full-time employee, indicate your company as the main employer.
For part-time hires, place your company information under the Secondary Employer section.
In addition, indicate the correct details of the former employer if you are fulfilling BIR Form 2316 for new hires.
Third: Benefits, wages, and contributions
In Part 4 of the form, indicate all benefits, wages earned, and appropriate government contributions.
Include all taxable and non-taxable compensation income your employee receives.
Item 51 should bear the signature of the authorized person(s) in your company.
Item 51 should bear the signature of the requesting employee.
Fourth: Community Tax Certificate and Valid ID
This section must include the requestor’s Community Tax Certificate number or any other valid ID number, along with the place and date of issue and the amount paid (if applicable).
Items 53 and 54 only apply when the requesting individual is qualified for substituted filing. Furthermore, such individuals do not need to submit their own Annual Income Tax Return (AITR).
This means that the employee does not have a source of livelihood or is not employed during the present calendar year.
Prepare four (4) copies of the completed BIR Form 2316. A copy should be provided to the requesting employee.
Two copies shall be submitted to the BIR. You should keep the one remaining copy for your records.
When is the best time to file BIR Form 2316?
Requesting employees should receive a copy of the complete BIR Form 2316 on or before January 31st of the succeeding calendar year.
If the requestor qualifies for substituted filing, the employer is expected to fulfill and submit a copy of the form. Purely compensation income-earners from only one employer for the year are qualified for substituted filing.
This copy should include complete employee and employer information and be duly signed by both the employer and employee.
The requestor should receive the fulfilled document on or before February 28th of the succeeding fiscal year.
What is Substitute Filing?
This means that the employee or taxpayer no longer needs to personally file his or her own income tax return (BIR Form 1700).
Moreover, the employer’s filed Annual Information Return on Income Taxes Withheld (BIR Form No. 1604-C) is considered the employee’s “substitute” ITR.
FAQs
When should I release BIR Form 2316?
Business proprietors are expected to release the completed BIR Form 2316 to requesting employees on or before January 31 of the following fiscal year.
In the case of termination, the issue date should be the same date as the release date of the employee’s final pay.
Are minimum wage earners required to file an income tax return?
An individual does not need to file an annual tax return form if they are a minimum wage earner.
This is applicable if the worker is earning purely compensation income, which should not exceed PHP 250,000 annually, or if the employer has withheld the employee’s total taxes appropriately.
Am I required to file BIR Form 2316 if I am switching jobs?
If you are an employee and are planning to or have already switched jobs within the same fiscal year, you will receive a completed BIR Form 2316 from each of your past employers.
Your new employer will require this document for them to correctly compute and file your total tax returns on your behalf.
Related: Learn how to compute your taxable income. See the tax rate guide here.
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