Income Tax Return: How to File and Compute ITR for Partnership Businesses in the Philippines

June 16, 2025

Payroll Outsourcing Services Philippines

Filing income tax returns (ITRs) is mandatory for all registered businesses in the Philippines. Whether you’re self-employed, a sole proprietor, part of a partnership, or a corporation, you must declare and pay your income tax. To help you stay compliant and avoid penalties, we’ll walk you through the basics of computing and filing ITRs for partnership businesses.

For ITR filing for self-employed individuals, sole proprietorships, and corporations, check out our other guides on our website.

What is an Income Tax Return

An ITR is a form submitted to the Bureau of Internal Revenue (BIR) to report a taxpayer’s income, expenses, and taxes due. It is used to calculate how much tax a business or individual owes.

What is a Partnership?

A partnership is a business structure where two or more individuals pool resources to earn and share profits. In the Philippines, partnerships are treated as separate taxable entities and must file income taxes like corporations. General professional partnerships (GPPs), such as law or accounting firms, are an exception. In GPPs, each partner is taxed individually on their share of the net income.

How to File and Compute ITR for Partnership Businesses

Step 1: Prepare the Required Financial Statements

Before filing, gather and finalize your financial records for the taxable year. You’ll need:

Audited Financial Statements (AFS)
Statement of Management’s Responsibility
Schedule of Income and Deductions
Books of Accounts and other supporting documents

Make sure your accounting books are properly maintained to ensure accurate computation of taxes. We have services to help you with audits, bookkeeping, payroll, and other accounting tasks.

Step 2: Compute Your Taxable Income

Here’s a basic formula to compute taxable income for partnerships (non-GPP):

Gross Sales/Revenue
– Allowable Deductions (Cost of Sales, Operating Expenses, etc.)
= Net Taxable Income

Partnerships can choose between two deduction methods:

Itemized Deductions – You deduct actual business expenses supported by documents. This is better for businesses with high expenses, often leading to a lower income tax than the other option.
Optional Standard Deduction (OSD) – You deduct 40% of gross sales/revenue, no need to itemize. This is usually preferable for businesses with very low expenses.

For example:

Gross Revenue: ₱2,000,000
Itemized Deductions: ₱1,200,000
→ Taxable Income = ₱800,000
→ Income Tax = 25% of ₱800,000 = ₱200,000

If using OSD:

40% of ₱2,000,000 = ₱800,000
→ Taxable Income = ₱1,200,000
→ Income Tax = 25% of ₱1,200,000 = ₱300,000

Choose the method that gives you the lower tax due.

Keep in mind that this is a simplified example. Filing income tax returns, especially when using itemized deductions, can be complex and often requires professional guidance. Contact us to ensure your filing is accurate and to maximize your tax deductions.

Step 3: File the Appropriate BIR Form

Use BIR Form 1702-RT (Annual Income Tax Return for Corporation, Partnership, and Non-Individual Taxpayer Subject Only to Regular Income Tax Rate) if your partnership is not a GPP.

Filing Deadlines:

Quarterly ITRs (BIR Form 1702Q) – Due within 60 days after the close of each quarter.
Annual ITR (BIR Form 1702-RT) – Due on or before April 15 of the following year.

For general professional partnerships, file BIR Form 1702-EX (for exempt corporations) and BIR Form 1701-A for each individual partner.

Step 4: File Your Income Tax Return

Partnerships in the Philippines are now required to file their Annual Income Tax Return (AITR electronically, in line with updated BIR regulations. Manual filing is no longer allowed for partnerships unless explicitly authorized by the BIR (e.g., during system downtime or under specific circumstances).

You can file your return using one of the following platforms:

eBIRForms – This is the standard electronic filing system for most partnerships. It allows you to fill out and submit your return digitally via downloadable software or through online submission.
Electronic Filing and Payment System (eFPS) – Required only for partnerships classified as large taxpayers or those mandated by the BIR due to their tax classification, gross income, or use of accredited tax agents.

While online filing is convenient, it makes government support for filing your taxes less accessible. Each mistake risks penalties and can trigger an audit. Contact us to ensure your income tax return is accurate, complete, and fully compliant.

Step 5: Pay Your Income Tax

Once your ITR has been successfully filed, your partnership must pay the tax due on or before the deadline to avoid interest, surcharges, or penalties.

You can pay through any of the following channels:

GCash or Maya (formerly PayMaya) – Fast and convenient for partnerships with smaller tax amounts.
Online banking – Through authorized banks that are connected to the BIR payment gateway.
Authorized Agent Banks (AABs) – For over-the-counter payments, especially if your digital payment fails or you prefer a manual transaction.

Keep your official receipt as proof of payment in case the BIR requests documentation or your partnership undergoes an audit.

Summary

Filing an income tax return (ITR) for partnership businesses in the Philippines involves several steps—preparing financial statements, computing taxable income, filing the correct forms, and paying on time. Navigate each step carefully as late filing or errors can result in penalties or even an audit. Don’t hesitate to contact us to make sure your ITR is accurate and filed before the deadline.

Do You Want to Stay Compliant While Lowering Your Tax Liability? Let Our Accounting Experts Support You.

Navigating business regulations in the Philippines can be complex, especially when it comes to maintaining accurate accounting records. Any errors or omissions can lead to significant fines, penalties, or even trigger a BIR audit.

That’s where Triple i Consulting can help. As one of the top accounting outsourcing firms in the Philippines, we offer reliable services in bookkeeping, payroll, auditing, and tax advisory. Let our skilled lawyers and accountants handle the details so you can focus on running your business without the stress of paperwork.

You can find a list of our legal and accounting services here.