BIR FORM 2316

DESCRIPITION - Also known as the Certificate of Compensation Payment or Income Tax Withheld, this
form reflects the tax withheld from an employee by his employer during a given calendar year. This
form will show the total income received by the employee for a certain year, and the total amount of
tax withheld from the employee.

BIR Form 2316 is a certificate to be accomplished and issued to each employee receiving salaries,
wages and other forms or remuneration by each employer indicating therein the total amount paid
and the taxes withheld therefrom during the calendar year.This Certificate in turn should be attached
to the Annual Income Tax Return (BIR Form 1700 for individuals receiving purely compensation
income, or BIR Form 1701 for individuals with mixed income).

BIR Form 2316 shall be issued to payee on or before January 31 of the succeeding year in which
the compensation was paid, or in cases where there is termination of employment, it is issued on the
same day the last payment of wages is made.

IMPORTANCE - All employees must receive from their employer the BIR Form 2316 anytime within
the first month of the year. This is important so that employees are kept aware about the amount of
tax that is withheld from them. The form must reflect the portion of the employees income that is
exempt from tax, and the portion of the income that has been taxed. Additionally, the form is proof
that the amount the employer withheld from the employee is really turned over to the government.

The BIR 2316 must also be issued by an employer to an employee when the latter resigns from
the company.1 The form is usually issued to an employee together with his last pay/back pay,
together with the Certificate of Employment. The Form 2316 will then be submitted to the new
employer as part of the pre-employment requirements.

The computation reflected in an employees Form 2316 will show whether the employer was
able to withhold the correct amount of tax from the employee. The amount must be computed
accurately as this will also reflect in BIRs records.

WHO ARE REQUIRED TO FILE INCOME TAX RETURNS?

You are a Filipino citizen living in the Philippines, receiving income from sources within or outside
the Philippines, and if

You are employed by two or more employers, any time during the taxable year.

You are self-employed, either through conduct of trade or professional practice.

You are deriving mixed income. This means you have been an employee and a self-employed
individual during the taxable year.

You derive other non-business, non-professional related income in addition to compensation

income not otherwise subject to a final tax.

You are married, employed by a single employer, and your income has been correctly
withheldthe tax due is equal to the tax withheldbut your spouse is not entitled to
substituted filing.

You are a marginal income earner.

 Your income tax during the past calendar year was not withheld correctlyif the tax due is not
equal to the tax withheld.

You are a non-resident citizenif you are a Filipino who works or resides abroadreceiving income
from sources within the Philippines. (You are taxable only for the income you earn from the
Philippines.)

You are not a Filipino citizen but you receive income from sources within the Philippines, regardless
of your residency. (You are taxable only for the income you earn from the Philippines.)

WHO ARE NOT REQUIRED TO FILE AN INCOME TAX RETURN?

You are not required to file an income tax return, if:

You are a minimum wage earner.

Your gross income (total earned for the past year) does not exceed your total personal and
additional exemptions.

Your income derived from a single employer does not exceed P60,000 and the income tax on
which has been correctly withheld.

Your income has been subjected to final withholding tax.

You are qualified for substituted filing. Requirements:

- You are employed by a single employer during the taxable year.

- You earn purely compensation income from that single employer.

- Your tax due at the years end equals the tax withheld by the employer.

- If you are married, your spouse also complies with the above conditions.

- Your employer files the annual information return (BIR Form No.1604-CF).

- Your employer issues BIR Form No.2316 to every employee.

WHO ARE EXEMPT FROM FILING INCOME TAX RETURNS?

However, there are certain individuals who are exempted from filing if

You are a non-resident citizen who is:

- A Filipino citizen not residing in the Philippines, but who has established with the BIR that you wish
to remain living outside the country.
- A Filipino citizen who leaves the Philippines during the taxable year to reside abroad, either as an
immigrant of for permanent employment.

- A Filipino citizen who works and earns income abroad.

- A Filipino citizen previously considered a non-resident citizen.

- You are an overseas Filipino worker whose income is derived solely from sources outside the
Philippines.

- If you are Filipino citizen working as an overseas seaman, your vessel must be engaged exclusively in
international trade.

TAXATION DEFINED

INHERENT POWERS OF THE STATE

POLICE POWER

The power to protect citizens and provide safety and welfare of society. The power of
sovereignty, the power to govern men and things within the limits of its dominion. From these roots,
the common definition of police power has evolved to the power to govern, the power inherent in
every sovereignty to control men and things under which authority the state may, within
constitutional limitations, prohibit all things hurtful to the comfort, safety, and welfare of society and
prescribe regulations to promote the public health, morals, safety, and order, and to add to the
general public convenience, prosperity and welfare.

Sovereignty provides the ultimate justification for the general exercise of governmental coercion,
while the police power represents the specific concept verifying and validating application of that
force to myriad special instances. The revenue power of taxation and the land control power of
eminent domain serve as the scalpels of sovereignty, slicing away bits of human liberty in the name of
public necessity; police power is sovereignty's sledgehammer, pummeling the subjects into an orderly,
if restricted, pattern of conduct.

EMINENT DOMAIN POWER

The power to take private property (with just compensation) for public use. Eminent domain
marks the attribute or power of a sovereign state to appropriate private property to particular uses
against the owners' consent in order to promote public welfare (usually after application of
procedural "due process" and the payment of "just" compensation).

TAXATION POWER

The power to enforce contributions to support the government, and other inherent powers of
the state. Taxation pertains to the power of government to extract involuntary contributions of in
come or property from residents or subjects for the support of the state and its undertakings.

1. A power by which an independent state, through its law making body, raises and accumulates
revenue from its inhabitants to pay the necessary expenses of the government.

2. A process or act of imposing a charge by governmental authority on property, individuals or

transactions to raise money for public purposes.
3. A means by which the sovereign state through its law-making body demands for revenue in order
to support its existence and carry out its legitimate objectives.

NATURE OF TAXATION

1. Inherent power of sovereignty;

2. Essentially a legislative function;

3. For public purposes;

4. Territorial in operation;

5. Tax exemption of government;

6. The strongest among the inherent powers of the government; and

7. Subject to constitutional and inherent limitations.