In the Philippine tax system, most employees enjoy the convenience of substituted filing, where the employer’s year-end adjustment serves as the individual’s tax return. However, this privilege is strictly limited. When an employee receives compensation from two or more employers within a single taxable year—whether concurrently or successively—the legal requirements for tax compliance shift significantly.
1. The Loss of Substituted Filing
Under Revenue Regulations No. 2-98, as amended, substituted filing is only applicable when an employee receives purely compensation income from a single employer in the Philippines for the calendar year, and the tax has been correctly withheld.
If you have two or more employers during the year, you are disqualified from substituted filing. This remains true even if each employer correctly withheld taxes from your salary. You are legally required to file your own annual income tax return.
2. Legal Obligations of the Employee
Because the "substituted" status is lost, the responsibility for consolidating income and ensuring the correct tax bracket is applied falls on the employee.
- Consolidation of Income: You must aggregate all compensation income earned from all employers during the taxable year.
- Filing BIR Form 1700: This is the Annual Income Tax Return for Individuals Earning Purely Compensation Income. It is used to report the total income, total taxes withheld, and any tax still due or refundable.
- Deadline: The deadline for filing Form 1700 and paying any resulting tax deficiency is April 15 of the following year.
3. Required Documentation
To accurately file your taxes, you must collect specific documents from your employers:
| Document | Purpose |
|---|---|
| BIR Form 2316 | The Certificate of Compensation Payment/Tax Withheld. You must obtain this from every employer you had during the year. |
| Proof of Tax Credits | If you have other allowable credits, though for purely compensation earners, the 2316 is the primary attachment. |
4. The "Successive" vs. "Concurrent" Scenarios
Successive Employment (Change of Jobs)
If you left Company A in June and joined Company B in July:
- Company A must issue you a BIR Form 2316 upon your resignation.
- You must submit that Form 2316 to Company B.
- Company B is technically required to perform a "year-end adjustment" by adding your income from Company A to your current earnings to compute the total tax.
- Note: Even if Company B performs this adjustment, you are still legally required to file Form 1700 because you had multiple employers during the year.
Concurrent Employment (Moonlighting)
If you work for Company A and Company B at the same time:
- Neither employer is aware of the other's specific payroll calculations (unless disclosed).
- Each employer will likely apply the lower tax brackets to your income.
- When you consolidate your income on Form 1700, your total income will likely push you into a higher tax bracket. This usually results in a tax payable (tax deficiency) that you must pay out of pocket by April 15.
5. Penalties for Non-Compliance
Failure to file BIR Form 1700 when required can lead to several legal and financial repercussions under the National Internal Revenue Code (NIRC):
- Surcharge: A penalty of 25% of the tax due (or 50% in cases of willful neglect or fraud).
- Interest: Assessed at a rate of 12% per annum (under the TRAIN Law) from the deadline until paid.
- Compromise Penalties: Fixed amounts based on the total sales or tax due, often ranging from ₱1,000 to ₱50,000.
6. Summary Checklist
- Collect 2316s: Ensure you have the signed certificate from every employer.
- Download eBIRForms: Use the latest version of the BIR software to encode Form 1700.
- Compute the Difference: Subtract the total taxes withheld (shown on all 2316s) from the total tax due on your consolidated income.
- File and Pay: Submit the form online and pay any balance through authorized agent banks (AABs) or mobile payment gateways.