How to File the Annual Income Tax Return (ITR) with Audited Financial Statement (AFS) for Partnership & Corporation ? 2026

How to File the Annual Income Tax Return (ITR) with Audited Financial Statement (AFS) for Partnership & Corporation ? 2026

 

 

 

as of  march 19, 2026 , from ChatGPT:

Filing the Annual Income Tax Return (ITR) with Audited Financial Statements (AFS) for a partnership or corporation in the Philippines (2026) follows a structured process under the Bureau of Internal Revenue. I’ll break it down clearly so you can actually execute it.

I. How to File the Annual Income Tax Return (ITR) with Audited Financial Statement (AFS) for Partnership & Corporation ? 2026 

 

 

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🧾 1. Know What You Need to File

For Partnerships & Corporations:

• ITR Form:

  • BIR Form 1702-RT – Regular (subject to normal income tax)

  • BIR Form 1702-EX – If exempt

  • BIR Form 1702-MX – Mixed income

• Attachments:

  • Audited Financial Statements (AFS)

  • Independent Auditor’s Report

  • Notes to FS

  • Statement of Management Responsibility (SMR)

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📅 2. Deadline (Important)

• April 15, 2026 → Filing of Annual ITR

• April 30, 2026 → Submission of AFS (if required separately)

⚠️ If you are using eAFS, the AFS is uploaded online (no need for manual submission).

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💻 3. Prepare Before Filing

You need:

• Books of accounts finalized

• Trial balance

• Adjusting entries

• CPA to audit financial statements (required for most corporations/partnerships)

👉 AFS must be signed by a licensed CPA.

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🧮 4. Compute Tax Due

Basic formula:

Taxable Income = Gross Income – Deductions
Income Tax = Taxable Income × Tax Rate

• Corporate tax rate: usually 25% (or 20% for small corporations if qualified)

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🖥️ 5. File the ITR (Step-by-Step)

OPTION A: eBIRForms (offline + submit online)

1. Download eBIRForms

2. Fill up:

   • Company details

   • Financial data

3. Validate the form

4. Submit online

5. Receive email confirmation from BIR

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OPTION B: eFPS (for large taxpayers / required entities)

Use Electronic Filing and Payment System:

1. Log in

2. Fill up Form 1702

3. Submit

4. Pay online through accredited banks

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💸 6. Pay the Tax Due

You can pay via:

• Online banking (eFPS)

• GCash / Maya (if supported)

• Authorized Agent Banks (AABs)

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📤 7. Submit AFS (Important Part)

OPTION A: eAFS (Recommended)

Upload via eAFS System:

Required files (PDF):

• AFS (signed)

• ITR (stamped/validated)

• Proof of payment

• SAWT (if applicable)

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OPTION B: Manual Submission (if required)

Submit to your RDO:

• 3–4 copies of AFS

• Stamped ITR

• Attachments

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📎 8. Additional Attachments (if applicable)

• SAWT (Summary of Alphalist of Withholding Taxes)

• BIR Form 2307 (Creditable withholding tax)

• Schedules

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⚠️ Common Mistakes to Avoid

• ❌ Late filing (penalties apply)

• ❌ Missing CPA signature in AFS

• ❌ Wrong tax form (1702-RT vs MX)

• ❌ Not uploading via eAFS

• ❌ Mismatch between ITR & AFS

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🧠 Important for YOU (Based on your situation)

Since you mentioned:

“I do not have salary in my small business partnership”

👉 That’s correct:

• The partnership files its own ITR (1702)

• You personally file separate ITR (Form 1701) only if you have other income

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👍 Simple Summary Flow

1. Prepare books → Audit → AFS

2. Fill up Form 1702 (eBIRForms/eFPS)

3. File & pay by April 15

4. Upload AFS via eAFS

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 II. Which is more convenient, eBIRforms or eFPS?

 

Short answer:
👉 For most businesses like yours → eBIRForms is more convenient
👉 For bigger/regular filers → eFPS is more convenient

Let me explain clearly so you can decide 👇

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⚖️ eBIRForms vs eFPS (Real Comparison)

🟢 eBIRForms (Most commonly used)

Best for: small–medium partnerships & corporations

👍 Advantages

• Easier to use (simple interface)

• You can prepare offline (no internet needed while encoding)

• Auto-computes tax

• No special approval needed (any taxpayer can use)

• Widely used by SMEs

👉 That’s why it’s considered “more accessible and convenient”

👎 Disadvantages

• Filing only (payment is separate)

• Windows-only software (medyo hassle)

• More manual steps (file → then pay → then upload AFS)

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🔵 eFPS (More advanced system)

Best for: large corporations / frequent filers

👍 Advantages

• All-in-one → file + pay in one system

• Fully online (no software install)

• Faster confirmation

• Available 24/7, real-time validation

👎 Disadvantages

• Not open to everyone (need BIR approval)

• Setup/enrollment is more complicated

• Usually required only for big taxpayers

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🧠 Practical Advice (Important for YOU)

Since you said:

small partnership trading business

👉 You should use eBIRForms

Why?

• You are likely a non-eFPS filer

• BIR actually designed eBIRForms for businesses like yours

• Less hassle vs applying for eFPS

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🔥 Simple Decision Guide

Situation	Use This
Small partnership / SME	✅ eBIRForms
Large corporation / high volume	✅ eFPS
Want simplest setup	✅ eBIRForms
Want all-in-one (file + pay)	✅ eFPS

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💡 My Honest Recommendation

For you:

👉 Stick with eBIRForms + eAFS

It’s:

• simpler

• standard for SMEs

• less risk of compliance issues 

  
  

III. Corporate Income Tax Rates (Philippines – 2026)

Under the CREATE Law:

🔵 25% (Regular Rate)

This applies if your company is NOT small.

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🟢 20% (Lower Rate – good news 😄)

You qualify for 20% corporate income tax if BOTH are met:

✅ 1. Net Taxable Income ≤ ₱5,000,000

AND

✅ 2. Total Assets ≤ ₱100,000,000

(excluding land where office is located)

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📊 Example

Case 1 (Qualified for 20%)

• Net income: ₱3,000,000

• Assets: ₱50,000,000

👉 Tax = 20% → ₱600,000

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Case 2 (Not qualified)

• Net income: ₱6,000,000 ❌ (exceeds 5M)

• Assets: ₱80,000,000

👉 Tax = 25% → ₱1,500,000