BIR Form 1603: Quarterly Remittance of Final Income Taxes Withheld on Fringe Benefits Paid to Employees Other Than Rank and File

In the Philippines, employers are required to remit taxes withheld on fringe benefits provided to certain employees, particularly those in managerial or supervisory positions. BIR Form 1603 is the specific form used for this purpose. This form ensures that final income taxes on fringe benefits paid to employees other than rank-and-file employees are properly reported and remitted to the Bureau of Internal Revenue (BIR).

In this blog post, we’ll break down what BIR Form 1603 is, who needs to file it, when it should be filed, and how to file it correctly.

What Is BIR Form 1603?

BIR Form 1603 is the Quarterly Remittance Return of Final Income Taxes Withheld on Fringe Benefits Paid to Employees Other Than Rank and File.

This form is specifically used by employers to report and remit final income taxes on fringe benefits provided to managerial and supervisory employees. Under the Philippine tax code, fringe benefits provided to non-rank-and-file employees (such as executives or managers) are subject to a final tax, which is withheld by the employer and remitted to the BIR.

Fringe benefits include non-monetary benefits like company cars, housing allowances, interest-free loans, stock options, and other perks provided to employees. These benefits are subject to final withholding tax at a rate set by the BIR.

Who Needs to File BIR Form 1603?

BIR Form 1603 must be filed by employers who provide fringe benefits to non-rank-and-file employees (usually managerial, supervisory, or executive employees). This includes:

Corporations or business entities providing fringe benefits to their managerial or supervisory employees.

Government agencies or other entities that offer fringe benefits to employees not classified as rank-and-file.

Sole proprietors or partnerships who provide fringe benefits to their non-rank-and-file employees.

What Are Fringe Benefits?

Fringe benefits are defined as all non-monetary compensation or benefits provided to employees. These can include:

Company cars

Housing allowances or free lodging

Interest-free or low-interest loans

Stock options or profit-sharing plans

Club memberships

Vacation allowances

Education assistance

Other perks provided to managerial or supervisory employees that are not offered to rank-and-file employees.

Fringe benefits are subject to final withholding tax at a fixed rate, and the employer is required to withhold and remit this tax on a quarterly basis.

When Should You File BIR Form 1603?

Due Date: BIR Form 1603 must be filed quarterly, and the due date for filing and remitting the tax is the 10th day of the month following the close of the quarter.

Example: For fringe benefits provided in January to March, the form must be filed and taxes paid on or before April 10.

For fringe benefits provided in April to June, the filing deadline will be July 10, and so on.

Note: If the deadline falls on a weekend or holiday, the filing and payment deadline is moved to the next working day.

How to File BIR Form 1603

There are several methods for filing BIR Form 1603, depending on your filing status:

1. eFPS (Electronic Filing and Payment System)

This system is used by large taxpayers, corporations, and certain government entities. It allows you to electronically file the return and remit the taxes online.

eFPS is efficient for filing, payment, and confirmation of remittance.

2. eBIRForms

For taxpayers who are not required to use eFPS, you can file BIR Form 1603 via eBIRForms, which is the BIR's online filing system.

After filling out the form, you can print a copy and make the payment at an Authorized Agent Bank (AAB) or through online payment methods such as GCash, Maya, or UnionBank.

3. Manual Filing

In some cases, businesses may file manually at their designated Revenue District Office (RDO).

You will need to submit a printed copy of the form and pay at an accredited bank.

Key Fields in BIR Form 1603

When completing BIR Form 1603, there are key fields you need to fill out, including:

TIN and RDO Code: Your taxpayer identification number (TIN) and the specific code for your Revenue District Office (RDO).

Return Period: Indicate the quarter for which you are remitting taxes (e.g., Q1-2025 for the first quarter of 2025).

Tax Type: You will be reporting the final tax withheld on fringe benefits, so the tax type should reflect this.

Amount of Fringe Benefits Provided: The total amount of fringe benefits paid to employees within the quarter.

Tax Withheld: The final tax that has been withheld on those fringe benefits.

Amount Payable: The total amount you need to remit to the BIR for that quarter.

Common Mistakes to Avoid

Late Filing: Be sure to file and remit on time to avoid penalties and surcharges.

Incorrect Fringe Benefits Calculation: Double-check that you're including all applicable fringe benefits and calculating the correct tax.

Failure to Submit Payment: Ensure that both the form is filed and the tax is remitted by the due date.

Errors in Taxpayer Details: Confirm that your TIN and RDO code are correct to avoid delays.

Final Thoughts

BIR Form 1603 is a vital compliance tool for employers who provide fringe benefits to their managerial or supervisory employees. By filing this form on time and accurately reporting the final tax withheld, businesses can avoid penalties, ensure they meet their tax obligations, and maintain good standing with the BIR.

Fringe benefits are a valuable part of compensation, but they come with their own tax responsibilities. If you have questions about calculating fringe benefit taxes or how to file the form, it’s advisable to consult with a tax professional or accountant.