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Streamlined guidelines, procedures

Transfer Pricing has long stayed in the consciousness of Philippine companies as the BIR stepped up the enforcement of transfer pricing rules and augmented the pace of incorporating transfer pricing examinations in the regular BIR audits.

Amid the pandemic, the BIR has issued Revenue Regulations (RR) No. 19-2020 last July 2020, requiring the submission of a three-page Information Return on Related Party Transactions or RPT Form (BIR Form No. 1709), to be attached, together with supporting documents, to the Annual Income Tax Return (AITR). This BIR Form will be used as a reference in choosing which company will be subjected to transfer pricing investigation by the BIR.

To take into account the mandate of the Ease of Doing Business and Efficient Government Service Delivery Act of 2018 especially during the COVID-19 pandemic, the BIR recently issued Revenue Regulations (RR) No. 34-2020 to lay out the streamlined guidelines and procedures in the submission of BIR Form No. 1709 (Information Return on Related Party Transactions [RPT]) and its required attachments including transfer pricing documentation (TPD). 

This basically means that only those taxpayers who have met the criteria detailed below will be required to submit the BIR Form 1709 and its mandatory attachments.

Submission of BIR Form 1709

Only the following taxpayers will now be required to submit the BIR Form No. 1709:

1. Large taxpayers; OR

2. Taxpayers enjoying incentives, i.e. BOI- and PEZA-registered enterprises enjoying Income Tax Holiday or subject to preferential tax rate; OR

3. Taxpayers reporting net operating losses for the current taxable year and immediately preceding two (2) consecutive taxable years; OR

4. A related party which has transactions with taxpayers enumerated above. Key management personnel are no longer required to submit BIR Form No. 1709.

Submission of TPD and other supporting documents

The preparation and submission of TPD is required only for the above taxpayers who are covered by the submission of BIR Form No. 1709 (see above-mentioned) and who meet the following criteria:

a)   Annual gross sales/revenues for subject taxable period exceeds P150,000,000 and the total amount of related party transactions with foreign and domestic related parties exceeds P90,000,000.

In computing the threshold, the following are included:

  • Amounts received and/or receivable from related parties or amounts paid and/or payable to related parties during taxable year but excluding compensation to key management, dividends and branch profit remittance.
  • Outstanding balances of loans and non-trade amounts due from/to all affiliates OR

b)  Related party transactions threshold:

  • If involving sale of tangible goods, the aggregate amount exceeds P60,000,000 within the taxable year;
  • If involving service transaction, interest payment, use of intangible goods or other related party transactions in the aggregate amount exceeds P15,000,000 within the taxable year OR

c)   If TPD was required to be prepared during the immediately preceding taxable period for exceeding (a) or (b) above.

The TPD and other supporting documents to the BIR Form 1709 are no longer required to be attached to the form. However, these are required to be submitted within 30 calendar days (subject to non-extendible period of 30 days based on meritorious grounds) upon receipt of request from the BIR pursuant to a duly issued Letter of Authority covering all internal revenue taxes.

Taxpayers who are not covered by the submission of BIR Form No. 1709 and supporting documents are required to disclose in the Notes to Financial Statements that they are not covered by the requirements of preparation and submission of BIR Form 1709, TPD and other supporting documents.

Amendments to simplify BIR Form 1709

The following are the key changes in the December 2020 version of BIR Form 1709:

  • Transactions with key management personnel and the reporting entity are no longer required to be reported in BIR Form 1709.
  • Related party transactions are categorized per type rather than per related party.
  • The taxpayer shall disclose whether they prepared a TPD for the related party transactions as prescribed under Revenue Regulations No. 2-2013.

We expect further developments and updates on this matter as the BIR tries to catch up with the global practice in transfer pricing compliance. As such, taxpayers must keep an eye on these developments to avoid non-compliance resulting to penalties.

Carl Adrian R. Grengia is an Associate of the Tax Advisory and Compliance at the Cebu branch of P&A Grant Thornton. P&A Grant Thornton is one of the leading audit, tax, advisory, and outsourcing firms in the Philippines with 24 Partners and more than 900 staff members. We’d like to hear from you! Tweet us: @GrantThorntonPH, like us on Facebook: P&A Grant Thornton, and email your comments to or For more information, visit our website:


As published in Mindanao Times, dated 30 December 2020