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March 1, 2021

Philippines provides guidelines and procedures for transfer pricing reporting

Executive summary

The Philippine Bureau of Internal Revenue (BIR) issued Revenue Regulations (RR) No. 34-20201 (the Regulations) providing guidelines and procedures for the submission of a new and simplified BIR Form No. 1709 (the Related Party Transactions (RPT) Form), transfer pricing (TP) documentation and other supporting documents. Safe harbors and materiality thresholds have also been provided. The Regulations became effective on 23 December 2020.

This Tax Alert summarizes the guidelines and procedures under the Regulations.

Detailed discussion

Covered taxpayers

The following taxpayers are required to file and submit the new RPT Form, together with the Annual Income Tax Return (AITR):

  1. Large taxpayers2

  2. Taxpayers with tax incentives, i.e., Board of Investments (BOI)-registered and economic zone enterprises, and taxpayers on Income Tax Holiday (ITH) or on a preferential income tax rate

  3. Taxpayers reporting net losses for the current taxable year and the immediately preceding two consecutive taxable years

  4. A related party, as defined in RR No. 19-2020, which has transactions with (a), (b) or (c) above. For this purpose, key management personnel (KMP), as defined under Section 3(7) of RR No. 19-2020, shall no longer be required to file and submit the RPT Form, nor shall there be any requirement to report any transaction between the KMP and the reporting entity/parent company of the latter in the RPT Form.

    In computing the above thresholds, the following items must be included:

Additional disclosure requirements for taxpayers with related party transactions

The RPT Form shall also be attached to short period returns required to be filed under existing laws or regulations commencing for 2021 and subsequent years.

Submission of TP documentation and other supporting documents

Submission of TP documentation is mandatory for the above taxpayers who meet any of the following materiality thresholds:

(a) Annual gross sales/revenue for the subject taxable period exceeding PHP150 million (US$3.1 million) and the total amount of related party transactions with foreign and domestic related parties exceeds PHP90 million (US$1.9 million).

In computing the above thresholds, the following items must be included:

i. Amounts received and/or receivable from related parties or paid and/or payable to related parties during the taxable year (excluding compensation paid to KMP, dividends and branch profit remittances).

ii. Outstanding balances of loans and non-trade amounts due from/to all related parties.

Related party transactions covered by an Advance Pricing Agreement (APA) need not be disclosed in the RPT Form but must be included in the computation of the amount of related party transactions following the prescribed formula

(b) Related party transactions meeting the following materiality thresholds:

i. If the transactions involve the sale of tangible goods in the aggregate amount exceeding PHP60 million (US$1.2 million) within the taxable year

ii. If the transactions involve a service transaction, payment of interest, utilization of intangible goods or other related party transaction in the aggregate amount exceeding PHP15 million (US$0.3 million) within the taxable year

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

The TP documentation and other supporting documents are no longer required to be attached to the RPT Form upon filing. Instead, the TP documentation and other supporting documents must be submitted to the BIR within 30 calendar days upon receipt of a request during a tax audit, subject to a 30 calendar days extension based on meritorious grounds.

The new RPT Form also requires a taxpayer to confirm if it has prepared TP documentation that is compliant with the documentation requirements of RR No. 2-2013 or the TP Regulations.

Taxpayers who are not required to file and submit the RPT Form as detailed above are required to disclose in the Notes to the Financial Statements that they are not covered by the requirements and procedures for related party transactions provided under the Regulations.

Any violation of this Regulation is subject to penalties. 

The pertinent provisions of RR No. 19-2020, its clarifying Revenue Memorandum Circular No. 76-2020 and other relevant issuances that are inconsistent herewith are repealed, amended or modified accordingly.


The information disclosed in the RPT Form will be used by the BIR for transfer pricing risk assessments, audits and the exchange of information. Consequently, Philippine companies with RPTs should review their transfer pricing positions to ensure that their RPTs are: (i) within the arm’s-length range; (ii) supported by contemporaneously prepared TP documentation and relevant documents; and (iii) properly disclosed in the annual RPT Form and in the Notes to the Financial Statements.


For additional information with respect to this Alert, please contact the following:

Ernst & Young Philippines (SGV & Co.), Makati City 

Ernst & Young LLP (United States), Philippines Tax Desk, New York

Ernst & Young LLP (United States), Asia Pacific Business Group, New York



  1. A ”large taxpayer” under the regulations is a taxpayer, regardless of its location in the country, which has been classified and notified in writing by the BIR as one that has satisfied the criteria for determining large taxpayers.

  2. Issued on 21 December 2020. Full text of Revenue Regulations No. 34-2020 and its Annex (BIR Form No. 1709) are available on the BIR website.


The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.


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