BIR Form 2551Q Quarterly Percentage Tax
Updated June 13, 2026
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Definition
BIR Form 2551Q is the quarterly return used to report and pay percentage tax. Non-VAT-registered persons whose gross annual sales do not exceed ₱3 million file it every quarter to pay the 3% tax on gross quarterly sales under NIRC §116, unless they elected the 8% income tax rate.
The Quarterly Percentage Tax Return (BIR Form 2551Q) is a key compliance requirement for small businesses in the Philippines that are not registered for VAT. Under Section 116 of the National Internal Revenue Code, a person who is not VAT-registered and whose gross annual sales do not exceed ₱3 million pays 3% percentage tax instead of 12% VAT. Cooperatives are exempt, and self-employed individuals who elect the 8% income tax rate pay that rate in lieu of the percentage tax. The Section 116 rate is 3% of gross quarterly sales. It was 1% only from July 1, 2020 to June 30, 2023. Form 2551Q is also used for the other percentage taxes in Sections 117 to 127 of the Tax Code, such as the taxes on carriers, franchise grantees, banks and amusement places, which have their own rates. Under NIRC §128, the return is filed and the tax paid within 25 days after the end of each quarter: April 25, July 25, October 25 and January 25 of the following year. The form reports the gross sales for the quarter, the tax due, any tax credits or prior payments, and the balance payable. Sales invoices and other records supporting the figures are kept for BIR inspection.
Detailed explanation
Overview
BIR Form 2551Q is the quarterly percentage tax return prescribed by the Bureau of Internal Revenue. Non-VAT-registered persons whose gross annual sales do not exceed ₱3 million use it to report gross sales and pay the 3% percentage tax under NIRC §116. The return is also used for the other percentage taxes under Sections 117 to 127 of the Tax Code.
Who Must File Form 2551Q
Form 2551Q is filed by:
- Persons who are not VAT-registered and whose gross annual sales do not exceed ₱3 million (NIRC §116, §109(CC))
- Retailers, wholesalers, manufacturers and service providers alike, since §116 applies one 3% rate
- Persons subject to other percentage taxes, such as carriers, franchise grantees, banks and amusement places
Cooperatives are exempt from the 3% tax, and self-employed individuals who elect the 8% income tax rate do not pay it. A person whose gross sales for the past 12 months exceed ₱3 million must register for VAT and file Form 2550Q instead (NIRC §236(F)).
Filing Requirements and Deadlines
Under NIRC §128, the return is filed and the tax paid within 25 days after the end of each quarter:
- First Quarter (January to March): due April 25
- Second Quarter (April to June): due July 25
- Third Quarter (July to September): due October 25
- Fourth Quarter (October to December): due January 25 of the following year
The return may be filed electronically or manually, with payment through an authorized agent bank, a Revenue Collection Officer or an authorized tax software provider.
Percentage Tax Rate
The Section 116 rate is 3% of gross quarterly sales. The CREATE Law (RA 11534) cut it to 1% from July 1, 2020 to June 30, 2023; the 3% rate has applied again since July 1, 2023. Other percentage taxes under Sections 117 to 127 have their own rates.
Contents of Form 2551Q
- Taxpayer Identification Number (TIN) and registered name
- The quarter and year covered
- Gross sales for the quarter and the applicable tax rate
- Percentage tax due
- Tax credits or payments already made
- Tax still due or overpayment
Payment of Percentage Tax
The tax is paid when the return is filed. Keep the proof of payment with your records.
Transition from VAT to Percentage Tax
A VAT-registered person may cancel its VAT registration if it shows the BIR that its gross sales for the next 12 months will not exceed ₱3 million, or if it has stopped doing business. The cancellation takes effect on the first day of the following month, and percentage tax accrues from the date of cancellation. A person who registered for VAT voluntarily cannot cancel for three years (NIRC §128, §236).
Record-Keeping
Books of accounts and records are kept for five years from the day after the filing deadline of the return for the year of the last entry (NIRC §235, as amended by RA 11976). They are subject to examination by the BIR.
Penalties for Non-Compliance
- Late filing or payment: 25% surcharge and interest of 12% a year (NIRC §248, §249); 10% and 6% for micro and small taxpayers (RA 11976 §45)
- Deficiency found on audit: the deficiency plus surcharge and interest
- Willful neglect or fraud: 50% surcharge (NIRC §248(B))
Why it matters
Form 2551Q is how most small business owners in the Philippines pay their business tax. Filing accurately and on time avoids surcharges and interest that strain cash flow and helps owners budget for taxes. Late payment costs a 25% surcharge and 12% interest a year, but micro and small taxpayers pay a reduced 10% surcharge and 6% interest. Since most Form 2551Q filers have gross sales below ₱3 million, they are micro taxpayers (RA 11976; RR 6-2024; RR 8-2024).
How it works
Determine Eligibility and Tax Classification
Confirm that you are not VAT-registered, that your gross sales for the past 12 months did not exceed ₱3,000,000, and that you did not elect the 8% income tax rate. The Section 116 rate is a flat 3% for retailers, manufacturers and service providers alike (NIRC §116).
Compile Quarterly Sales Data
Gather your sales invoices and records for the quarter and total your gross sales. Keep the documents organized and available for BIR inspection.
Complete and File Form 2551Q
Fill out Form 2551Q with your TIN, business name, the quarter, gross sales and the 3% tax. File it within 25 days after the end of the quarter: April 25, July 25, October 25 or January 25 (NIRC §128).
Pay Tax and Retain Proof
Pay the tax when you file, through an authorized agent bank, a Revenue Collection Officer or an authorized tax software provider (NIRC §128, as amended by RA 11976). Keep the proof of payment and your records for five years (NIRC §235).
Examples
Sari-sari store owner with ₱2.5 million annual sales
Maria Santos operates a sari-sari store in Manila with annual gross sales of ₱2.5 million. She is not VAT-registered and files Form 2551Q quarterly. Her Q1 gross sales are ₱625,000, so her percentage tax is ₱18,750 (₱625,000 × 3%). She files and pays by April 25 (NIRC §116, §128).
Small manufacturing business with ₱2.8 million annual sales
Juan dela Cruz manufactures wooden furniture with annual gross sales of ₱2.8 million and is not VAT-registered. The Section 116 rate is the same 3% for manufacturers. His Q2 gross sales are ₱700,000, so his tax is ₱21,000 (₱700,000 × 3%), due by July 25 (NIRC §116, §128).
Late filing with surcharge and interest
Anna Reyes, a wholesaler with ₱2.2 million in annual sales, owed ₱16,500 for Q1 (₱550,000 × 3%) but filed and paid on June 15 instead of April 25, 51 days late. As a micro taxpayer she pays a 10% surcharge of ₱1,650 plus 6% interest a year, about ₱138 for the 51 days, for a total of about ₱18,288. A taxpayer that is not micro or small would pay a 25% surcharge and 12% interest (NIRC §248, §249; RA 11976 §45).
Online seller who elected the 8% rate
Roberto Santos sells handicrafts online with annual gross sales of ₱2.9 million and elected the 8% income tax rate on his first quarterly return. The 8% rate is in lieu of both the graduated income tax and the Section 116 percentage tax, so he does not pay percentage tax on Form 2551Q for that year (NIRC §24(A)(2)(b)).
Common misconceptions
- Myth: Form 2551Q is only for businesses with sales below ₱1 million.
- Fact: Form 2551Q applies to non-VAT-registered persons with gross annual sales of ₱3 million or less, whether they are above or below ₱1 million (NIRC §116, §109(CC)).
- Myth: Percentage tax is the same as VAT and can be claimed as input tax.
- Fact: Percentage tax is a tax on gross sales and generates no input tax credit. VAT is a separate system for VAT-registered persons. The two do not apply to the same sales (NIRC §110, §116).
- Myth: If I do not earn income in a quarter, I do not need to file Form 2551Q.
- Fact: A registered percentage tax filer still files Form 2551Q for a quarter with no sales, showing zero tax due, to avoid a missing-return record.
- Myth: Percentage tax is calculated on profit, not gross sales.
- Fact: Percentage tax under NIRC §116 is computed on gross quarterly sales, not on profit, so it is due whether or not the business made money.
Questions people ask
What is the difference between Form 2551Q and Form 2550?
Form 2551Q is the quarterly percentage tax return of non-VAT-registered persons, reporting the 3% tax on gross sales. Form 2550Q is the quarterly VAT return of VAT-registered persons, reporting output and input VAT. A business is under one system or the other for the same sales (NIRC §114, §116).
Can I file Form 2551Q if my business is VAT-registered?
No. A VAT-registered person files Form 2550Q. It may cancel its VAT registration only if it shows the BIR that its gross sales for the next 12 months will not exceed ₱3,000,000, or that it has stopped doing business; the cancellation takes effect on the first day of the following month. A person who registered for VAT voluntarily cannot cancel for three years (NIRC §236, as amended by RA 11976).
What happens if I file Form 2551Q late?
Late filing or payment adds a surcharge and interest from the original due date: 25% and 12% a year, or 10% and 6% for micro and small taxpayers. For example, a micro taxpayer who pays a ₱10,000 Q1 tax 30 days late owes a ₱1,000 surcharge plus interest (NIRC §248, §249; RA 11976 §45).
Do I need to file Form 2551Q if I had zero sales in a quarter?
Yes. A registered percentage tax filer files Form 2551Q even for a quarter with no sales, showing zero tax due, so the BIR does not record a missing return.
Can I claim percentage tax paid as a deduction or credit against my income tax?
No, it cannot be credited against income tax. If you use itemized deductions, the percentage tax you paid on your business is a deductible tax under NIRC §34(C)(1). If you use the 40% optional standard deduction, the OSD replaces all itemized deductions.
What documents must I keep to support Form 2551Q?
Keep your sales invoices, sales records, bank documents and any other evidence of gross sales for the quarter. Books of accounts and records are kept for five years from the filing deadline of the return (NIRC §235, as amended by RA 11976).
If my annual sales exceed ₱3 million, when must I register for VAT and stop filing Form 2551Q?
You must register for VAT once your gross sales for the past 12 months exceed ₱3,000,000, or when there are reasonable grounds to expect your sales for the next 12 months to exceed it. If you fail to register, you pay VAT as if you were VAT-registered but without input tax credits for that period (NIRC §236(F), as amended by RA 11976).
Can I file Form 2551Q online, and is it mandatory?
Yes. Under NIRC §128 as amended by RA 11976, Form 2551Q may be filed either electronically or manually, and the tax paid through an authorized agent bank, a Revenue Collection Officer or an authorized tax software provider.
In practice
- Small retailers and wholesalers with sales of ₱3 million or less file Form 2551Q quarterly; micro taxpayers who pay late face a 10% surcharge and 6% interest, other taxpayers 25% and 12%.
- A VAT-registered business whose sales drop must first have its VAT registration cancelled; percentage tax then accrues from the date of cancellation (NIRC §128(A)(1)).
- Form 2551Q can be filed electronically or manually and paid through authorized agent banks, Revenue Collection Officers or authorized tax software providers (NIRC §128).
- Accurate records of sales invoices are essential because the BIR checks reported gross sales against invoices, bank deposits and third-party data.
- A business whose sales for the past 12 months exceed ₱3 million must register for VAT and file Form 2550Q from then on (NIRC §236(F)).
Next steps
Learn more
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Sources & References (2)
Primary sources and the laws, regulations, and official issuances this page relies on. Links open the recorded source documents or references.
- Bureau of Internal Revenue. “BIR Form 2551Q (Quarterly Percentage Tax return): NIRC §116.” bir.gov.ph. Bureau of Internal Revenue, BIR Form 2551Q. Source checked .
- LawPhil Project (Arellano Law Foundation). “NIRC §116 (percentage tax, 3% reverted 1 Jul 2023): full text.” lawphil.net. NIRC of 1997 (RA 8424), Sec. 116, as amended by RA 11534. Source checked .