Fiscal Year
Last Updated: June 13, 2026
tips_and_updatesDefinition
A fiscal year is a 12-month accounting period used by businesses and organizations for financial reporting and tax purposes, which may or may not align with the calendar year (January 1 to December 31).
In the Philippines, taxpayers can choose between a calendar year (January 1 to December 31) or a fiscal year for their accounting and tax reporting period. Most individual taxpayers use the calendar year, while corporations and businesses may adopt a fiscal year that better aligns with their business operations. Once chosen, the fiscal year must be consistently used unless approval is obtained from the BIR to change it. The fiscal year determines when annual income tax returns must be filed and when tax liabilities are calculated.
Why it Matters
Your chosen fiscal year affects critical tax compliance dates, including when to file annual returns, pay taxes, and submit financial statements to the BIR. It also determines which tax rates apply to your income and how you report transactions across accounting periods. Understanding your fiscal year prevents late filing penalties of ₱25,000 plus 25% of the tax due and ensures proper tax planning throughout your business cycle.
How it Works
To establish a fiscal year, corporations file BIR Form 1903 (Application for Registration) indicating their chosen accounting period. Individual taxpayers typically default to the calendar year unless they operate a business requiring a different fiscal year. The BIR requires consistency - once you choose a fiscal year, you must use it for all subsequent years unless you file Form 1905 (Application for Authority to Change Accounting Period) and receive approval. Your fiscal year determines when quarterly returns are due, when withholding taxes must be remitted, and when annual compliance requirements must be met.
Examples
01Standard Calendar Year Taxpayer
Juan operates a sari-sari store and uses the calendar year (January 1 to December 31, 2026). His annual ITR must be filed by April 15, 2027, covering all income earned from January 1, 2026, to December 31, 2026.
02Retail Business Fiscal Year
ABC Retail Corp. uses a fiscal year ending March 31 to align with their peak sales season. Their fiscal year 2026 runs from April 1, 2025, to March 31, 2026. They must file their annual ITR by June 15, 2026 (75 days after fiscal year-end).
03Agricultural Business Example
Verde Farms uses a fiscal year ending September 30 to match their harvest cycle. For fiscal year 2026 (October 1, 2025, to September 30, 2026), they must file their corporate income tax return by December 15, 2026.
04School Fiscal Year
Bright Academy uses a fiscal year ending May 31 to align with the academic year. Their fiscal year 2026 covers June 1, 2025, to May 31, 2026, with the annual ITR due by August 15, 2026.
05Mid-Year Business Start
New Corp. was incorporated on July 15, 2025, and chooses a calendar year. Their first tax period is a short period from July 15 to December 31, 2025, with the return due by April 15, 2026.
Common Misconceptions
Misconception
All businesses must use calendar year
Reality
Businesses can choose a fiscal year that best fits their operations, subject to BIR approval and consistency requirements.
Misconception
Fiscal year can be changed anytime
Reality
Changing fiscal years requires BIR approval through Form 1905 and must meet specific criteria under Revenue Regulations.
Misconception
Fiscal year affects tax rates
Reality
Tax rates are determined by the tax year in which income is earned, not by the choice of fiscal vs calendar year.
Frequently Asked Questions
A fiscal year is a 12-month accounting period chosen by businesses for tax reporting purposes, which can start on any month but must consistently cover 12 consecutive months. It differs from the calendar year which always runs January 1 to December 31.
Your fiscal year determines when your annual income tax return is due (105 days after fiscal year-end for corporations, April 15 for individuals using calendar year), when quarterly returns must be filed, and how you report income across accounting periods.
Calendar year runs January 1 to December 31, while fiscal year is any 12-month period ending on the last day of any month. Most individuals use calendar year, while businesses may choose fiscal years that align with their operational cycles.
Business owners filing corporate returns, accountants preparing financial statements, employees receiving 13th month pay calculations, and anyone involved in tax compliance planning must understand fiscal year implications.
Fiscal year appears on Form 1701 (Annual Income Tax Return), Form 1903 (Registration), Form 1905 (Change of Accounting Period), quarterly forms like 1701Q, and all annual financial reporting requirements.
New businesses choose their fiscal year when filing Form 1903 for BIR registration. They can select calendar year or any 12-month period, but must consistently use this period for all subsequent tax years unless BIR approves a change.
Yes, but you must file Form 1905 (Application for Authority to Change Accounting Period) and receive BIR approval. The change must be for valid business reasons and may result in a short tax period for the transition year.
Common mistakes include filing returns based on calendar year when using fiscal year, missing the 105-day deadline for corporate returns, inconsistent use of fiscal periods, and failing to get BIR approval before changing accounting periods.
Learn More
Annual Income Tax Calculator
Corporate Income Tax Calculator
Quarterly Income Tax Calculator
BIR Form 1701 Annual Income Tax Return
BIR Form 1903 Application For Registration
BIR Form 1905 Change Of Accounting Period
BIR Form 1701Q Quarterly Income Tax Return
Corporate Tax Filing Deadlines Guide
Related Content
Related Calculators
Related Tax Types
Related Taxpayers
Related BIR Forms
Related Guides
Glossary Terms
Sources & References (2)
Primary sources and the laws, regulations, and official issuances this page relies on. Each citation links directly to the issuing authority’s document.
- LawPhil Project (Arellano Law Foundation). “NIRC §22(Q), §43-47 (fiscal/taxable year, accounting periods) — full text.” lawphil.net. NIRC of 1997 (RA 8424), Sec. 22(Q)/43-47. Accessed .