BIR Form 1603-Q is the Quarterly Remittance Return of Final Income Taxes Withheld on Fringe Benefits Paid to Employees Other Than Rank and File. Employers use it to remit the final fringe benefits tax (FBT) due on taxable fringe benefits granted to managerial and supervisory employees during the quarter. It is a quarterly remittance return for the fringe benefits tax only — not a general return for compensation, professional fees, or other final-tax income.
Purpose & Legal Basis
The 1603-Q is the remittance return for the fringe benefits tax imposed under NIRC Section 33. The FBT is a final tax on the grossed-up monetary value of fringe benefits (such as housing, vehicles, membership dues, and similar perks) furnished to managerial and supervisory employees. The standard FBT rate is 35% for resident and citizen employees (with different rates for certain non-resident aliens), and the employer — not the employee — is liable to withhold and remit the tax. Revenue Regulations No. 3-98, as amended, prescribe the rules for valuing fringe benefits and computing the tax.
Who Must File
The following must file BIR Form 1603-Q:
- Employers who grant taxable fringe benefits to managerial or supervisory employees during the quarter.
- Private corporations, partnerships, and sole proprietors providing perks (housing, motor vehicles, membership fees, expense accounts, etc.) to non-rank-and-file employees.
- Government agencies and instrumentalities that furnish taxable fringe benefits to qualifying employees.
Fringe benefits granted to rank-and-file employees are not subject to FBT (they are taxed as compensation instead), so they are not reported on this form. Employers with no taxable fringe benefits for the quarter generally have nothing to remit on the 1603-Q.
When to File
BIR Form 1603-Q must be filed not later than the last day of the month following the close of the quarter during which withholding was made:
- Q1 (January–March): File by April 30
- Q2 (April–June): File by July 31
- Q3 (July–September): File by October 31
- Q4 (October–December): File by January 31 of the following year
(eFPS filers follow the staggered eFPS deadlines.) If the deadline falls on a weekend or public holiday, the return may be filed on the next business day. Remittance of the fringe benefits tax accompanies the return.
Line-by-Line Instructions
Header Information:
- Taxpayer Identification Number (TIN): Enter your 9-digit TIN as registered with the BIR.
- Taxpayer Name: Enter the complete legal name of the withholding agent or employer.
- Address: Provide the principal business address registered with the BIR.
- Quarter & Year: Clearly indicate the calendar quarter (Q1, Q2, Q3, or Q4) and the tax year (e.g., 2026).
Part I – Fringe Benefits and Final Tax
- Total Grossed-Up Monetary Value of Fringe Benefits: Enter the grossed-up monetary value of the taxable fringe benefits granted to managerial and supervisory employees during the quarter. The grossed-up value is the actual monetary value of the benefit divided by 65% (i.e., 1 minus the 35% FBT rate) for resident citizens and resident aliens.
- Fringe Benefits Tax Due: Multiply the grossed-up monetary value by the applicable FBT rate (35% for resident and citizen employees; special rates apply to certain non-resident aliens). This is the final tax the employer must remit.
- Less: Tax Remitted in Prior Periods / Adjustments: Deduct any FBT already remitted for the period or allowable adjustments, if applicable.
- Tax Still Due / Remittable: The fringe benefits tax payable with this return for the quarter.
Part II – Penalties (if late)
- Surcharge, Interest, and Compromise Penalty: If filing or remitting after the deadline, add the applicable surcharge (25%), interest (12% per annum), and compromise penalty.
Part III – Total Amount Remittable
- Total Amount Still Due: The fringe benefits tax due plus any penalties. This is the amount remitted with the return.
Common Filing Errors
- Treating it as a compensation or EWT return: The 1603-Q is only for the final fringe benefits tax under NIRC §33. Withholding on compensation is remitted on 1601-C; expanded withholding on income payments is remitted on 0619-E / 1601-EQ.
- Reporting rank-and-file benefits: Fringe benefits to rank-and-file employees are taxed as compensation, not FBT, and should not appear on this form.
- Failing to gross up the benefit: The FBT is computed on the grossed-up monetary value (actual value divided by 65% at the 35% rate), not on the bare monetary value.
- Wrong deadline: The 1603-Q is due on the last day of the month following the quarter (April 30, July 31, October 31, January 31), not the 10th.
- Incorrect TIN or Taxpayer Name: Verify header information matches BIR registration.
- Failure to Remit Payment: The fringe benefits tax must be remitted with the return on or before the deadline.
Required Attachments
- Proof of Payment: Official receipt, bank validation, or electronic payment confirmation for the fringe benefits tax remitted.
- Computation of Fringe Benefits Tax: Schedule showing the monetary value of each benefit, the grossed-up value, the rate applied, and the tax due (retained for audit).
- Supporting Documents: Records of the fringe benefits granted (housing, vehicle, membership, expense accounts, etc.) supporting the amounts reported.
How to File
Electronic Filing (Recommended):
- eBIRForms: File through the BIR's eBIRForms package, select Form 1603-Q, enter the required information, and submit electronically.
- eFPS (Electronic Filing and Payment System): Use eFPS to file the return and remit the fringe benefits tax simultaneously; eFPS filers follow the staggered eFPS deadlines.
- Authorized Agent Banks (AAB): Remit the tax over the counter at any BIR-authorized agent bank of the RDO where registered.
Penalties for Late Filing & Non-Payment
Failure to file BIR Form 1603-Q on or before the prescribed deadline, or failure to remit the fringe benefits tax, results in the following penalties under NIRC §248 and §249:
- Surcharge: 25% of the unpaid tax for late filing or late payment (50% if fraudulent).
- Interest on Unpaid Tax: 12% per annum on the unpaid tax from the due date until full payment.
- Compromise Penalty: A fixed compromise amount may be assessed in addition to surcharge and interest.
- Criminal Penalties: Willful failure to file or remit may result in fines and imprisonment under the NIRC.
To avoid penalties, file and remit on or before the last day of the month following the quarter.
Examples & Scenarios
Example 1: Company Housing for a Manager
ABC Corp. provided a managerial employee a housing benefit with an actual monetary value of PHP 130,000 in Q1 2026. The grossed-up monetary value is PHP 130,000 ÷ 65% = PHP 200,000. The fringe benefits tax at 35% is PHP 200,000 × 35% = PHP 70,000. ABC Corp. files BIR Form 1603-Q and remits PHP 70,000 on or before April 30, 2026.
Example 2: Company Vehicle for a Supervisor
XYZ Inc. granted a supervisory employee the use of a company car with a taxable monetary value of PHP 65,000 in Q2 2026. The grossed-up value is PHP 65,000 ÷ 65% = PHP 100,000, and the FBT is PHP 100,000 × 35% = PHP 35,000, remitted on Form 1603-Q on or before July 31, 2026.
Example 3: No Taxable Fringe Benefits
DEF Co. granted only de minimis benefits and benefits to rank-and-file employees in Q3 2026. Because these are not subject to FBT, DEF Co. has no fringe benefits tax to remit on Form 1603-Q for the quarter.
Frequently Asked Questions
Q: What income does BIR Form 1603-Q cover?
A: Only the final fringe benefits tax under NIRC §33 on taxable fringe benefits granted to managerial and supervisory (non-rank-and-file) employees. It does not cover compensation withholding or expanded withholding tax.
Q: When is BIR Form 1603-Q due?
A: Not later than the last day of the month following the close of the quarter — April 30, July 31, October 31, and January 31 (eFPS filers follow the staggered eFPS deadlines).
Q: Who is liable for the fringe benefits tax?
A: The employer is liable to withhold and remit the FBT; it is not deducted from the employee. The employer files and pays using Form 1603-Q.
Q: How is the fringe benefits tax computed?
A: Gross up the actual monetary value of the benefit (divide by 65% at the 35% rate) and multiply the grossed-up value by 35% (special rates apply to certain non-resident aliens).
Q: Are fringe benefits to rank-and-file employees reported on 1603-Q?
A: No. Benefits to rank-and-file employees are taxed as compensation (via withholding on compensation), not FBT, so they are not reported on this form.
Q: What happens if I discover an error in a previously filed 1603-Q?
A: File an amended return (marked "AMENDED") as soon as possible, remit any additional tax due, and include a written explanation. Overpayments may be claimed as a refund or credited to future periods.
Q: What is the penalty for late filing or non-payment of 1603-Q?
A: A 25% surcharge on the unpaid tax, 12% annual interest from the due date, and a possible compromise penalty. Willful failure may also lead to criminal liability under the NIRC.