Are agencies still required to submit BIR Form No. 2305 (Certificate of Update of Exemption and of Employer’s and Employee’s Information) to the BIR?

BIR Form No. 2305 is a form used by agencies in previous years to update the exemption status of their employees, particularly additional exemption.

The form is likewise used when an employee move from one company to another and when employee changes legal status (such as when he/she gets married) or when he/she add dependents (such as when an employee have children).

However, under the Tax Reform for Acceleration and Inclusion (TRAIN) Law, the personal and additional exemption of P50,000.00 and P25,000.00 for each qualified dependent, respectively, can no longer be claimed by employees as deductions to their gross compensation subject to tax.

Thus, updating your employee’s civil status, for purposes of claiming additional exemption, which was BIR Form 2305 was used for, is no longer necessary.

In this regard, the Bureau of Internal Revenue (BIR) issued Revenue Memorandum No. 42-2018 to suspend the use of the Update of Exemption of Employees (UEE) Data Entry Module in the filing of BIR Form No. 2305 (Certificate of Update of Exemption and of Employers and Employee’s Information) and 2305 Batch File Validation Module submission in view of the above.

To change/update the civil status and the employee’s information, it shall now be done manually using BIR Form No. 1905 (Application for Registration Information Update).

[Download printable copy of BIR RM No. 42-2018]

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