What Happens If You Don't Submit BIR Form 1709 or Transfer Pricing Documentation?

Missing or incomplete BIR Form 1709 filings don’t carry one flat penalty — they escalate through three separate provisions of the NIRC depending on how the taxpayer responds. A first offense draws a modest civil penalty under Section 250. A repeat violation jumps to a flat ₱25,000 under Section 274. And if the BIR has to serve a formal summons and the taxpayer still won’t produce the documents, Section 266 brings in a fine and possible imprisonment for the responsible officer — a meaningfully different exposure than simply forgetting an attachment.

What is BIR Form 1709, and when is it due? #

BIR Form 1709, the Information Return on Related Party Transactions, is filed together with a taxpayer’s annual income tax return, and must be accompanied by transfer pricing documentation where the taxpayer’s related-party dealings fall within its scope — the BIR streamlined the rules for submitting both the form and its attachments under Revenue Regulations No. 34-2020, issued December 18, 2020. RMC No. 76-2020 followed up with clarifications on filing questions that came up once the form and its attachments went into practice. The purpose isn’t to compute a tax liability directly from the form — it’s to give the BIR the data it needs to run a transfer pricing risk assessment early, so it can decide whether a taxpayer’s related-party pricing warrants a deeper audit, rather than auditing every related-party transaction blind. For who is required to file the form in the first place, see Who Must File BIR Form 1709? Related Party Transactions and Transfer Pricing Documentation.

How do the penalties escalate? #

Non-submission of BIR Form 1709 or its required attachments doesn’t have its own standalone penalty schedule — it falls under the NIRC’s general provisions for failing to file a required return or document, and those provisions escalate in three distinct stages depending on whether the failure repeats and whether the BIR has to formally compel compliance.

Section 250’s exact statutory language sets the per-failure amount and the annual ceiling together, rather than framing it as a discretionary range:

“In the case of each failure to file an information return, statement or list, or keep any record, or supply any information required by this Code or by the Commissioner on the date prescribed therefor, unless it is shown that such failure is due to reasonable cause and not to willful neglect, there shall, upon notice and demand by the Commissioner, be paid by the person failing to file, keep or supply the same, One thousand pesos (P1,000) for each such failure: Provided, however, That the aggregate amount to be imposed for all such failures during a calendar year shall not exceed Twenty-five thousand pesos (P25,000).”

Read literally, that means a single missed BIR Form 1709 or attachment draws a ₱1,000 penalty per required item not filed, with the ₱25,000 figure operating as the maximum a taxpayer can be assessed under this specific provision across an entire calendar year, not as a range for one isolated failure.

The first two stages are civil, administrative penalties tied to the act of failing to file or attach the required document. The third stage is materially different in kind — it applies specifically when the BIR has already issued a formal summons demanding the documentation and the taxpayer or responsible officer still doesn’t comply, at which point the exposure shifts from a fine on the entity to a fine-plus-imprisonment exposure on the individual who failed to respond.

Why does this matter beyond the peso amounts? #

The escalating structure means the real risk in missing a BIR Form 1709 attachment isn’t the first-offense penalty itself — which is comparatively small next to the transfer pricing exposure a related-party pricing dispute can generate — it’s what a pattern of non-compliance signals to the BIR during a transfer pricing risk assessment. A taxpayer that consistently fails to submit complete transfer pricing documentation gives the BIR less basis to confirm its related-party pricing is at arm’s length, which can itself increase audit selection risk independent of the modest civil penalty for the missing form. Treating BIR Form 1709 compliance as a routine annual-filing task — the same discipline applied to any other required income tax return attachment — avoids both the escalating civil penalties and the audit-selection signal a pattern of gaps can send.

Worked example #

A corporation with material related-party transactions fails to attach its transfer pricing documentation to BIR Form 1709 when it files its annual income tax return for the first time.

• First offense: the BIR assesses ₱1,000 under Section 250 for the missing attachment (an amount that would keep accumulating per additional missed item, up to the ₱25,000 annual cap, if more failures occurred in the same year).
• The following year, the same corporation again fails to submit complete documentation.
• Second offense: the penalty is now a flat ₱25,000 under Section 274, a materially larger amount than the ₱1,000 per-failure basis under Section 250.
• The BIR, now tracking the pattern, issues a formal summons demanding the outstanding transfer pricing documentation as part of a broader review. The corporation’s compliance officer still fails to produce it.
• Continued refusal after summons: the responsible officer faces a fine of ₱5,000–₱10,000 and imprisonment of one to two years under Section 266 — separate from, and in addition to, the earlier civil penalties already assessed against the corporation.

Frequently asked questions #

What is the penalty for not submitting BIR Form 1709? #

NIRC Section 250 imposes a penalty of ₱1,000 for each failure to file a required return, statement, or document, capped at an aggregate of ₱25,000 for all such failures in a calendar year — this covers a missed or incomplete BIR Form 1709 (Related Party Transactions Form) submission.

What happens on a second violation? #

Secondary sources describing BIR practice indicate a second offense escalates to a flat ₱25,000 penalty under NIRC Section 274, rather than the per-failure amount that applies under Section 250.

Can the BIR compel a taxpayer to submit the documentation through a summons? #

Yes. If a taxpayer still fails to provide the required documents even after being served a valid BIR summons, NIRC Section 266 provides for a fine of not less than ₱5,000 but not more than ₱10,000, plus imprisonment of one to two years, against the responsible officer or party.

What does BIR Form 1709 actually require a taxpayer to submit? #

BIR Form 1709 is the Information Return on Related Party Transactions, filed together with the annual income tax return, along with supporting transfer pricing documentation where applicable. Revenue Regulations No. 34-2020 streamlined the guidelines and procedures for submitting the form and its attachments.

Why does the BIR require this documentation in the first place? #

The BIR uses the information in BIR Form 1709 and its attachments to perform an early transfer pricing risk assessment on a taxpayer’s related-party dealings, helping it decide whether a more thorough review or audit of a particular transaction is warranted, rather than to compute tax due directly from the form itself.

Summary #

Missing a BIR Form 1709 filing or its transfer pricing documentation triggers an escalating penalty structure rather than one fixed fine: a ₱1,000-per-failure civil penalty under Section 250 (capped at ₱25,000/year), a flat ₱25,000 under Section 274 for a repeat offense, and a fine plus imprisonment under Section 266 for a responsible officer who still refuses to comply after a formal BIR summons. The safest approach is treating the form and its attachments as a standard part of the annual income tax return package rather than a discretionary extra. For the underlying filing obligation itself, see Who Must File BIR Form 1709?, and for how BIR Form 1709 fits into a corporation’s broader annual attachments, see BIR Form 1702 Attachments.