Philippine payroll in Odoo 20: BIR Forms 1601-C, 2316 and 1604-C, and what you still set up

Payroll is where BIR rules meet every employee. A wrong bracket or a missed benefit cap shows up twice: in the 1601-C you remit every month, and again in each employee's 2316 at year-end. Odoo 20's release notes add a Philippine payroll package from Odoo itself; before that, companies typically relied on community or third-party apps. This guide sets out what it covers, according to Odoo, and what the rules ask for.

What Odoo 20 adds for Philippine payroll

The Odoo 20 release notes list:

• a basic payroll package with mandatory calculations for basic pay, benefits, taxes and overtime;
• support for Form 1601-C items for monthly BIR reporting;
• the yearly BIR Form 2316 report;
• annualisation with auto-generated 1604-C summary worksheets and validated alphalist DAT exports for BIR eSubmission;
• automatic deductions for SSS salary and calamity loans and Pag-IBIG multi-purpose, calamity and housing loans.

Two things to note. The Philippines is not yet on the Odoo 20.0 payroll localisations documentation page, so the release notes are the reference for now. And the release notes do not name the SSS, PhilHealth or Pag-IBIG contribution tables, the 13th month or de minimis benefits, so plan to check those in your setup.

The BIR calendar for payroll

Before the December return, the employer does a year-end adjustment: annualise each employee's compensation and settle any tax still due or refund any excess. That is the step Odoo 20's annualisation report supports.

The rules your payroll has to follow

Withholding tax on compensation

From 1 January 2023, the TRAIN Law's graduated table applies (Tax Code Section 24(A)):

13th month and de minimis benefits

• The 13th-month pay and other benefits are tax-free up to P90,000 a year (Section 32(B)(7)(e)). Bills to raise this cap have been filed in Congress, but none has become law as of October 2026.
• RR 4-2025 raised the uniform allowance ceiling to P7,000 and allowed cash and gift certificates as achievement awards; RR 29-2025 then raised several ceilings again, effective January 2026. PwC's tax alert on RR 29-2025 lists the new ceilings, for example a rice subsidy of P2,500 a month and a uniform allowance of P8,000 a year. Check every ceiling in your salary rules against the regulation.

Contributions

• SSS: 15% from January 2025 (10% employer, 5% employee), on a monthly salary credit of P5,000 to P35,000.
• PhilHealth: 5% of monthly basic salary, with a P10,000 floor and a P100,000 ceiling, shared equally.
• Pag-IBIG: maximum fund salary of P10,000 since February 2024. The employer pays 2%, the employee 1% or 2% depending on pay.

Agencies update these tables by circular. Confirm the current rates with each agency before a pay run, and update the rules in Odoo when they change.

What is still project work

From our experience setting up payroll, these parts depend on your company and should be in the plan:

1. Contribution tables and benefit ceilings, checked against the latest circulars and regulations.
2. 13th-month accrual and the P90,000 cap.
3. Your own pay rules: allowances, holiday pay, night differential and overtime policies.
4. Year-to-date balances if you go live mid-year, so the annualisation and the 2316 start from the correct totals.
5. Bank payroll files and the agencies' remittance reports.
6. Attendance and time off, so payroll starts from approved hours, not spreadsheets.
7. A test of the alphalist DAT file in the BIR's validation tool before January.

You don't need to hire your own team. A TechNext adviser maps your pay rules first, then our team in Taguig City sets up Odoo Payroll and runs parallel pay runs with you before go-live. See Odoo in the Philippines.

Sources

• Odoo 20 release notes (Philippines payroll)
• RA 10963 (TRAIN Law), Sections 5 and 9 and RA 9504 (who need not file an income tax return)
• Grant Thornton: RR 29-2025 de minimis ceilings and PwC tax alert
• Grant Thornton: RR 4-2025
• Deloitte: year-end tax compliance checklist
• Forvis Mazars: tax calendar and January 2026 tax calendar (1601-C e-payment for December)
• Grant Thornton: SSS rates for 2025, Philstar: PhilHealth premium and Forvis Mazars: Pag-IBIG Circular 460

Common questions