Tax Guide for Filipino Freelancers

Probably one of the hardest parts about being a freelancer in the Philippines is filing your own tax. However, no matter how hard computing taxes may be, it is something every upstanding citizen must do.

This article aims to guide all Filipino freelancers through the process of registering and paying their taxes. We’ll be breaking the process down step by step, so keep on reading below!

Step 1: Register at the Bureau of Internal Revenue (BIR)

The first step to successfully paying your taxes is to register as a self-employed individual in your city’s BIR branch. To do this, you need to bring the following documents with you:

  • BIR Registration Form (Form 1901)
  • BIR Payment Form (Form 0605)
  • Barangay Certification
  • Cedula
  • NSO Certified Birth Certificate
  • TIN Number/Card

Once you hand these documents in, you will be asked to pay a registration fee of ₱500. You will then need to attend a seminar conducted by the BIR, and on the day of the seminar you will know when you can claim your Certificate of Registration (CoR).

This certificate is proof that you are a registered taxpayer and will allow you to file your taxes.

Step 2: Computing Your Tax

Here comes the hard part – math – but stay with us. We’ll get through this together. As a self-employed individual, you are required to pay monthly and quarterly taxes.

First, the monthly percentage tax; this should be settled on or before the 20th of every month and you will need forms 06005 and 2551m. 3% of your monthly income must be paid to the government. Assuming you earned ₱30,000 during the month of June, you are required to give 3% of that, which is ₱900, to the government. Pretty straightforward, right?

Second is the quarterly income tax which is due on the 15th of April, August and November. Basically, this is your gross income minus your allowable deductions. Freelancers are allowed to choose between two types of deductibles: Optional Standard Deduction (OSD) and Itemized Deduction.

Choosing OSD will make your life easier because it means that you’re legally declaring 40% of your income as deductible. There will be no other computations made when you go with this.

Itemized deductible, on the other hand, is quite tedious and may require the involvement of a professional. Choosing this means you will be able to deduct all expenses made for the purpose of your business to your gross income given that you can provide proof in the form of receipts, invoices, and bank statements.

Step 3: Pay Your Taxes

Now that you’re done with the painful math, here comes the easy – or equally painful – part where you actually pay your taxes.

You can settle your taxes through a number of ways. Some prefer using eBIRForms and pay over-the-counter at their preferred accredited agent banks. Others settle their taxes through their phones using mobile money services.

Key Takeaway

Tax filing in the Philippines is a tedious process, even more so for new freelancers. It will throw your head for a loop and you will find yourself going to and from different government agencies, but don’t give up!

Once you’ve successfully paid your taxes, you will feel successful, independent, and accomplished, albeit poorer. That feeling of satisfaction should make all the hard work pay off.

Also, it’s the law, so you don’t really have a choice here.

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