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The Filipino freelancers' guide to paying taxes and securing social benefits

Updated: 2 October 2015

16 December 2009


Schedule for filing and payment of taxes

Freelancers in the Philippines will have to file taxes within the calendar year of their business operation. These taxes include the annual registration fee, annual tax (or the income tax return), quarterly tax, and percentage tax (or monthly tax) for non-VAT taxpayers whose yearly income does not exceed PhP550 thousand. We seek the professional service of an account to furnish us a financial statement in filing ITR, should our annual income reach PhP550 thousand.

A. Annual Registration (Section 236, NIRC)

A freelancer renewing his BIR registration shall pay on or before January 31 every year the amount of PhP500 (with filled-out BIR Form 0605 or download the zipped Excel file ready for encoding) to any of the following: the BIR personnel assigned at the municipal office, the BIR office, or any accredited agent bank (AAB) of the BIR. See the Taxpayer's guide for the registration and/or updating (i.e., stamping) of accounting books on or before December 31.

B. Income Tax Returns (Section 74, NIRC)

You may request your accountant to accomplish the needed forms for you. But if you have learned to accomplish your accounting books, then you have an equal grasp of what to write on these BIR forms. The basic rule applies: if you don't know how to do something, then ask the one who does. If you still find no one who can answer your question the time you need the answer, then just leave that part of the form blank (I did this and no one from the BIR scolded me). But take heart, you will understand these things in due time.

Schedule for Filing and Payment of Taxes Due

*For manual filing, learn to fill out the forms using the Excel format--saves you time and lets you check entries just before you print out copies. Save form templates you can revise every month, quarter, and year. For electronic filing, be sure to download eBIRForms Package Version 5.1 here and follow procedures stated in RMC 58-2015. (While there's obscurity about filing or not filing electronically, I suggest electronic filing for online sellers.)

The table above has been reverted to its original version (i.e., sans the 4th quarter). As you go over the new BIR Form 1701, you will notice that only the first three quarters are mentioned. Do take the time to review the guide on page 6 of this form and accomplish the requirement relevant to your freelance business. This means that you need not compute for the 4th quarter, as this has been included in the ITR (Form 1701). So strike out the 1st, 2nd, and 3rd quarters and affix the 4th quarter. Form 1701 covers all months of the previous year. You may read further, "Taxation for the Filipino freelancer: Do we file or pay for the 4th quarter separately?"

C. Percentage Tax Returns (Section 128, NIRC)

Fill out BIR Form 2551M and pay your percentage tax returns (three percent of your monthly gross pay) to any AAB of your BIR-RDO on or before the 20th day of the month following the applicable month. (How to fill out Form 2551M is mentioned at the Freelancer's FAQs page.) Your chosen AAB has a separate payment form for BIR payments; ask for this form before you even start following the usually long queue of taxpayers. Months without income shall be filed directly at one's BIR-RDO.

For taxation details, please visit the BIR website.

Source: Taxpayer's Guide handout of BIR-RDO 045, year 2009

For details and updates, do check out the main page:

The Filipino freelancers' guide to paying taxes and securing social benefits