Freelancing continues to grow in the Philippines, giving professionals more freedom to work on their own terms. However, with independence comes the responsibility of handling your own taxes. This guide explains freelancer tax in the Philippines, covering BIR freelancer registration, how to compute freelancer tax, and compliance rules.
Why Freelancers Must Pay Taxes
Freelancers are considered self-employed professionals. The Bureau of Internal Revenue (BIR) requires them to pay taxes just like regular employees and businesses. Paying the correct taxes ensures you remain compliant with the law, avoid penalties, and build a clean financial record.
Step 1: BIR Freelancer Registration
Before paying taxes, freelancers must register with the BIR. The process involves:
- Get a Taxpayer Identification Number (TIN).
If you don’t have one, apply at the nearest BIR office. - Register as Self-Employed.
File BIR Form 1901 and submit the required documents, such as a valid ID, birth certificate, and proof of address. - Pay the Registration Fee.
You must pay ₱500 annually using BIR Form 0605. - Secure Your Books of Accounts.
Register your ledger or choose a loose-leaf system to record transactions. - Get an Official Receipt.
Apply for an Authority to Print (ATP) or use BIR-approved computerized receipts.
Step 2: Filing Freelancer Taxes
Freelancers file taxes quarterly and annually. Here are the key taxes:
- Percentage Tax (3%) – Paid if annual gross income is ₱3 million or below.
- Income Tax – Based on net income using graduated rates or the 8% flat income tax option.
- Withholding Tax – Clients may withhold tax, especially if they are corporations. You can credit this against your annual tax due.
Important: Always ask clients for a BIR Form 2307 if tax is withheld. This serves as proof of creditable withholding tax.
Step 3: How to Compute Freelancer Tax
To compute your taxes, follow these steps:
- Compute Gross Income.
This includes all payments received from local and foreign clients. - Deduct Business Expenses.
Valid deductions include internet bills, office rent, software subscriptions, and other work-related costs. - Arrive at Net Income.
Net Income = Gross Income – Allowable Expenses - Apply Tax Rates.
- Graduated Income Tax: 0% to 35% depending on your income bracket.
- Optional 8% Flat Rate: Applied on gross income exceeding ₱250,000 (if no deductions are claimed).
Example:
- Gross Income: ₱800,000
- Allowable Expenses: ₱200,000
- Net Income: ₱600,000
Using graduated rates, the tax would depend on the bracket. If using the 8% flat rate:
₱800,000 – ₱250,000 = ₱550,000 × 8% = ₱44,000
Step 4: Filing and Payment Deadlines
Freelancers must file regularly using eBIRForms or BIR’s online payment channels. Deadlines include:
- Quarterly Percentage Tax – 25th day after each quarter
- Quarterly Income Tax – May 15, Aug 15, Nov 15
- Annual Income Tax – April 15
Paying on time avoids surcharges and penalties.
Why Tax Compliance Matters
Paying freelancer taxes in the Philippines not only avoids penalties but also provides long-term benefits. Tax records help when applying for loans, visas, or even government benefits.
For official details, visit the Bureau of Internal Revenue (BIR) website.
You can also try our Suweldo Calculator to estimate your freelancer net income.
Final Thoughts
Understanding how to compute freelancer tax in the Philippines makes compliance easier. From BIR freelancer registration to filing deadlines, every step ensures your freelancing career remains legal and financially secure. By staying compliant, you build both credibility and peace of mind.