Taxation has always been a mystery among Filipino freelancers, yet it’s a necessary step if you want to be considered as a legitimate freelancing business.
While there is a significant lack of clear tax laws applicable to freelancers and online workers, it is still a freelancer’s responsibility to learn about tax laws applicable to his or her situation and to abide by these laws at all times when operating one’s freelancing business.
When I made the decision to register myself as a tax payer, I did receive a handful of negative reactions from members of my family. With the BIR running after the family business and monitoring its income reports, the fact that I can earn without needing to register myself as a tax payer is a dream come true for them.
But I knew that there is still some good in paying taxes, so I did a bit of research to see what resources were out there regarding taxes and freelancing in the Philippines.
You can have a look at these articles:
- Freelancer’s Guide to Paying Taxes and Securing Social Benefits by Al Sabado
- Do I Have to Pay Taxes On My Online Income? by PinoyMoneyTalk.com
- The Pinoy Tax Yahoo! Group
As you can see, it’s an issue that’s already been discussed, debated, and argued upon. The fact of the matter is that according to Philippine tax laws, we must pay our taxes if we are located physically within the Philippines and regardless whether the sources of income are coming from within or outside of the Philippines.
Quoting again from PinoyMoneyTalk.com’s article:
A Filipino citizen is taxed based on his taxable income derived within and without the Philippines, which includes part-time works as an offshore, outsourced writer for a US-based website (see page 157 Annex A1 of Philippine Taxation Handbook: A Simplified Course September 2006 Edition).
Again, no matter where the source of income is coming from, it is still taxable by law. If you received your funds from an online MLM scheme, an outsourced project, work from a fellow professional, etc., it is still taxable income.
5 Reasons Why Freelancers Should Pay Taxes
Convinced, I sought the help of a certified public accountant to talk about the process further and to help me with my own taxes. We discussed many things regarding taxation, especially the benefits and consequences of paying and evading taxes.
Here are 5 good reasons why Pinoy freelancers should pay taxes:
- You need to think long-term. Buying a house or a car is a lifetime investment that securing a loan to buy one will mean presenting actual proof that you have the earning capacity to pay for it. Unless you plan on buying your next Honda Civic or Toyota Lexus in cold cash, you need to show your income tax returns to the company or organization.
- You are required by Philippine law to pay taxes. Not paying means breaking the law, and if you get caught breaking the law, you will be penalized heavily by the BIR without question. That’s 25% to 50% of your income per year plus up to 20% interest. Read Section 232 of the National Internal Revenue Code.
- You’re in control of your taxes. Registering as a tax-paying self-employed professional gives you the opportunity to declare your taxable income without the BIR dictating how much you have to declare every year. According to an article by About.me Tax Guide William Perez, “Being self-employed is quite possibly one of the best tax strategies available today…you are in full control of your tax situation, and you can reduce current income by any losses you have from freelancing, renting out property, or investing.“
- You save yourself from a lot of inconvenience. You may think that you can live without a credit card or a particular service, but as your business grows and your ideas encourage you to go forth and be risky, you will need other payment methods besides cash. Applying for a credit card, a phone line, an internet connection, etc. will definitely be easy if you have ITRs, SSS, and other income-related documents on hand.
- You’re doing your part as a citizen of the Philippines. It’s certainly difficult knowing that your taxes are pocketed by greedy people in the government, but at least you did your part as a citizen of this country. Even though you have the opportunity to evade and live life tax-free, it’s always good to know that you lived up to your responsibility by diligently calculating and paying your taxes.
Dondi Tiples says
Yes, it is an iffy issue isn’t it, taxes?
I still haven’t gotten around to registering as self-employed yet and I dread filling out an all new W2 form primarily because I don’t know how. My former company’s accounting department used to do all that.
Still, this is a relevant post worthy of conscience advocacy. Brave of you to be putting this out there.
We all do know, pretty soon, one way or the other, the government’s going to find a way to tax freelancers.
They always do.
Stef G. says
Thanks Dondi for sharing in my views. I’m sure most Pinoy freelancers think that freelancing’s the career path where the government isn’t going to force us to pay taxes. Sure, there’s a slim chance that they won’t catch those earning online income, but we gotta think beyond that. We need to consider our future investments, social responsibility, and receiving access to life and health insurance.
I’m sure another reason why we don’t pay taxes is because we don’t know how the process works. I’ll make sure to detail every step the moment I’m done registering at the BIR. 🙂
Ray Refundo says
I am Ray, cofounder of PayGuard. We’re located here in Silicon Valley. I will be going back to Manila to launch our payments service designed for people who are engaged in the freelance marketplace and those who sell digital goods and contents online.
Would you have time to chat on the phone?
Please let me know.
Stef G. says
Hi Ray! Sending you a private email now. Thanks!
For Pinoy freelancers who pay business and income taxes, PayGuard would be fine if it is accredited by the BIR.
I have been a full-time freelancer since 2010. In 2010, I went to BIR to inquire about paying taxes as a freelancer. They don’t have a provision for that so I have been unable to pay taxes since 2010. The ITR is an important financial document that I’m unable to produce for banks & other financial institutions. 🙁 I have been looking for a solution to this problem.
Were you able to register and pay your taxes? Can you please send me a private email on how to get started?
Stef G. says
Hi J-za, this post should help you get started: http://thefreelancepinoy.com/freelancing-tips/taxes-for-pinoy-freelancers-bir-requirements-and-registration
One thing I hated about being a freelancer before is that it’s difficult to pay taxes. I wanted to pay because I like traveling a lot, and in most developed countries, you would need to show your ITR to prove that you have a source of income. This is why I left full time freelancing and went back to my offline job 🙂 Great post you have here, Stef!
Stef G. says
Thanks Aleah! When you say “offline job”, do you mean a job at a company? Well, I hope you won’t have difficulties paying your taxes and that you’ll still continue to travel. I got to know a lot of cool new places thanks to The Solitary Wanderer. 🙂
Excellent post, as always! And timely. This has been at the back of my mind lately and now I’m more convinced than ever that I should pay attention to that little voice in my head. I don’t want this catching up with me later. Thanks for the reminder!
Stef G. says
You’re very welcome Tez! I gotta admit, I was hesitant at first with the idea of registering at the BIR as a tax payer because of all the horror stories I’ve heard. But I knew that paying taxes is part of being a citizen of this country and that there are plenty of benefits that come with the TIN, so I decided to give it a shot. I really hope that I won’t have a difficult time. *crossing fingers*
April Ricafort says
Great post! Will share this with the others. I’m scheduled to pay my taxes in January so I better read your next posts.
Stef G. says
Thanks April! I really appreciate you sharing the post to others. I’ll definitely do my best to push the succeeding articles out as soon as possible. 🙂
Interesting post. I recently renewed my tax info and I was wondering whether to declare my earnings online or not. I decided not to. This article is enlightening (I’m thankful that I actually finished reading the entire article). I guess next time I find myself in a BIR office, I’ll declare my online earnings. But I’m not in a hurry.
Stef G. says
Thanks gsL! From what I learned, you don’t have to declare your income diligently just because you’re a registered tax payer. It would be unreasonable to do so if, for instance, you didn’t earn income during a particular month or two. It’s really up to us to do our part by paying our taxes.
If you ever get to declare and pay taxes as a professional, let us know how it turns out! 🙂
Great post! I’m looking forward to your future post about the process.
This is a good site you’ve built! Keep it up. 🙂
Stef G. says
Thanks Joy for commenting! I’ll be sure to share the post on TFP’s Twitter and Facebook streams as soon as it’s done. You follow the blog through there if you’d like. 🙂
I’ve been thinking about registering and paying taxes for awhile now, but I don’t know where to start. Wait, did you fill up the BIR form 1902 (application for registration for self-employed)? after that, how does one go about in paying taxes? do you pay on a monthly basis, and who decides how much you pay (where does that reflect, like do you initially just declare your earnings) or do you just pay and pay every month and the only time you make a declaration is when you file your tax returns? o.O i swear i am so confused. LOL
Stef G. says
Hi Justine! I started with paying for registration for a TIN card. That’s using BIR form 605. Once that’s done, you have to visit your chosen revenue district office to claim the TIN card. It’s also the place where you’ll be paying taxes annually. I’ll let you know as soon as I claim my TIN card on how the process goes. 😉
I’ve been a full-time freelancer now for about 7 months. Ever since I started, I have already thought about paying my taxes but it seems that the process is very tedious. To make the story short, I’m discourage with how the system works. The government is just not making it easy for us freelancers.
Nice blog! This is really a good reminder that no matter how difficult, I have no choice but to just do it.
Stef G. says
Hi Jessica and thanks for sharing! I agree that the process is intimidating and confusing for freelancers, quite frankly because they don’t really know what freelancers (especially creative professionals) are and how we do business. Even the BIR’s forms in PDF aren’t updated on their website! Hopefully it won’t be like this since they’re now bringing all of their processes on the web.
I’m glad you liked the post. I hope to read more of your comments in future posts! 🙂
Hi, I have been doing freelance jobs for a year now and I have been planning to pay my taxes too since I need my ITR and TIN. I was wondering how I can get this started and I was wondering what are the necessary steps that I should do first once I get to the BIR. Lastly, I was wondering if a freelancer is eligible to join SSS and Pag-ibig. Anyway, Thank you very much, your post was really helpful.
Stef G. says
Hi jxm and thanks for asking! The answers to your questions are covered in the upcoming follow-up post to this one. I’m personally visiting the BIR tomorrow to go through the entire process of registering myself as a taxpayer. If you’d like, you can subscribe to your social media channels and RSS feed to get updates on the next post. 🙂
Ryan Delos Reyes says
I thought of registering myself as an individual and not self-employed. I have yet to convert my SSS and Philhealth status to individual since I resigned from my 8-hour job.
Good post on this issue.
Stef G. says
Thanks Ryan! Glad it helped. 🙂
john carl villanueva says
I’ve always been wondering whether we Pinoy oDesk contractors are really legally obligated to pay taxes or what compelling reasons there were to do so. Glad I came across your post!
Stef G. says
Hi John and thanks! I’m glad you found the post useful.
As Pinoy freelancers/professionals, we’re all obligated to declare our taxes, no matter how vague the tax laws are. So I do hope you’ll take the time to register at the BIR and file for your taxes. 🙂 You can learn more about taxation for freelancers in the succeeding posts.
I really appreciate these insights. I totally support the need to continue one’s SSS and Philhealth contributions on a long-term basis. This is really long-term planning for one’s life. However, I noticed that if one is responsible enough in maintaining a Savings account one can absolutely veer away from the REAL need to file one’s ITR (online based jobs i.e Odesk etc). This is merely practicing tax avoidance not tax evasion.
I can understand why many home based online jobs contractors do not feel the need to pay their taxes. The law is vague and it is about time to make necessary changes. There is really NO Direct connection why online jobs need to pay their taxes. The country’s IT infrastructure is still average. A lot of people are actually tired of our government. This not just being apathetic. I can understand the need to pay taxes if one has a regular job in the Philippines.
Financial institutions don’t just look at ITRs. There are other venues that they can check. I’m sure there will always be ways on how to circumnavigate the Tax Laws. I personally do not see the dependency for credit cards. Just being realistic, a lot of service industry applications do not heavily depend on ITRs. A lot of applicants get approved by mere COEs and bank statements.
Stef G. says
Thanks for sharing your opinion about this. Could you share an example or two on how a professional can acquire the same benefits and privileges as one who is a registered tax payer? I’m interested to know just how a person could avoid taxes in a legal manner. Also, I’ve not yet heard of any personal story of how a Filipino could acquire a house, a car, or any other large investment without the need for an ITR.
Credit cards can be put away with proper budgeting, that I agree. But the rest, I’m sure we still need the ITR. Even a fellow freelancer of mine who travels all over the world knows that she’ll still need ITRs as part of her documents to enter certain parts of a country.
As for a direct connection between taxes and online jobs, you’re right about not having clear tax laws for online work. But as stated in the Philippine Taxation Handbook, any form of income is taxable whether taken online from a foreign source or within the country. I’ve personally talked to a BIR officer about this and the only exemption we can get from earning dollars is not paying VAT.
Personally, I don’t see why paying taxes should be something to shy away from if you know what types of taxes you’re paying for and how to compute. If you don’t know how to compute, you can always ask the help of a tax professional/accountant to compute for you. What’s more, we freelancers have the power to declare our taxes. If there is no income, there is no income tax to be paid. We just need to file the necessary form to let the BIR know that.
Hi. Thanks for your post. I’ve been freelancing for a year now and been looking for info about how I can pay my taxes. Freelancers should make it a point to pay their taxes. Why? Duh. Anything ‘public’ you use or benefit from, you have to pay for it. Think of the public road, the government-run schools, health centers among others. Just because most freelancers don’t pay their taxes, you’ll do the same. It’s your call, as a Filipino. You may get away from the taxes but you won’t get away from your conscience.
I’m here again. As I said, Ive been reading posts and forums about how a freelancer can pay taxes, its saddens me that most are not intending to pay their taxes just because they can get away with it. They don’t feel the need to pay taxes. All I can say is makapal ang mga ganong tao. Our country will never progress with such apathetic mentality. I really hate it whenever I hear news about celebrities or rich people not paying their taxes. I don’t wanna end up like them. While its true that our government is mostly run by corrupt politicians, we should not give up on it. If we choose not to pay our taxes, wala tayong pinagkaiba dun sa mga corrupt officials na kinaiinisan natin.
Stef G. says
Hi Loidski! Apologies for the late comment approval, we were out the whole day today. Anyway, I agree and think the same way. Freelancers really should make it a point to pay taxes since it is our duty as citizens to do so. The funny thing is that some people would argue that there are no tax laws for freelancers, so there’s no point in doing so. While it is true that there are no direct tax laws for professionals who get work online, it is still the law to pay income tax whether your income is derived within or outside of the country.
I noticed that there are plenty of horror stories spreading about freelancers applying for a TIN at the BIR. That could be another reason why some freelancers don’t want to register and pay. But my experience registering at the BIR wasn’t a total disaster at all, so I think the key is to explain to the BIR officials in their own language what type of earner you are and what the nature of your business is.
It is easy for me to say and yes, there could be freelancers who refuse to pay because of the complications & all and I can’t judge them. Actually, I didn’t think of paying my taxes during my first few months as a freelancer, it was an adjustment period for me but now that everything’s settled…I know have to do the right thing. But those who know what to do but still refuse to pay their taxes — because BIR is incapable of tracking them down — should be ashamed of themselves. PS: No need to apologize, really. I can’t even thank you enough for your posts about taxes.
@Stef and Loidski
So paano kayo nakapag register? Ilang beses na ako pabalik palik since 2009 pero hindi nila malaman ang isasagot sa akin.. 🙁
Stef G. says
Hi John! How do you normally approach the BIR officers? What do you call yourself and your freelance biz when they ask what your line of business is? In my case, I didn’t call myself a freelancer but a professional, and I don’t mention that I’m a contractor or an “employee” for a foreign/local employer. They don’t know what these terms are, so it’s best to just stick with terms they’re familiar with.
Richard Belarmino says
Thanks for your post! My company is one of those Accounting firms that push honest taxation whatever sector you belong.
Just in case, any of your followers need help, you may contact us at firstname.lastname@example.org or visit our website at www
rtbelarmino com [Feb 26, 2018: website marked as harmful, so visit at you’re own risk]
Thanks once again for this inspiring blog.
Stef G. says
No problem Richard! I’m sure many freelancers interested but hesitant to register will welcome your help.
This is a ridiculous perspective. The Philippines has gone from being one of the best countries in Asia with a charming capital to the disgrace of SEA. All the talent has fled. The government is a joke. Anyone who continues to support the government by paying taxes is a traitor. Spend that money on your kids education, on building a business, you might even support you local government if you live in a small enough town so that it hasn’t been corrupted yet. But to support the national government by feeding it taxes is the worst thing you can do.
@John You’re calling “paying the taxes” a ridiculous perspective? Now, look who’s ridiculous here. A mistake cannot be corrected by committing another mistake! No matter how corrupt our government is, you owe it to the government, especially the poor public, to pay your taxes. If everyone will think the same way you do, do you have ay idea what will happen to the projects of the national government – which mainly benefit the poorest of the poor? If you’re calling paying the taxes ridiculous, allow me to call your perspective as selfish and self-serving. Think of workers who make less money than you do but still, they get tax deductions. You’re being unfair to them just like the corrupt officials are being unfair to all of us, don’t you think?
Stef G. says
Freelancers paying taxes is, to be frank with you, in no way ridiculous. Yes, there are no direct tax laws for those working from home (and I’m pretty sure plenty will cry in protest if there will be such a law), but we are still required to pay since we are living in the Philippines, using its resources, and earning income while doing so.
What many don’t seem to realize is that we have an advantage over the corrupt BIR officials. We declare how much we are earning, have the proof to back us up, and so no one can come to us and say we did not pay. If you are an honest tax payer and you pay only the right amount of tax, I don’t see any reason why the government should sic their BIR officers out on you.
This is why I suggest hiring a trusted accountant to help compute and file your taxes. This way, he or she will explain to you how the process works and can assist you if there are any problems or issues along the way. But going back, those who pay taxes are not traitors. It’s really the other way around.
Hello Stef…I’m glad to read about your posts. Just like freelancers I am interested in filing my income tax. But my experience with BIR has been dreadful ever since that I now lost whatever interest I have. When I had my first job back in 2002, my employer never paid taxes despite promises they’re working on getting us our tin numbers. I worked for them for 2 years until I finally decided to resign because they didn’t fulfill their promise of getting us our tin # which I knew was mandatory for any working individual. When I transferred to a call center in Makati I was happy that I will finally work in a legit company. I filled out a form for tax application and eventually got my own tin #. I was getting my ITR report every January and I stayed with the company for almost 4 years. Then I got accepted to another call center and I was asked to request transfer of my tax records from the RDO where it was registered to the RDO in Manila. That was fine but here’s where the misery began…again. I went to RDO Makati and was told my tin # was invalid that there is a tin # registered under my name in RDO Cubao. Wow, I worked for almost 4 years in makati and my employer was using the tin # they provided me to remit my tax deduction only to find out it was invalid. Now I have open cases with the existing tin # which according to the BIR records was registered under the company I worked for in 2002. I was flabbergasted and was told I had open cases. Kasi pala the registration appeared like I was the owner of the company, no wonder i have open cases. The tax type status is Professional daw. I said I was never the owner of any company. I said that the address that appears in the registration is the address of my previous employer. They said I had to fix it fine I did and filled out forms. Now my tin # has been transfered to RDO Manila pero they were not able to fix the tax type status kasi daw I had to write letter of intent pa. It was so frustrating. They can’t even tell me what to do. I’m thinking about registering a new tin # and just request for the cancellation of the one they had on their records. Nakakalokah lng 🙂
Hi I do get a little over 100 from Adsense this year. I already have tin since I had worked before but now switched to home-based job.
What kind of form should I use then, 1701?
What about the 2316 please enlighten me.
Stef G. says
Hello Julie, you can take a look at the next few posts on taxes for freelancers for more information about the types of documents to use when filing for your taxes. 🙂
Hahaha… I’ll file a tax for 1 centavo. Joke, I do pay my income tax although my personal computation would prbably be lower than what should have been 😀
For those on freelancing like me, I want to give the people who read this a reality check on what you read about.
I’d like to point out something about these so called “benefits” from paying taxes. Take this from experience.
A car or house loan through banks? It will never be approved. Simplest way to put it is freelancers are a big risk since they don’t have job tenure which is a critical factor in loans so sad to say you’ll never get a car loan unless your company endorses it to the bank and that’s only for those whose parent company is in the country. If its abroad, kiss those loans goodbye. .I only managed to get one by assuming a loan considering salary-wise I will probably give a high level manager here a run for his money. In other words, if you want to get a car and you’re a freelancer, just saved the money and buy it in CASH.
A house loan? Yes, you may if you’ll covert your HDMF(Pag-Ibig) contribution to voluntary. Unfortunately you can only get the minimum amount since any loan amount to more than 800k is subjected to credit check which you will fail because of your job nature. If you’re planning to get a house, you can get low cost housing units. You still have a shot at it if the company that you work for is base in the country, but if you work for those outsourcing sites or you parent company is outside the country, you won’t have a decent shot for bigger loan regardless of salary.
SSS? Being a freelancer, you can do voluntary contributions and get the same benefit as an employed one. It all depends on how much money are you willing to contribute? 1500 is the max if I’m not mistaken the last time I check. You still enjoy all benefits that one can get except for disability I think. So if you’re earning nicely, maximize it so you get the max benefit too. The same goes to your PHILHEALTH.
In truth, you don’t get a single thing out of the tax you’re paying as a freelancer. What you get is a bunch budget and low quality roads with the big faces of those EPAL politicians screaming that we owe them a lot.
Honestly, the only reason that I do pay my tax even if my brain is screaming not to pay is because the tax is still needed for basic service like education and health. Hell, if I can just choose which agency would my tax go that would give me the biggest laugh while filing my tax. 😀
Thanks for this great post! I love my freelance job because it’s my passion and I earn well. I want to continue with it! However I had fears about buying a car, house, or subscribing to new services such a cable or internet. I was thinking that I would need to be employed or have a business in order to get TIN or ITR. I go over google and see if there are blog articles about this (since I know there are lots of Filipinos doing freelance work and I wonder what they do in these TIN or ITR issues).
Fortunately I got into your post and it answered all my questions. Now I am very confident on my freelance job! Thanks for your post. It would be a lot better if you can give us also a step-by-step guide on how we can process this to BIR, what are the requirements, etc. I will surely register to BIR this year.
Stef G. says
Hello, Mark! I’m really happy that you’re taking your freelance business to the next level by registering it at the BIR. You can definitely check out the next line of posts on taxes for freelancers, particularly:
Hope these help you when registering as a tax payer at the BIR!
– Stef G.
I’ve been working as freelance web designer/developer for almost 4 years and not paying any single cent for withholding tax but still acquired a house and car. I do pay other taxes like VAT from goods purchases, VAT for transportation or fares, VAT from remittances, etc. My clients where from outside the country so my job category was considered as an OFW which BIR stated that OFW’s doesn’t required to pay withholding tax.
Really? You got a car and a house without paying TAX? How?
Is it like a brand new car from a branded car maker? Did you buy the house?
hi!very helpful post!can i ask a few more questions because i just graduated from college and i am still unaware of how these things work.basically, i am only earning around 15k a month from my freelance job.do i still need to file this?because i had a talk with a freelance and part time wedding coordinator before and she said that if your salary is only below 30k,you won’t need to pay for tax anymore.also,you mentioned that with if you pay taxes you can sort of get health benefits,apply for a credit card, and get loans. How does that work?because for example i’ve been trying to apply for a credit card but i am not allowed because they require payslips and i dont have those because my boss only pays me via paypal.you also said that you have control on the amount of tax you pay.does that mean you can have a different amount of tax every year? Sort of stupid questions,i know,but i just haveto know.still clueless about these things.:(
Stef G. says
Great questions nonetheless! Thanks for reaching out to me.
thank you so much! i find your blog really really helpful! 😀
Stef G. says
You’re welcome, bea! Thanks for visiting. 🙂
If the online work is contractual let say for only 6 months. In this scenario, how would you consider the type of tax to pay etc..
Diego Lobos says
Hi there! You have a nice blog, thanks!
I maintain a day job, and I do pay my taxes, but the tax amount I pay is based on my basic salary. Now that I am freelancing, how will I add the additional income to my tax return? I work in the government, and I am quite afraid that maintaining a freelance job would endanger me legally.
Thank you very much!
Yes, it will that is called moonlighting you are not allowed to moonlight if you are a gov’t employee, just keep it a secret no one will know.
IMBA Researcher says
Dear Fellow Countrymen,
I NEED YOUR KIND HELP!
I am a Filipino student from National Cheng Kung University in Taiwan and I am currently looking for current users of the eFPS or the online tax filing system of BIR. If you are a user of eFPS, I would like to ask for your precious time to be my respondent by answering my survey questionnaire. This would help a lot for my study to be robust, for BIR to improve the system and for me to graduate on time. 🙂
If you’re not a user, I know you are kind enough also to help me forward this to users of the eFPS.
Here’s the link to the survey:
I know I’m asking too much for a favor but I really highly appreciate your sincere participation. If you have questions don’t hesitate to email me on email@example.com
I get remittance from family abroad. They paid taxes for that already. Now do I have to pay taxes for it here?
Stef G. says
Hello, Cid. We’re referring to taxable income, so remittances coming from family aren’t included of course.
What if I work online but I don’t do jobs for several people. I have a contract and I am just employed by a single person.
I searched and freelancer is defined as “sells services to different employers without a long-term contract with any of them.”
Am I considered a freelancer?
Stef G. says
So long as you are not bound to an employer/company and that you have the freedom as to when and where to work, you’re a freelancer. It’s good that you brought this up because there are certain gray areas wherein a distinction between a freelancer and a contractor needs to be addressed.
The difference between the two—and this is based on my opinion and from my experience as one—is that as a freelancer, you are self-employed and you run a freelance business. You have the power and the tools to market your business and can choose which projects to work on. A contractor is somewhat like an employee but without the benefits. The moment your contract expires, the employer can let you go. In the case of the freelancer, the working relationship can extend even after the project is over.
Hi, thanks for sharing this. Maganda ngang nagfifile ka sabi din dito.
hi! i want to file income tax but i read that you are exempted if your earnings are less than P50,000 because you are qualified to deduct personal expenses P50,000? Is this right?
I am also interested to your answer in this question.
50k per year.
that’s just about earning 4,000 a month bros.
We are already paying our taxes in some other way like VAT, fares, basic commodities, lpg, gasoline, etc.. Freelancers also have an unsecured way of getting paid or not. We are not paid on holidays. We don’t have double pays. We don’t have bonuses or 13th month. No work no pay. So why at all. There are also fees on getting your payment online.
Ferdinand Tan says
I’ve been doing freelance for like 3years now and I’ve stopped paying my taxes. I know that it’s our obligation to make sure that we pay our taxes diligently but somehow I wonder where the money goes, cause here in the Philippines there are a lot of corrupt officials and I don’t trust the government anymore. Just my opinion on the matter.
Stef G. says
Hi, Ferdinand. I’m sorry to hear that, but as you said it is our obligation, and that’s regardless of who is handling the country’s taxes. It’s difficult to accept, but think of it na lang as your support for the country, not to the corrupt officials and agencies running the place. 🙂
Hello I just want to ask, what is the difference between TIN and ITR(Income Tax Return?
I am applying for my tourist visa and i only have Sponsor, and one of the requirements is ITR(income tax return)
I am unemployed, I have ATM.
Can I get ITR? and how? and how much to pay monthly for that?
Please advice me.
Advance Merry Christmas.
Felix Gomez says
great post. Have you written na ba the step by step way to file taxes? Gusto ko rin malaman kasi. Thanks!
Just would like to share my experience and my 2 cents on this. I have been working as a freelance contractor for 3 years now and also paying my taxes in a timely manner. Honestly, I cant keep with it. I only earn 300 dollars x 45 during the time I landed the contract. We are renting out our apartment for 5000. I pay my bills (internet, water, and electricity) around 2,000 and the rest is history as i also have to pay 150 for philhealth and 200 for pagibig). My annual tax is 6500. Approx 550 per month which is very disheartening as I usually see in our area roads in very good condition being reconstructed and a lot of politician’s posters on walls, cable wires, etc. I am trying to be a good citizen of my beloved country. Honestly, I am trying my best to be a good citizen but as I am trying to plan out our future it leaves me no choice but to not pay taxes. I am torn to the reality that 550 pesos is 15 kilos of rice for my family. I cant be exempted because I am not a minimum wage earner but I cant imagine life to those who earn less than what i earn and with that, I have to right to complain? What should I do?
Hi, I just want to ask, kelangan ko ba i print ang odesk profile to declare how much I am earning…? I
I wanna start investing for a condo, but I was told I need TIN. Aside from that, I am afraid I will be questioned in the future how did I manage to pay for a condo without paying a tax/TIN… I just wan’t to avoid the hassles.
Also, how much do u pay for your tax monthly? or is it yearly or quarterly..
Stef G. says
1. Di na po kailangan i-print ang oDesk profile mo.
2. Income tax is paid both quarterly and annually.
first of all. this blog article is absolutely correct.
Imagine if a person from another country, transfers and pays you lets say P15k a month, and then in about 6month’s to a year’s time you already have a down payment for a car or a condo.
now the car/real estate sales industry would want to ask for your income statement or your pay slips or (ITR) Income tax return. they need this to be sure that you can pay them the monthly remaining balance. they have a minimum years of experience/tenure-ship or income requirement. now imagine if you walk into BMW’s show room. they require you to be an executive already for over 2 years and is earning over 65k a month. they all have these minimum standard of qualifications. also credit cards have these. and they are the most common examples of judgmental basterds Im sure we all got a chance to encounter. if you cant show a good stable income, they wont grant you a card. in short, if we don’t pay taxes, our lives are fk’d in the future.
Thank you for posting this. I finally found an informative site about taxation for freelancers 🙂 I am sure to read every bit of information on this site 🙂 More power
Stef G. says
Thank you Ana! 🙂
What if I am currently employed in a company and I also do have my own Website Design and Hosting part time business, do I have to be registered in BIR even though I am not earning too much in a year??.
Can I pay taxes without receipts. I read from one of your post (“no need for odesk print profile” or paypal statements?)
If so, how do I go about this? I gather BIR strictly requires receipts .
Stef G. says
You will need to issue receipts for the BIR to see that you are really in business. You can just record each transaction you make, throw away your copy, and just keep the BIR’s copy with you.
Hi stef! I work as a solo web and multimedia developer / freelancer … my dad had told me to take realestate exam and also an insurance test…both of them would land me as an agent or broker, he told me this so that i can pay taxes as a professional which was called PTR Professional Tax Rate which applies if ur an agent or broker, I was thinking that if ever id pass the exam and hv my own license as a licensed professional individual then that mean i dont need to get another tax application as a freelancer? Do u agree?
PTR i meant Professional Tax Receipt
BIR now collects withholding tax from bloggers
But basically they wont be able to trace your adsense earnings right?
So may choice ka kung magkano idedeclare mo n knkta mo
Stef Gonzaga says
This tutorial is about registering a business as a self-employed professional, which is the best category (at this point) for freelancers. So if you’re registered, you’ll be required to record your business data using your books of account + issue receipts to clients. If you’re making money through Adsense, then you’ll need to search for BIR information that is most applicable to your case.