A freelancer is a self-employed individual who earns income from professional services or gigs (like writers, designers, developers, VAs, consultants, or influencers) and is not an employee under a company.

Yes, mandatory registration. Freelancers must register with the BIR (Bureau of Internal Revenue) to legally issue official receipts and pay the required self-employment taxes.

Key Requirements:

• • BIR Form 1901 (for Self-Employed/Professional)

  • Government ID

  • Proof of address (like a utility bill or lease)

  • Registration Fee: ₱500 + ₱30 Documentary Stamp

Tip: Services like Taxumo can assist with online BIR registration, saving you trips to the Revenue District Office (RDO).

reelancers generally pay a combination of:

• Income Tax: Based on your net income (with deductions) or the 8% flat tax option.

• Percentage Tax (3%): If you are non-VAT registered and not using the 8% rate.

• Value-Added Tax (VAT – 12%): Only if your annual gross sales exceed ₱3 million.

The 8% income tax is a popular, simplified tax option. It replaces both the regular graduated Income Tax and the 3% Percentage Tax for self-employed individuals whose gross sales are ₱3 million or less annually. It is simpler because you do not track expenses.

How it works (Example):

• • Gross Income: ₱800,000

  • Less ₱250,000 Tax Exemption

  • Taxable Income: ₱550,000

  • Tax Due: ₱550,000 $\times$ 8% = ₱44,000

 Tip: Many opt for this 8% tax scheme for its straightforward calculation

You are still required to file “zero returns” (also called no-due-tax returns) on time to stay compliant. Failing to file even with zero income leads to penalties.

Freelancers must issue Official Receipts (ORs) for professional services. You can use:

• Manual ORs: Printed by a BIR-accredited printer.

• Electronic Receipts: If registered under the new EOPT Act (Ease of Paying Taxes Law).

If your client is a business, they might deduct a Withholding Tax (usually 5% or 10%) from your payment. They will give you BIR Form 2307, which serves as a tax credit to lower your tax due when you file.

Yes, you can deduct ordinary and necessary business expenses (like internet, software, or rent) if you choose the regular graduated income tax rates.

If you use the simplified 8% flat tax rate, you cannot claim expense deductions.

Non-compliance with the BIR can result in serious penalties, including:

• Surcharges: 25% to 50% on the tax due.

• Interest: 20% per year.

• Compromise Penalties and even criminal liability under the Tax Code.

Taxumo is a popular online tool for Filipino freelancers that simplifies tax compliance by automating:

• Tax computation

• Quarterly & annual filing

• Online payments (via e-wallet, debit, credit, and installments)

It is designed for zero-stress compliance without needing a degree in tax education.