Tax Guide for Self-Employed Workers and Freelancers

by | March 1, 2019

What are the common questions asked by self-employed workers and freelancers in the Philippines?

  1. What is the Bureau of Internal Revenue?
  2. Who are considered self-employed?
  3. Who and who aren’t required to file for income tax returns?
  4. Do freelancers need to pay taxes?


Since the dawn of technological advancement, many of the younger generations choose to work as a self-employed individual or a freelancer – those who choose this route make up 27.8% of the total employment rate in the country. When it comes to the intricacies of government requirements, they could simply take their knowledge with them and learn by attending seminars in the Philippines. But what about taxes?

How are freelancers and self-employed workers tasked if their sources of income are usually drawn from many different sources? We’re here to talk about taxes and guide freelancers and self-employed agents who want to learn more about taxes.

Unbeknownst to many freelancers, they too may fall under some tax code categories requiring them to pay for different tax rates. Let’s take a quick tour of our guide to tax for self-employed workers and freelancers:


What is the Bureau of Internal Revenue?

The Bureau of Internal Revenue (BIR) is a governing body who is responsible for collecting taxes and carrying out tax laws. They are a governing body under the Department of Finance. Their duties include the reduction and collection of all tax charges, fees, and internal revenue.

They are also tasked to enforce all penalties, fines, and forfeitures which include the execution of verdicts in all cases determined in its favor by the Court of Tax Appeals and all other courts. Their duties also include the administration of supervisory and police powers conferred to it by the National Internal Revenue Code and special laws.


Who are considered self-employed?

Agents who work on their own accord or are associated with a few partners are considered self-employed. Many entrepreneurs in the country are classified as self-employed workers. Freelancers also fall under this category. Who are workers that fall under this classification?

Here are some of the most pre-dominant freelance and self-employed professions: Journalism, Publishing, Filmmaking, Music Scorer, Song Writers, Photo Journalism, Editing, Event Planning, Copy Editing, Copy Writing, Event Management, Copywriting, Proofreading, Computer Programming, Web Design, Website Development, Consulting, Video Editing, Translating, Video Production, Content Writing, Buy and Sell, and Modelling.


Who and who aren’t required to file for income tax returns

According to the Internal Revenue Code, any person whether a single entity or a conglomerate is required to file for a return or statement and shall have a Tax Identification Number assigned by the BIR. To further clarify, here are the conditions for filing for Income Tax Returns: individuals who receive income from local sources or from abroad, self-employed agents who receive income through trade or any form of business transaction, those receiving multiple sources of income; compensation income and via trade, agents whose compensation income is purely derived from a single source, non-residents who receive income from Philippine sources, and aliens who receive income from local sources.

For companies and non-individuals, filing an Income Tax Return is required when corporations receive income from local and foreign sources, foreign corporations receiving income from local sources, and estates engaged in business or trade.

On the other hand, those who are not required to file for Income Tax Returns are workers who earn from purely compensation whose taxable income does not surpass P250,000, agents whose income tax has been withheld correctly by his/her employer, as long as that individual only has a single employer for the taxable year, those working under minimum wage, an agent who is exempted from the Tax Code and other special laws, and if your annual salary is below P60,000.


Do freelancers need to pay taxes?

As mentioned previously, some of you may be exempted from paying taxes. But freelancers earning P250,000 and over are required to pay for income tax and an additional 3% percentage tax. And if your income surpasses P3,000,000 you are obliged to pay for the taxes plus an addition 12% Value-added Tax.

Paying for taxes might seem like a pain to many, but in fact, they are of great importance for the nation. Apart from them being a requirement, taxes help build a nations value and the money will be used for the country’s development. You may learn a great deal about the functions of our taxes and the laws that surround them at a tax seminar in the Philippines. A great deal of updated and revisions are a common topic during tax congresses in the Philippines as well.


Key Takeaway

It’s important to know about these as a self-employed worker. If you’re part of the 27.8% of Filipino freelancers and self-employed workers who have not yet filed for an ITR or have not paid for taxes, it’s best to file for one and aid in the growth of our motherland.

It is up to every Filipino employee and businessman, whether working for yourself or for a corporation, to help our nation. If you need to know more details about taxes, you could watch the latest tax congress in the Philippines or other notable sources.

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