Freelance Tax in the Philippines

Under the recently passed tax reform law or The Tax Reform for Acceleration and Inclusion, or
TRAIN, freelancers still need to pay tax, but there are changes on how to pay taxes, and how much
is required to pay.
Filing percentage tax is now quarterly. According to the BIR TRAIN tax advisory dated February
8th, 2018:
“All taxpayers subject to percentage tax pursuant to Section 116 of the Tax Code and those who
will be subject thereto due to change of registration from VAT to Non-VAT, are required to pay
the percentage tax on a quarterly basis using BIR Form No. 2551Q. There is no need to file and
pay monthly percentage tax on their monthly gross receipts using BIR Form No. 2551M.”
Second, tax rates are now an option for eligible individuals. “Self-employed individuals and/or
professionals with gross sales and/or receipts and other non-operating income that do not exceed
the above amount (VAT exemption amount of Php 3,000,000.00) have the option to avail of the
eight percent (8%) income tax on gross sales or receipts and other non-operating income in lieu of
the graduated income tax rates and percentage tax. These taxpayers who avail of this option have
to accomplish BIR form No. 1905 (registration update) to effect the end date for their VAT or
percentage tax, and as such, they are not required to file quarterly percentage tax.”
In terms of tax exemptions, taxpayers with an annual income of less than P250,000 are exempt
from paying income taxes.
However, freelancers who earn more than P250,000 must pay income tax based on the graduated
tax table, as well as an additional 3% percentage tax. If a freelancer’s annual revenues exceed
P3,000,000, they must also pay 12% Value-Added Tax.
As a general rule, any person or entity who, in the course of trade or business, sells, exchanges, or
leases goods or properties, or renders services, and any person who imports goods, shall be liable
to value-added tax (VAT). Thus, for both an online seller and a store owner, the sale transaction
shall generally be subject to 12 percent VAT.

Victoriano, M. (2018, July 23). Complete Bir Taxation Guide for Self-Employed & Freelancers. Everything
freelancers. Retrieved from https://grit.ph/freelancer-tax/
Garcia, C. (2016, January 26). Taxes on buying and selling goods online. Manila Times. Retrieved August
27, 2019, from https://www.manilatimes.net/taxes-on-buying-and-selling-goods-online.com