Independent Contractors

Independent Contractors such as consultants or practicing professional are individual business entities
or single proprietors, who are solely liable for payment of national taxes, business fees and licenses.
With this, the need for registration with government agency requirements are complied with before
they can fully operate as independent contractors.

Registration Requirements

The independent contractor/consultant’s business name needs to be registered first with the
DTI, for the right to use the business name.

Assuming that the individual has an existing TIN, their registration status needs to be updated
with the BIR as self-employed, and well as with the RDO, depending their registered address.

The submission of documentary is another requirement, such as the books of accounts and the
application with the BIR the Authority to Print Official Receipts (OR) for the ORs can be printed and
issued to their clients.

Registration updates are required as a voluntary member with the Social Security System(SSS);
Philippines Health Insurance Corp. (PhilHealth) and Pagibig.

The individual contractor is considered as engaged in business, thus registration for business
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permits , and licenses and payment of the corresponding local fees (sanitary and fire inspection fees) are
required to be complied with the local government where the individual conducts his or her business.

Income and Business Taxes

The individual is subject to income taxes on the graduated rates 5% to 32% based on net taxable
income. On the other hand, under the TRAIN Law, the individual may elect to pay 8% on gross income
tax.

Further, the individual is also subject to expanded withholding tax, 10% or 15% (depending on
the gross income). If not withheld by NFS or its clients, the individual is liable to pay.

b. Business Taxes

The individual may be liable either for Percentage Taxes 2 of 3% or Value-Added Taxes3 of 12%
based on gross receipts, depending if their annual income is less or in excess of the threshold of One
Million Nine Hundred Nineteen Thousand Five Hundred Pesos (Php 1,919,500.00).

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Section 129 of the Local Government Code.
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SEC. 116. Tax on Persons Exempt from Value-Added Tax (VAT). - Any person whose sales or receipts are
exempt under Section 109(BB) of this Code from the payment of value-added tax and who is not a VAT-registered
person shall pay a tax equivalent to three percent (3%) of his gross quarterly sales or receipts: x x x.
3
SEC. 105. Persons Liable. - Any person who, in the course of trade or business, sells barters, exchanges, leases
goods or properties, renders services, and any person who imports goods shall be subject to the value-added tax
(VAT) imposed in Sections 106 to 108 of this Code.
If the individual’s gross receipts exceeds the aforesaid threshold, he or she is required to registered with
the BIR as a VAT entity.

1. DTI

The independent contractor/consultant’s business name needs to be registered first with the DTI, for
the right to use the business name.

2. BIR Requirements

Assuming, that the individual has an existing TIN, their registration status needs to be updated with the
BIR as self-employed, and well as with the RDO, depending their registered address.
Next step is the submission of documentary requirements, such as the books of accounts. The
independent contractor is also required to apply with the BIR the Authority to Print Official Receipts (OR)
with the BIR in order for ORs can be printed and issued to their clients.

3. SSS, Philhealth and Pagibig

Social Security agencies registration update as a voluntary member with the Social Security
System(SSS); Philippines Health Insurance Corp. (PhilHealth) and Pagibig.

4. National Taxes

a. Income Tax and Withholding Taxes

The individual is subject to income taxes on the graduated rates 5% to 32% based on net taxable
income. On the other hand, under the TRAIN Law, the individual may elect to pay 8% on gross income
tax.

Further, the individual is also subject to expanded withholding tax, 10% or 15% (depending on the gross
income). If not withheld by NFS or its clients, the individual is liable to pay.

b. Business Taxes

The individual may be liable either for Percentage Taxes 4 of 3% or Value-Added Taxes5 of 12% based on
gross receipts, depending if their annual income is less or in excess of the threshold of One Million Nine
Hundred Nineteen Thousand Five Hundred Pesos (Php 1,919,500.00).

If the individual’s gross receipts exceeds the aforesaid threshold, he or she is required to registered with
the BIR as a VAT entity.

5. LGU

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SEC. 116. Tax on Persons Exempt from Value-Added Tax (VAT). - Any person whose sales or receipts are
exempt under Section 109(BB) of this Code from the payment of value-added tax and who is not a VAT-registered
person shall pay a tax equivalent to three percent (3%) of his gross quarterly sales or receipts: x x x.
5
SEC. 105. Persons Liable. - Any person who, in the course of trade or business, sells barters, exchanges, leases
goods or properties, renders services, and any person who imports goods shall be subject to the value-added tax
(VAT) imposed in Sections 106 to 108 of this Code.
The individual contractor is considered as engaged in business, thus registration for business permits 6,
and licenses and payment of the corresponding local fees (sanitary and fire inspection fees) are required
to be complied with the local government where the individual conducts his or her business.

 A person who is at least twenty one (21) years old, doing business or proposing
to do business in the Philippines under a BN as defined in this Order and who is
not disqualified by any existing law or regulation to engage in business is
required to register under the BN Law.  (Revised Implementing Rules and
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Regulations of Act No. 3883, as Amended Otherwise Known as the Business

Name Law, DTI Department Administrative Order No. 01-10, [February 8, 2010])

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Section 129 of the Local Government Code.