Question 1

Do freelancers really have to pay income tax?

Accepted Answer

Yes. Freelance and professional income is self-employment income. You register with the BIR, file quarterly and annual returns, and pay either the 8 percent option or the graduated rates. This applies whether you work for local or foreign clients.

Question 2

What is the 8% option?

Accepted Answer

A simplified regime for self-employed individuals earning ₱3 million or less a year. You pay 8 percent of your gross income above ₱250,000, and that replaces both the regular income tax and the 3 percent percentage tax. No expense receipts needed.

Question 3

When are the graduated rates better?

Accepted Answer

When your documented business expenses are large relative to your income. The graduated table applies to your net income after expenses, so a low profit margin can beat the 8 percent on gross. As a rule of thumb, if expenses are under about half of your income, the 8 percent option usually wins.

Question 4

My clients deduct tax before paying me. Is that extra?

Accepted Answer

No. Clients registered with the BIR are withholding agents. They deduct creditable withholding tax, usually 5 percent for professional fees when you file a sworn declaration that your yearly gross is at or under ₱3 million, or 10 percent otherwise. It is a prepayment of your own tax, not an extra charge, and it is remitted to the BIR under your name.

Question 5

How do I get credit for the withheld tax?

Accepted Answer

Ask each client for BIR Form 2307, the certificate of creditable tax withheld. Attach these when you file your quarterly and annual income tax returns; the withheld amounts are subtracted from the tax you owe. If more was withheld than you owe, the excess can be carried over or refunded.

Question 6

Do foreign clients withhold anything?

Accepted Answer

Usually not. Clients abroad are not registered with the BIR, so they pay you in full and withhold nothing. You still declare that income and pay tax on it yourself. Set the withholding rate here to None for fees paid straight to you.

Question 7

What if I earn more than ₱3 million a year?

Accepted Answer

You lose the 8 percent option, must register for VAT, and charge 12 percent VAT on your services. At that level the computation has more moving parts, and an accountant will earn their fee.

Question 8

Is anything I enter saved or sent anywhere?

Accepted Answer

No. Every calculation runs privately on your device. Nothing you type is stored, tracked, or sent to a server.

Freelancer Tax
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How freelancer tax works

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Freelancer TaxCalculator

How freelancer tax works

Questions people ask

The other calculators

Freelancer Tax
Calculator