How freelancer tax works
Four things every self-employed freelancer deals with, in the order they happen.
Freelance income makes you self-employed in the BIR's eyes. Register as a professional or sole proprietor and get your Certificate of Registration.
BIR Form 1901The 8 percent option taxes gross income above ₱250,000, simple and receipt-free. The graduated rates tax profit after expenses, plus 3 percent percentage tax on gross.
8% or graduatedLocal clients deduct creditable withholding tax before paying you. Collect BIR Form 2307 and subtract it from your tax due when filing.
prepaid taxCross ₱3 million in gross income and the 8 percent option disappears, replaced by VAT registration.
₱3M threshold8 percent or graduated
one choice a yearFreelance and professional income counts as self-employment income, so the BIR treats you as a business of one. You register with BIR Form 1901, then file quarterly and annual returns and pay under one of two regimes. This holds whether your clients are local or abroad. The 8 percent option is a simplified route for anyone earning ₱3 million or less a year, with no expense receipts to keep.
Under the 8 percent option you pay 8 percent of gross income above the first ₱250,000, and it replaces both the regular income tax and the 3 percent percentage tax. On a gross of ₱800,000 that means 8 percent of ₱550,000, or ₱44,000 for the year. The graduated rates instead tax your profit after documented expenses, plus the 3 percent percentage tax on gross, and they win when expenses run high. If expenses stay under about half your income, the 8 percent usually comes out cheaper.
Local clients registered with the BIR withhold tax before paying you, usually 5 percent for professional fees when you file a sworn declaration that your gross stays at or under ₱3 million, or 10 percent otherwise. This is a prepayment of your own tax, not an extra charge, so collect BIR Form 2307 from each client and subtract it when you file. Clients abroad withhold nothing. If your income comes from platform payouts, the affiliate tax calculator handles that, and employees can compare with the income tax calculator.
Questions people ask
answered in plain wordsYes. 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.
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.
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.
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.
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.
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.
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.
No. Every calculation runs privately on your device. Nothing you type is stored, tracked, or sent to a server.
Where these numbers come from
straight from the sourceThe rates and rules on this page follow the official issuances below. When an agency updates a schedule, this is where to confirm the current figure against your own situation.