The modernization and innovation of technology in today’s world have paved the way for many opportunities for a lot of individuals. Apart from providing convenience and efficiency, technology has also created tons of jobs, which many Filipino workers have reaped benefits. Also, since the pandemic has occurred, many Filipinos lost their regular jobs resorting to the increasing number of Filipino freelancers. Nonetheless, the Philippine economy was greatly suffering due to the decline of taxes collected from Filipino workers. That’s why to help improve the economy, in this article I will share with you the guide to paying taxes for Filipino freelancers.
Why should Filipino Freelancers pay taxes?
Filipino freelancers who are working in the Philippines or with clients abroad, whether full-time or part-time are required to pay income tax. Since many Filipinos are working home-based, making money from doing online works such as writers, graphic designers, virtual assistants, and developers, are all required to pay their taxes.
Meanwhile, freelancers who are working with clients abroad and conducting business in the Philippines can claim a tax credit in the foreign country for the taxes they are paying. Doing so will exempt a freelancer to pay the foreign country the required taxes. Also, by claiming a foreign tax credit a freelancer can lessen the impact of double taxation through tax exemption or preferential tax rates.
Although there is confusion if freelancers are required to pay taxes since the Tax Code does not specifically indicate “freelancers”, they are still categorized as self-employed individuals or mixed-income earners. Thus, it does not exempt them from filing and paying income tax in the Philippines.
How to register with BIR for Filipino Freelancers?
The initial step to take is to register with BIR so that freelancers can proceed with filing and paying freelance taxes. Freelancers should register with BIR as self-employed individuals or mixed-income earners. A Taxpayer Identification Number or TIN is also needed in the process and has an annual registration fee of Php500 that can be paid through Authorized Agent Banks (AABs), GCash, or under Electronic Filing and Payment Systems (Efps). After paying the fee, you can claim the TIN Card at the nearest BIR office.
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