The gig economy in the Philippines has been thriving. While being a freelancer or non-licensed self-employed professional has several perks over regularly employed individuals, there are also numerous drawbacks. One of such is taxation. Unlike being a regular employee, a freelancer has to account for all of his or her earnings and file his or her income on his or her own. Of course, there is an option to hire an accountant but doing so would mean additional expenditure.
Then there is the temptation of not wanting to register as a taxpayer because of the seeming hassle and complications. However, any responsible citizen should know that paying the right taxes is a social obligation. Aside from being a legal mandate, there are benefits that come from being a registered taxpayer: being able to use an Income Tax Return as proof of earnings when applying for loans or securing travel visas.
But how do you go about becoming a taxpayer? It all boils down to registering as a self-employed taxpayer via the Bureau of Internal Revenue or BIR. This article provides a simplified yet comprehensive guide to BIR registration for freelancers or non-licensed self-employed professional, along with the list and description of requirements.
The General Requirements for BIR Registration for Freelancers
Make sure you have the following general documentary and identification requirements before heading to BIR to register as a self-employed freelancer or non-licensed professional:
• Valid Government IDs: Valid government-issued IDs include government-issued IDs such as passport, driver’s license, postal ID, Unified Multi-Purpose ID, and NBI clearance, among others that show name, address, and birthdate. This is needed for all government and non-government transactions.
• Tax Identification Number or TIN: If you were previously employed, you are more likely to have a TIN already. In case you still have one, you can go to your BIR Revenue District Office or RDO to secure one.
• Occupational Tax Receipt: An OTR is similar to a community tax certificate. You can get this at the Treasurer’s Office of your Municipal Hall or City Hall. Cost varies from PhP 150.00 to PhP 250.00 depending on the municipality or city. Prepare a photocopy of your OTR.
• Notarized Affidavit: There is a need to write an affidavit or sworn statement stating that you are a freelancer and explaining the nature of your work or services, as well as an overview of your rates. The affidavit also needs to be notarized. A notary public can help you write the affidavit. Cost varies from PhP 150.00 to PhP 250.00.
The Steps in BIR Registration for Freelancers
Note that this is applicable for those who DO or DO NOT have a Tax Identification Number:
Step 1: Get an OTR at your Municipal Hall or City Hall. You will need to present a valid ID for identification. Once secured, have the OTR photocopied.
Step 2A: Secure your TIN by going to the BIR RDO of your present residence, accomplishing the BIR Form 1901, and submitting the form together with your OTR and affidavit to the officer in charge.
Step 2B: If you already have a TIN from previous employment, you need to go to the BIR RDO of your previous employer to have a transfer of TIN to the BIR RDO of your present address of residence.
Step 3: Once you have already secured a TIN, you need to get a Certificate of Registration or COR. This involves accomplishing BIR Form 0605. Note that this is a payment form. You need to accomplish this and pay an amount of PhP 500.00 to any Authorized Agent Banks. Once done, have the form and receipt photocopied in triplicate each.
Step 4: Go back to your BIR RDO and present BIR Form 0605 to a relevant officer. From hereon, they will have your COR printed and stamped. Once you secured a COR, you have 30 days to register official receipts or invoices, and books of accounts. Take note of Step 5 for this.
Step 5: You will also need to secure an Authority to Print or ATP by accomplishing BIR Form 1906 and register your books of accounts by accomplishing BIR Form 1905. Once accomplished, present these forms together with the paid BIR Form 0605 or COR, photocopied OTR, and affidavit. Note that securing an ATP means registering, ordering, and applying for official receipt or invoice. This process also involves buying journal books or books of accounts and having them registered.
A Note on the Registration Process for Freelancers
The entire process can be overwhelming because they are relatively not straightforward. You would have to go back and forth to your BIR RDO, especially if you forgot all the documentary requirements. Furthermore, depending on your BIR RDO, it could take you one to three days to finish your BIR registration. Note that the entire process is also almost similar for PRC licensed professionals.
As a reminder, the following are the documentary requirements:
• Pre-BIR Registration: Valid government-issued IDs, Tax Identification Number or TIN, Occupational Tax Receipt or OTR, and notarized affidavit.
• During BIR Registration: BIR Form 1901 (Application for Registration), BIR Form 0605 (Payment form for Certificate of Registration), BIR Form 1906 (Authority to Print Receipt/Invoices), and BIR Form 1905 (Application for Registration Information Update/Correction/Cancellation).