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Ways for Filipino Freelancers to Pay Taxes in the Philippines

Frequent Visitor
Demetrius O Member Since: Feb 25, 2015

Great post!!
Thanks for sharing.  Robot wink

 

Active Member
Margareth M Member Since: Jun 23, 2015

Hi Ms Juvy, 

 

for filling 1701 (Annual Income tax) can some BIR staff Help us to compute and fill up our taxes using the the system? this is one of my problem on how to File 1701 since other are saying that this part is so complicated.. Im planning to regsiter to BIR as Self employeed but had a problem on how to use, to fill up the annual income tax. what to do with the books you mention earlier. also question we will declare all are income starting from the day we start earning on Upwork? like for exmple i have been earning on upwork since 2014 and Just now I will regsiter as a self employed thus you need to declare that on the books? enlighten me on this .. sin ce I really wanted to pay task but I'm confuse...  by the way how many Books you have ? you mention "Every freelancer must have her/his own Accounting Journal and Ledger Book, Book of Accounts, Cash Receipts (the bundle) and Cash Disbursement Book" and wht is the two columnar books? so meaning the Only two books need to be register? 

 

how do I declare my income since I'm earning /hour and not fix.. so my monthly or weekly earning si changing .. so how it will be when Filing "Quarterly Income - 170Q" and "Annual Income Tax - 1701" ? do you pay also Monthly Percentage Tax (3% of gross revenue)?

please teach me and enlighten me on how and what to do Smiley Happy 

Regards,
Margie

Community Guru
Juvy Ann P Member Since: Oct 29, 2015

I apologize for my delayed reply, Margie.  Or did I address all of your questions via private messages?

Frequent Visitor
Maria Cecilia Beat B Member Since: May 14, 2017

Hi Ms Juvy,

 

I have the same questions with Ms Margareth M. Could you please share the responses you gave her via private message?

 

Best regards,

Maria

Community Guru
Juvy Ann P Member Since: Oct 29, 2015

@Maria Cecilia Beat B wrote:

Hi Ms Juvy,

 

I have the same questions with Ms Margareth M. Could you please share the responses you gave her via private message?

 

Best regards,

Maria


 Okay, no problem. 

Community Guru
Juvy Ann P Member Since: Oct 29, 2015

@Margareth M wrote:

Hi Ms Juvy, 

 

for filling 1701 (Annual Income tax) can some BIR staff Help us to compute and fill up our taxes using the the system? this is one of my problem on how to File 1701 since other are saying that this part is so complicated.. Im planning to regsiter to BIR as Self employeed but had a problem on how to use, to fill up the annual income tax. what to do with the books you mention earlier. also question we will declare all are income starting from the day we start earning on Upwork? like for exmple i have been earning on upwork since 2014 and Just now I will regsiter as a self employed thus you need to declare that on the books? enlighten me on this .. sin ce I really wanted to pay task but I'm confuse...  by the way how many Books you have ? you mention "Every freelancer must have her/his own Accounting Journal and Ledger Book, Book of Accounts, Cash Receipts (the bundle) and Cash Disbursement Book" and wht is the two columnar books? so meaning the Only two books need to be register? 

 

how do I declare my income since I'm earning /hour and not fix.. so my monthly or weekly earning si changing .. so how it will be when Filing "Quarterly Income - 170Q" and "Annual Income Tax - 1701" ? do you pay also Monthly Percentage Tax (3% of gross revenue)?

please teach me and enlighten me on how and what to do Smiley Happy 

Regards,
Margie


 

Hi Margie,

 

I understand that you are a Filipino citizen and I am glad that you expressed your desire to register as a self-employed and registered tax payer in the Philippines.  As regards the computation of your taxes there is an e-lounge per BIR Office (at least in cities). An Officer will assist you on how to compute your taxes.  There are only two books - the Cash Disbursement Ledger and the Cash Receipt Ledger which you can purchase at the BIR establishment for around Php 50.00 each.  It must be duly signed by a BIR Official before you start recording your business transactions via Upwork.  You may register  for the most recent year.  I am not sure if there is such a thing as "retro" when it comes to paying taxes.

 

The bundle of receipts will be ordered by you.  It will expire within 5 years.  It is very important that you begin with the Certificate of Earnings Report which you can freely download from the site.  It must be notarized for legal purposes.  I am not familiar with the 3% thing.  I opted for an automatic 40% deduction since last March, 2016 was also my first time to register as a self-employed individual.  But next year I can choose to go for the standard itemized deduction using my accounting books or the 40% rule but the BIR Officer strongly suggested that I go for the itemized deduction.

 

Please let me know if there are still things that you need to be clarified about.

 

 

Cheers,

 

 

Juvy

Active Member
Rose J Member Since: Oct 12, 2016

 Thank you so much Juvy for a very detailed explanation on filing COR and tax paying for upwork freelances.  I am sure it helps a lot of the freelancers who are planning to file COR as well.  

 

I just have some clarifications on the writing of books of accounts.  You mentioned that we can easily access them in upwork's GUI?  Which particular page do you quickly go to check this out?  And since the pay is  in dollars, do you record the dollar payment or just the equivalent amount in peso which is transferred to you?  Also kindly let me know how the 2 journals differ since this is my main problem cuz I don't have to issue any receipts to clients.  That means, I have also to record each paid transaction to my receipt booklet even if client don't take it.  

 

Thank you again for your help.

Community Guru
Juvy Ann P Member Since: Oct 29, 2015

@Rose J wrote:

 Thank you so much Juvy for a very detailed explanation on filing COR and tax paying for upwork freelances.  I am sure it helps a lot of the freelancers who are planning to file COR as well.  

 

-- I agree.  Not all freelancers can opt to pay for taxes.  Others give employment and that's the way they pay things forward and uplift the dignity of the "poor" like myself.

 

I just have some clarifications on the writing of books of accounts.  You mentioned that we can easily access them in upwork's GUI?  Which particular page do you quickly go to check this out?  

 

-- Books of Accounts are not available via the platform.  UW releases CSV files of all business transactions and these files are downloadable from the Reports section specifically at the Transaction History page. There is also an option to download the ZIP files.  Books of accounts are purchased at bookstores and BIR offices (for Php 50.00 each) and accomplished by taxpayers using the info provided by the CSV files.

 

And since the pay is  in dollars, do you record the dollar payment or just the equivalent amount in peso which is transferred to you?  

 

--I record the dollar amount in my MS Excel matrices which are adaptations of CSV files that I normally and regularly download from the Reports page that I mentioned above but the Cash Receipt Book that I submit to BIR contains the Philippine peso amount (per transaction) plus the FOREX rate.

 

Also kindly let me know how the 2 journals differ since this is my main problem cuz I don't have to issue any receipts to clients.  

 

--There are 2 journals that need to be submitted to BIR annually -- the Cash Receipt Book and the Cash Disbursement Book. The Cash Receipt Book is for money that we receive through our business transactions with our clients and is usually reflected in our bank statement (if we opt for direct-to-local-bank transactions) and in the Transaction History page while the Cash Disbursement Book is for money that we invest in and utilize for our business to continue to run smoothly. The latter is for utilities (internet connection), equipment (personal computer, laptop, audio sets, etc) and equipment-related expenses (licensed MS Office software, antivirus software, etc.), taxes (monthly, quarterly and annual), health expenses (PhilHealth and healthcare plan), social security system (SSS) and mutual fund (Pag-IBIG) premiums -- these last three are considered as tax-free investments.  One may choose between 40% optional standardized deduction (for sole proprietors) or itemized deductions (for large companies) which require the Cash Disbursement Book more.  But the best accounting practice, I have learned, is to keep both books updated everytime for the annual registration which happens every last day of January, application for the Authority to Print Receipts (ATP) and auditing to be done by a Certified Public Accountant and this is for special cases such as loan applications and the like.

 

 

--That means, I have also to record each paid transaction to my receipt booklet even if client don't take it.  

 

Official receipts -- are your referring to official receipts?  I normally scan receipts and send these scanned files to my clients via UW's message center.  Whether or not clients want to take it has nothing to do with the fact that they paid me for my work and I earned something from my contracts with them.  Taxes are taxes because of earnings and not because of the client's prerogative to be invoiced.

 

Thank you again for your help.

--I am also grateful to my cool and generous clients who provide work to me and to this platform for directing me to them via some sort of a magical scheme. I am also thankful to specific freelancers of this platform who believe in taxes.

 

 

 

Ace Contributor
Francisco F Member Since: Nov 13, 2010

 

"I just have a random question as regards some posts on this thread.  Why is there an option for PTR?  According to the BIR Officer, freelancers who work from home cannot apply for this."

 

Not all BIR personel are completely familiar with tax laws and even their own BIR policies. I confronted them stating legal provisions during my registration process when they refused my PTR even though I'm neither a lawyer nor an accountant. They relented and accepted my PTR. I think a BIR LEGAL officer would answer differently about freelancers working at home.

 

Frequent Visitor
Catherine P Member Since: Sep 24, 2016

Hi, Francisco.

 

Just wanted to know what will be the proof the I am earning in USD when I am subject to audit, that I am earning in USD?

 

As I am really interested on this Vat registered freelancer, so atleast to be exempt on the 3% monthly percentage tax.

 

Appreciate your help.

 

Thank you!

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