As of 2025, more than 1.5 to 2 million people in the Philippines are still working as freelancers. But as that number grows, it's clear that people need to learn more about their legal, financial, and tax duties. It's important to do your taxes right, whether you work as a freelancer full-time or just to make extra money. This guide gives Filipino freelancers a full and useful plan for how to handle their money, taxes, and registration under the rules that will be in place in 2025.

Understanding Freelancing and What You Have to Pay in Taxes

Philippine tax law says that freelancers are people who work for themselves. If you're a writer, developer, designer, marketer, or online seller, you have to pay taxes on any money you make as a freelancer. Even if you only do freelance work part-time while you work full-time (which is often called "raket"), you still need to tell the Bureau of Internal Revenue (BIR) about it.

The BIR says that all freelancers need to sign up, even if they don't make a lot of money. You need to register to get official receipts, file your taxes correctly, and avoid fines.

How to legally register as a freelancer with the BIR

1. Get a Tax Identification Number (TIN)

If you don't already have a TIN, fill out BIR Form 1901 and send it to your local BIR Regional District Office (RDO) or online. You can only use this form if you work for yourself or get money from more than one place.

If you already have a TIN from a job you had before, you need to go to your RDO and change your status to "self-employed".

2. Sign up for your freelance business

You need to send the following to your RDO:

• Form 1901 for the IRS
• A valid government-issued ID
• Evidence of your address

Pay for: The registration fee is PHP 500.
Tax on documentary stamps: PHP 30When the process is over, you will get a Certificate of Registration (Form 2303).

3. Sign up for Books of Accounts

You need to keep track of your money transactions by writing them down in either physical or digital books:

• Journal for the General
• The Main Ledger
• Book of Cash Payments
• Journal for Giving Out Cash

To get these stamped, you need to bring them to your RDO.

4. Get permission to print receipts

To apply for Authority to Print (ATP), fill out BIR Form 1906 and send it in. After that, you can use a printer that the BIR has approved to make your official receipts. You have to buy at least 10 booklets, which usually cost between PHP 1,500 and PHP 2,000. (Optional) Sign up with DTI to get a name for your business.

You can register a trade name with the Department of Trade and Industry (DTI) to use as a brand. You don't have to do this. You can also use your full legal name to do business.

6. (Optional) Get More Permits

You may need to get more permits or meet local requirements depending on where you live and what kind of freelance work you do. Getting an Occupational Tax Receipt (OTR) from your city or town is one of these requirements. This shows that you have permission to do business in that area and may be needed when you sign up with other government agencies.

Freelancers in the Philippines should also sign up for PhilHealth, the Social Security System (SSS), and the Pag-IBIG Fund so they can get government-mandated benefits like health care, retirement savings, and housing loans. These registrations aren't always required for freelancers, but they are highly recommended for long-term financial security. If you run a formal business, they may be required.

Also, all Filipino freelancers have to pay income tax, and there are two main ways to do this:

• Freelancers have to pay graduated income tax rates under the TRAIN Law. People who make less than PHP 250,000 a year don't have to pay income tax. Those who make more do, with rates that range from 20% to 35% depending on their income level. Freelancers can lower their taxable income by deducting business expenses that are allowed by this tax plan.
  
  
• Freelancers who make less than PHP 3 million a year can also choose the 8% flat tax on their gross receipts. This tax is applied without taking into account any deductions. It takes the place of both the percentage tax and the income tax (over PHP 250,000). But if you choose this simpler option, you can't pay percentage tax anymore, and you have to stick to this tax system for the whole year. Remember that you still need to file income tax returns even if your income is below the taxable threshold (PHP 250,000).
  
  
• If you don't choose the 8% tax and make less than PHP 3 million, you will have to pay a 3% tax on your gross income. If you make more than PHP 3 million a year, you have to pay Value-Added Tax (VAT) at a rate of 12%. This tax must be added to your service fees and sent to the Bureau of Internal Revenue (BIR). You must file your tax returns every three months and give official BIR receipts, no matter what tax system you are in.

Picking between the 8% flat tax and the graduated rates

The 8% flat tax is the best choice if you are a freelancer with few costs and earn less than PHP 3 million a year. It is easier to keep records because you don't have to keep track of deductible expenses.

The graduated tax system, on the other hand, lets you write off expenses. This can help if your business costs make your net income much lower than your gross income. To pick the best plan, you need to know how much money you make, how much you spend, and what your long-term goals are. If you're not sure, talk to a tax professional who is licensed.

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Conclusion 

If you want to make a lot of money and have a lot of freedom by freelancing in the Philippines today, you need to be disciplined and follow the rules. If you want to be a successful freelancer, you need to know how much you owe in taxes, keep good records, choose the right tax strategy, and stay up to date on changes in the law.

Filipino freelancers can confidently handle their taxes and focus on growing their businesses in 2025 and beyond if they have the right information and systems in place.

FAQs 

1. Should I sign up with the BIR if I only work part-time or on an irregular basis?
Yes. The BIR says that anyone who works for themselves, even if it's only part-time or once in a while, has to register and pay their taxes. You still have to sign up and follow the rules, even if you don't make much money or it doesn't come in on time.

2. How does the 8% flat tax differ from the tax rates that go up as you earn more money? How do I decide?
The 8% flat tax is easier to understand because there are no deductions. You can only get it if you earn less than ₱3 million a year.

3. What will happen if I don't file my taxes for a quarter when I didn't make any money freelancing?
You still have to file a return to show that you didn't make any money. If you don't file, you might have to pay fines, interest, and compromise fees, even if you didn't make any money. You have to file on time every year and every quarter, no matter how much money you make.

4. Do I need to add VAT or a percentage tax to the amount when I send my clients a bill?
If you didn't choose the 8% flat tax and your gross income is less than ₱3 million a year, you owe 3% of that. You usually don't have to pay for this; it's usually included in the price.

5. Do sites like Upwork and Fiverr now charge Filipino freelancers VAT?
Yes. Starting on June 1, 2025, foreign digital platforms will have to charge Philippine users 12% VAT on service or platform fees. This VAT is not the same as the tax you pay on your freelance income. It could make running your business more expensive.