Sunday, April 8, 2012

Registering Your Online Work In The BIR

I came across an article in Yugatech about Filipinos being one of the top freelancers in Odesk and came across a reader post that states that the BIR will find a way to tax these Filipinos. Actually, online freelancing is taxable under the line of business category "9309 Other Service Activities" and is subject to monthly taxes and income tax returns. I pay my taxes monthly and will be passing my annual ITR next week. I would have taken care of that this week, but because of the holy week, the BIR and banks are closed. So in light of this, I will try my best to recall and explain how to go about in registering your line of work in the Bureau of Internal Revenue or BIR so you could start contributing to our country's economic growth and get to have your own ITR or Income Tax Returns, which you might even find useful in the future, i.e. credit card application.

First you need to get a Professional Tax Receipt or PTR in your city hall. When I applied at the BIR, I did not know that I needed this and was forced to continue my application the next day since I need this to complete my registration. Community Tax Certificate or CTC or Cedula is not needed at this moment.

I suggest you go early because you need to go pay the annual application fee in an authorized agent bank or AAB, which unfortunately has a cut-off of before lunch. You will also of course need a tax identification number or TIN. If you don't have one then you need to get one first. This might probably make your application time a bit longer but you do need this. I'm not sure how much longer it would take though because I have had my TIN since 2004.

Now for your application. First, you will need to be assessed. Either ask the guard or any employees you come across with where this is. Tell your assessing officer that you work online as a freelancer and that you directly get paid by your clients abroad for your services. I get paid through wire transfers and through paypal and I explained to them that my clients do not pay any witholding taxes as far as I know. If your work goes through a middleman here in the Philippines you will need to get their TIN and be registered as a regular employee since you are considered one.

They will then tell you to fill up three copies of both the 0605 and 1901 forms. After filling up these forms, either have your TIN verified by showing your 0605 forms at the TIN verification booth or go to next step, which is assessment of the requirements, and this is where the PTR comes handy because it is the only requirement that you will need at this point. If you don't have this in hand, you will need to get it in your city hall and that will take another hour or more. Now I assume depending on where you are, either they will help you out and not require you to go to the process of verifying your TIN and do it themselves or point you back to the TIN verification booth. I'm not sure of this though. We have the nicest people here in Baguio City so I guess it depends on where you are.

Up next is paying the 500-pesos annual fee in an authorized agent bank. You can ask your assessing officer where is the nearest authorized agent bank or AAB you can go to. I tried looking for a list online but eerily can't find one. I can confirm a few though like the Land Bank of the Philippines, Banco De Oro, and Philippine National Bank as these are the banks that I have gone to. I know you can pay your taxes online at the Bank of the Philippine Islands but that's all I know.

At this point, one of your 0605 and 1901 forms will be in your possession and the rest will be kept by the bank. You need to bring these back to the BIR. They will then schedule an orientation date where you will get all your forms back after and then some.

After the orientation, they will give you a simplified set of booking records or a ledger, which is of course for a fee. If I remember it correctly, it was about 50 pesos. This is where you'll write down your transaction records like payments and expenses. Remember that this ledger should be renewed every year regardless if there are still plenty of space to write into (i.e. you registered in November and only has filled up the ledger for your November and December transactions), as well as the 500-peso registration.

The final step will be ordering your receipts. If you know a printing press where you can order one and think you'll save some money feel free to do so. If you don't, you can ask someone in the BIR who knows one and you can order from them. I think I paid 500 pesos for a 500-page receipt. This is an official receipt and you could actually use these if you want to sell stuff online because online selling is also under the "9309 other service activities" category as far as I know. You'll probably wait a few days before getting your receipt.

And that's it. You can now legitimately shout out the phrase "I'm a taxpaying citizen goddammit!" And you'll even have those little "Ask for Receipt" certificates to post in your personal office's door (see image above).

Note: This is a step for online workers only and may be different from the steps for applications of people in other lines of work.


  1. Great! Thank you for the information! I am a fresh Computer Science graduate and I am about to enter the world of Freelance.

  2. Hi, I am a textbook author and was just recently required by my publisher to issue an OR to claim my royalty. I went through the same process as you did, was registered under the same 9309 category and just had my Ors printed. But I only get paid royalty once a year. Do I just file my ITR once a year?

  3. There are three quarterly income tax and one annual income tax returns. This system is designed so that tax payers won't be burdened in paying a very high amount in one sitting. You may also need to pay a monthly percentage tax, but I'm not really sure in your case. You can check the taxes that you need to settle in your certificate of registration under registered activities -> tax type. If you don't have any income for a month or for the whole quarter, you will still need to submit the proper forms directly to the regional office you are registered indicating that you have zero income to avoid penalties. However, this is all based on my experience. I suggest you go directly to the BIR office to inquire about your particular case. :-)