BIR Registration and the 8% Tax Option for Filipino Freelancers and Remote Contractors
How Filipino freelancers register with the BIR, when the 8% tax option beats graduated rates, a ₱600,000 worked example, and the 1701Q and 1701A deadlines.
8 min read · Last updated
General information, not tax or legal advice.
If a foreign client pays you as a contractor, nobody withholds tax for you. That part is on you. The good news is that the BIR process is shorter than it used to be, and the 8% option can make your taxes simple. Here is the whole thing, step by step, with the numbers worked out.
Do you need to register?
Look at how you get paid, not at your job title. If a foreign company hires you through a local employer, an agency, or an employer of record, and you get a payslip with tax already withheld, you are an employee. Your employer handles the BIR side.
If you send invoices and the client pays you the full amount with no tax taken out, you are self-employed in the BIR's eyes. That covers most Upwork, OnlineJobs.ph and direct-contract work. BIR Form 1901 is the application for self-employed people (single proprietors and professionals) and for mixed income earners, meaning people with a salary from an employer plus income from their own business or profession.
The BIR guide says to register on or before you start your business. In practice that means before your first client payment, or within 30 days of getting a mayor's permit, a DTI business name, or a professional tax receipt, whichever comes first.
How to register, step by step
- Go online through ORUS, the BIR's Online Registration and Update System at orus.bir.gov.ph. You can also file at the Revenue District Office (RDO) that covers your home address if you work from home.
- Fill in BIR Form 1901 (the current version is October 2025). Item 23 asks if you are availing of the 8% income tax rate option. Answer it on purpose; this is one of the places where you choose.
- Prepare one government ID that shows your name, address and birthdate, like a PhilID, passport or driver's license. If your ID has no address, add a proof of residence.
- Pay the ₱30 documentary stamp tax for your Certificate of Registration. That is the fee listed in the BIR registration guide, plus the printing cost if you buy BIR Printed Invoices.
- Set up your invoices. You can buy BIR Printed Invoices at your RDO, or have your own invoices printed by an accredited printer.
Two changes from the Ease of Paying Taxes (EOPT) Act are worth knowing. First, the old ₱500 annual registration fee is gone. The law took effect on January 22, 2024. Second, the BIR now uses invoices for both goods and services, so you will hear less about official receipts. Under EOPT, issuing an invoice is required for sales of ₱500 or more.
The 8% option versus graduated rates
By default, every individual is taxed at the graduated income tax rates. If you are self-employed, not VAT-registered, and your gross receipts for the year do not go over ₱3,000,000, you can choose the 8% option instead. It replaces both the graduated income tax and the 3% percentage tax.
| Your situation | How the 8% is computed |
|---|---|
| Purely self-employed or professional | 8% of gross receipts above ₱250,000 |
| Mixed income earner (salary plus freelance) | 8% of the whole freelance gross, with no ₱250,000 deduction. Your salary stays on graduated rates. |
| Gross receipts above ₱3,000,000, or VAT-registered | Not allowed. You are on graduated rates. |
How to choose it. New registrants choose on Form 1901 or on the first quarterly return. If you are already registered, file Form 1905 at the start of the year, or choose it on your first quarterly return (1701Q or 2551Q) for the year.
It only lasts one year. Every January you go back to graduated rates unless you choose 8% again. Once you choose, you cannot change it for that year.
Crossing ₱3,000,000. If your gross goes over ₱3,000,000 during the year, you move to graduated rates and become liable for VAT. You need to update your registration within the month after the month you crossed it.
Worked example: ₱600,000 a year
Say you are a purely self-employed VA. You bill about ₱50,000 a month, so ₱600,000 for the year, and you are non-VAT. Here is how the two choices compare, using the 2023-onward tax table printed on BIR Form 1701A.
| 8% option | Graduated with 40% OSD | |
|---|---|---|
| Taxable amount | ₱600,000 − ₱250,000 = ₱350,000 | ₱600,000 − ₱240,000 OSD = ₱360,000 |
| Income tax | ₱350,000 × 8% = ₱28,000 | 15% of (₱360,000 − ₱250,000) = ₱16,500 |
| Percentage tax | None, the 8% covers it | 3% × ₱600,000 = ₱18,000 |
| Total for the year | ₱28,000 | ₱34,500 |
OSD is the optional standard deduction, a flat 40% of gross that you can take instead of listing your actual expenses. In this example the 8% option saves you ₱6,500 and a lot of paperwork, because you skip the quarterly percentage tax return.
The answer can flip if you have big real expenses, like a co-working desk, equipment or paid helpers, and you keep receipts for all of them. Run your own numbers in the HanapHub tax calculator. Choose graduated and enter 40% of your gross as deductions to copy the OSD case. Note that the calculator shows income tax only, so add the 3% percentage tax yourself when you compare.
If you also have a day job, the math changes. As a mixed income earner on 8%, the same ₱600,000 of freelance income is taxed at ₱48,000 (8% of the full amount), on top of the tax on your salary.
What to file and when
| Return | Covers | Deadline |
|---|---|---|
| 1701Q | 1st quarter (Jan to Mar) | On or before May 15 |
| 1701Q | 2nd quarter (Apr to Jun) | On or before August 15 |
| 1701Q | 3rd quarter (Jul to Sep) | On or before November 15 |
| 1701A | Whole year, purely self-employed (8% or graduated with OSD) | On or before April 15 of the next year |
| 2551Q | Quarterly percentage tax, only if you are on graduated rates | Check the current deadline on bir.gov.ph |
There is no 1701Q for the fourth quarter; the annual return covers it. Mixed income earners file Form 1701 instead of 1701A. Deadlines can move. For example, the BIR moved the April 15, 2026 deadline for 2025 annual returns to May 15, 2026 (RMC 30-2026). Always check the latest advisory before the due date.
You can file electronically through the Offline eBIRForms package and pay through ePayment channels like LandBank Link.Biz, UnionBank, or DBP PayTax (which includes GCash and Maya through MyEG). Late filing brings a surcharge, interest and a compromise penalty. EOPT cut the surcharge to 10% and halved the interest for micro and small taxpayers, but that is still money lost. The 1701Q has to be filed regardless of how much you earned, so file even if you owe nothing.
Keep records of every foreign payment
Your books are your defense if the BIR ever asks questions. Under EOPT, keep books of accounts and records for five years.
- Issue an invoice for each client payment, and keep a copy.
- Save the client's statement or contract that shows the amount in dollars.
- Write down the peso amount you actually received and the date, from your Wise, Payoneer, PayPal or bank statement.
- Keep a simple spreadsheet per quarter: date, client, invoice number, foreign amount, peso amount. Your 1701Q totals come straight from it.
If you are still picking a payment platform, see How to Get Paid by Overseas Clients for the fees on each one.
What to do this week
- Total what you earned from clients so far this year, in pesos.
- Run 8% versus graduated in the tax calculator.
- If you are not registered yet, start Form 1901 on ORUS and prepare your ID and the ₱30 DST.
- If you are already registered and want 8% next year, put "file 1905 or elect on the Q1 1701Q" on your January calendar.
- Mark May 15, August 15, November 15 and April 15 on your calendar.
Frequently asked questions
Is there still a ₱500 yearly BIR registration fee?
No. The EOPT Act removed the ₱500 annual registration fee. It took effect on January 22, 2024.
Can I switch from 8% to graduated in the middle of the year?
No. Once you choose, the option is irrevocable for that taxable year. You can choose again at the start of the next year.
I have a full-time job and a side client. Can I use 8%?
Yes, for the freelance part, as long as you qualify. But as a mixed income earner you do not get the ₱250,000 deduction on your freelance gross.
Useful links
Sources
- BIR, RMO No. 23-2018 digest (8% income tax option) (checked October 24, 2026)
- BIR, Salient Features of the EOPT Act (RA 11976) (checked October 24, 2026)
- BIR Form 1901, October 2025 (ENCS) (checked October 24, 2026)
- BIR, Taxpayer's Guide on Business Registration (checked October 24, 2026)
- BIR, Guidelines and Instructions for Form 1701Q (checked October 24, 2026)
- BIR Form 1701A with 2023-onward tax table (checked October 24, 2026)
- BIR, RMC No. 69-2023 (percentage tax back to 3%) (checked October 24, 2026)
- BIR, RMC No. 30-2026 (2025 annual return deadline extension) (checked October 24, 2026)
- BIR, RMC No. 20-2026 digest (filing and payment channels) (checked October 24, 2026)