I wanted to pay my taxes, but the process of registering made me think that they made it hard because they didn't want my money.
Tax. As an employee, di mo yan matatakasan. But as an independent contractor, ala non-licensed professional, consultant, freelancer, yada yada, madaling takasan ang tax. Wag ka lang mag bayad, wag magarbo ang buhay, wag mansyon ang bahay, wag magyabang, maging mabaet sa kapwa, at ma e-evade mo yang tax na yan. Pag ginawa mo yun, ha, isa kang masamang tao.
Since I pride myself as the most humblestest and kindest person in the whole world, evading my tax obligations is a no go. Oo, medyo malaki laki ung tax na babayaran ko considering mas kinder-er ang mga bossmen ko overseas, pero I need to do what is right, and paying my taxes is what is right.
But the hassle of getting to the point of being able to pay my taxes is such a chore, it makes me feel like they made it hard because they don’t want me to pay. Halika, ikwento ko ang estorya ko.
THE PATH TO PAGLUSTAY NG PERA PARA SA GOBYERNO
In order to pay for your taxes as an independent contractor, you should first register yourself as a non-licensed professional. Once you’re done with that, and you got your Certificate of Registration, then only would you be able to pay your taxes.
If you’re looking simply for the steps to register yourself as a non-licensed professional, scroll to the bottom of this page. Kung madami kang oras at trip mo magbasa, edi magbasa ka.
Transferring of RDO (Regional/District Offices)
My previous employer was at McKinley so I had to first transfer my BIR RDO from Taguig (RDO 44) Cainta-Taytay (RDO 46). Why so? E kasi sa Rizal ako nakatira e.
The first time I went to BIR in BGC, the lines were long. It was just after things lightened up a little after the thing called ECQ during the pandemic, and ang haba ng pila grabe.
I went through all that hassle, and when I called after 3 weeks or so, my RDO still wasn’t updated! So, I scheduled an appointment again, and this time the lines weren’t that long. It took me about 30mins to get through all of that again, but that 30mins was all for nothing. When I called them up again after another 3 weeks, my records were still not updated.
Kaya ginawa ko nalang is I went directly to RDO 46, and told them that I already submitted my papers (Form 1905) twice, the first was almost 2 months ago, and the last one was almost 4 weeks ago. Dapat ginawa ko na lang ito nung umpisa pa lang, kasi when I called them after a week, all my records were updated, kaagad!
With that done, the next step was to secure an OTR from my municipality.
Getting an Occupational Tax Receipt (OTR)
This was a quick one. So, it’s the delta variant season around this time, and I decided to go get my OTR along with paying my land taxes kasi it’s on the same building naman. Alam mo na, make efficient use of time kuno.
Apart from being the delta variant season, it was also the election season, where politicians go about spreading the virus to their supporters hoping that they stay alive until they cast their ballots. This was a good thing kasi there was some bigshot presidential candidate trying to woo people in the municipal hall, kaya wala masyadong pila sa mga counters for the land tax and dun sa window for the OTR.
I did all my municipal hall related errands within 30mins tops, and a negative 10k in my wallet. Mahal nga pala ang amilyar (land tax). Pero ung OTR, it was just around 300 pesos or so.
Registering the “Business”
Heto na, Form 1901 na ang ipapasa ko. I’m going to establish my own business! Este, self-employed chuvaness lang.
The Taxpayer Type that I had to tick in the form is “Single Proprietorship Only (Resident Citizen)”.
As for the Line of Business field, I wrote down “Freelance - Computer Programming” as this is what is available in BIR’s newest shenanigan of a system called IRIS.
I also made sure to put a tick on the 8% flat tax rate. If I don’t do that, I’ll be paying taxes using the graduated tax table where the tax rate is way higher than 8%, and since I don’t have much of a business expense aside from electricity and internet, the 8% rate would always be the lower amount.
The whole ordeal took 6 hours, most of which was waiting on queue. The process was:
- go to the window for New Business Registration, pass in your form 1901 along with your OTR and a photocopy of your ID.
- make sure that the address reflected on your ID is the same as your business address. If it is not, get a photocopy of your latest proof of billing that has your name and the business address alongside your ID.
- if that goes well, you’ll proceed to the cashier to pay 500 pesos for the business registration, and another 30 pesos for the documentary stamp.
- go back to the New Business Registration window, and pass the Form 1901 with the receipt and the documentary stamp.
- the teller would proceed to tell you to get an Accounting Book before they would release your CoR (Certificate of Registration).
- in my case, she also inform me that either I get it outside of the BIR or buy it from her. If I buy it from her, I’ll be sure that the required stamps, etc. are correct, which would save me some time. So yeah, I bought the books from her and also the ORs (Official Receipts). It costed me 1.2k.
- The CoR was released the same day, but it took around 3 hours of waiting before my name was called.
With my CoR on hand, I can now proceed to pay my taxes the correct way.
STEPS TO REGISTER YOURSELF AS A SELF-PROPRIETOR
Here’s the summarized step-by-step process to get your CoR (Certificate of Registration).
- Get an OTR (Occupational Tax Receipt) from your city/municipality hall
- Some cities/municipalities require a barangay clearance to get an OTR
- If your previous RDO is different from your home address, you need to transfer your RDO first
- The form required for this is Form 1905
- Go to your previous RDO, submit the form and wait for 3 weeks
- Confirm if your RDO is already updated by calling the hotline of your new RDO
- If your RDO is still not updated, submit the Form 1905 to the new RDO, and simply reason out to the Officer In Charge that you already submitted the form to your previous RDO but they haven’t updated yet
- Go to your local RDO (RDO of your home address), and sumbit Form 1901 for new business registration
- For the Form 1901:
- Specify the tax payer type as Single Proprietorship Only (Resident Citizen)
- Specify the line of business. If you are a software developer working on foreign companies as an independent contractor, this would be Freelance - Computer Programming
- Ensure that you put a tick on the 8% flat tax rate if your projected annual income is less than 3m.
- Make sure you have at least P1800 with you. The Business Registration fee is P500, while the documentary stamp is P30
- You’ll need to buy a Book of Accounts from an accredited supplier. Ask the teller where to buy it, there’s usually a list pinned somewhere inside BIR for the list of accredited printers of Book of Accounts and OR
- There could be times that the teller themselves have some preferred supplier. To save you all the hassle, just buy it from them instead to ensure that all the stamps, etc. are correct. This could cost you at least P1200 or more
- You need to provide another Form 1905 when submitting the Book of Accounts. This is “required” before BIR releases your CoR.
- Do note that the CPA I consulted with, did not inform me that this is required. In fact, she told me that I could only get my Book of Accounts and ORs AFTER I got my CoR. But on my actual experience, it was the other way around. I had to give the stamped Book of Accounts first, and submit another Form 1905 before they could release my CoR.
- For the Form 1901:
- Some RDOs could release your CoR at the same day, some would take a few days to release your CoR.
As you can see, ang hassle mag register as a freelancer dito sa pinas. Magbabayad ka na nga lang ng tax, ayaw pa nila. Well, dahil sa tedious process para makapag register, parang ma-fe-feel mo na ayaw nila na magbayad tayo. Ang baet naman nila.