Freelance Tax: When you can’t get an OTR
I’ve been wanting to blog about my tax experience for a while now but I did not want to overstep my boundaries; after all, I would not have been able to register without the help of other people, especially Donna Donor whose blog, Register as a freelancer! My experience in registering at BIR, was the guide I mostly used in the process. Most of the hard work had been jotted down for me to follow, instead of me having to feel my way blindly through the process.
For years, I’ve contemplated on registering as a freelancer but I’ve heard so many horror stories about it, and perhaps because I’ve had a handful of bad experiences with some government employees in the 90’s that I was too afraid to go through with it. But last year, I felt brave enough to finally do it.
I’ve been trying to find accountants who would teach me how to do it, but I can’t seem to find anyone who would. They all say they don’t know how to handle a freelancer’s tax, so I started asking fellow freelancers whom I know have been filing their taxes.
That’s when Donna mentioned that she has a blog about it and I saw that it had all the information I needed, from the requirements I needed to prepare to the steps I had to take. It really made my registration process so much smoother than I anticipated.
Since my TIN number was originally registered in Las Pinas, I had to go to the RDO there to request the transfer to the RDO assigned for our location. I don’t remember how long it took for the transfer, but it took me another week to visit the city hall to secure an OTR (Occupational Tax Receipt) which I should include with other documents (birth certificate, proof of income, baranggay clearance, my kids’ birth certificates and my marriage certificate) required to register. Professionals who do not have licenses must have an OTR in order to register as freelancers.
That’s where I hit a dead end. When I went to the city hall, the man at the window told me that they do not issue OTRs. They only issue PTRs (Professional Tax Receipt) which is only applicable for doctors and lawyers, but not for freelancers like me. Another city hall staff suggested that I try getting an OTR in Mandaluyong, but I didn’t want to do that.
For a minute, I was stumped. I was determined to register in 2020 so I had to think. I decided to go to my RDO and ask them what I could do in absence of an OTR. I brought all my documents and blank cash books with me and handed them over to the BIR assessor and told him my case.
As it turned out, it was all I needed to do! The assessor went through my documents, asked me a few questions, checked my cash books and told me to fill out the top fields in them so he can put the BIR stamp on them and sign them, then instructed me to pay for my registration and bring him back the receipt.
He categorised me under 9309 Other Service Activities and explained to me how it works. My tax would be an automatic 3% deduction in all of my earnings, which later on I learned, also disqualifies me from deducting any of my expenses from my tax except for the basic expenses allowed by the BIR. I’m okay with that for now, I’m still learning how to file my quarterly and annual taxes properly, in fact, I need to take one more trip to the RDO this month to file my late 3rd quarter tax and pay the corresponding penalties. I’ll learn to apply the changes I need as I go along.
I had to follow up for about 3-4 weeks before my COR (Certificate of Registration) was ready for pick up, and when I went to get it, I celebrated with my husband. It feels so good to finally be able to register!
There are many reasons why I wanted to register as a freelancer. I’ve been told that it will prove useful if we ever take out a loan in the future, and it will help if we want to apply for travel VISAs, too.
But most of all, I just wanted to be a good citizen and do my part. I want to be considered legitimate and work with brands and clients the right way. I want to be able to issue receipts when necessary, and do business in peace. I don’t want to evade this civic obligation and I believe that God will honour my heart in doing so.
“Pay to all what is owed to them: taxes to whom taxes are owed, revenue to whom revenue is owed, respect to whom respect is owed, honor to whom honor is owed” Romans 13:7.