By this time, all of us must have heard about the Kasambahay Law.

We know that under the law, we are required to pay for our
household worker's SSS, HDMF (PAG-IBIG), and Philhealth benefits.
How do you go about it, and what do you need to know?
SSS
If your kasambahay has been an SSS member in the past, you can
fulfill the Kasambahay Law by simply registering your kasambahay
as voluntary member and shouldering your legal share of the SSS
payments. You do not need to register as employer.
I got the above information from a supervisor at the Department of
Labor and Employment (DOLE) contact center. (The agent passed
the phone to her when she found out I was writing all these in my
blog.)
If you are using this method of SSS payments for your kasambahay,
the DOLE advises that you clearly indicate in the contract that
although your kasambahay is registered as voluntary member, you
are shouldering your legal share of the payments as employer. And
make sure to keep your own copy of all receipts.
To change your kasambahay's membership status to Voluntary,
simply make payments in his/her behalf using his/her SSS number,
using the SSS Form RS-5. According to the SSS website, "Posting of
said payment will change the membership status from covered
employee, self-employed, OFW or non-working spouse to a voluntary
paying member."
If your kasambahay has never been an SSS member, then he/she
cannot begin as a voluntary member (SSS rules forbid that; don't ask
me why) and you, alas, will need to register as employer. I have a
separate article on that. Click the link to read The SSS Household
Employer Under the Kasambahay Law: Register, Pay, Report.
Now you can start paying your kasambahay's SSS contributions. Do
so before the 10th of the following month. For your convenience, it
is better to pay through SM Payment Centers, Bayad Centers, or SSS
accredited banks, such as Chinabank, Metrobank, and BPI.
How much should you pay? See the table below (click to enlarge). If
your kasambahay is registered as a voluntary member, then the
required contribution is found on the last column (SE/VM/OFW).
Note that if your kasambahay is earning less than five thousand
pesos per month, you are required to shoulder 100% of the
Page 1 of 19

contribution. If your kasambahay is earning five thousand pesos or

more, the contributions are divided, as indicated on the table:
QUESTION: What if our kasambahay has been with us since the year
2000 but we only began paying contributions this year? Click on the
link to see the answer: SSS Arrears and the Kasambahay Law.
Philhealth
According to the DOLE, you can register your kasambahay as
Individually Paying Member (IPM). Do this by filling out
the Philhealth Member Registration Form and submitting it, along
with supporting documents, to the nearest Philhealth office. To find
the Philhealth office nearest you, call the Philhealth contact center
at (02) 441-7442.
As IPM, your kasambahay is required to pay P600 quarterly or
P2,400 per year. As employer, you are required to shoulder this in
full if your kasambahay is earning less than P5,000. If your
kasambahay is earning P5,000 or more, you shoulder half of the
payments while your kasambahay shoulders the other half.
Now if you want to register as employer rather than register your
kasambahay as an IPM, I've written a separate article on that.
Please click the link to read The Philhealth Household Employer
Under the Kasambahay Law: Register, Pay, Report.
Where to pay: Click on the link to find a list of Philhealth accredited
collecting partners.
PAG-IBIG/HDMF UPDATED! (June 11, 2013)
For HDMF, you don't have to will be advised to register as employer,
contrary to what their hotline agent told me earlier this month. I
found this out because I went to the HDMF office today to register
our househelp, and lo and behold, they told me to register as
employer!
To see the steps on how to register as employer, click on the link.
On the other hand, I have just been on the phone with the Marketing
Department of the HDMF main office in Cubao. Although they still
advise that we register as employer, they admitted that there is no
real sanction if your kasambahay is registered as individual payor,
as long as you shoulder your legal share of his/her payments and
have proof of doing so.
Whether or not you are registering as employer, you should register
your kasambahay as member online. Click on the link to reach
Page 2 of 19

their online registration portal.

After your online registration, print out the Member Data Form that
will be generated. Submit that form to the nearest HDMF office,
along with
1. proof of income, which is basically a statement from you saying
that Mr./Ms. So-and-so has been working with you since (the
date of first employment) and is earning (amount) per month,
and
2. two of your kasambahay's valid IDs.
What valid IDs can you use for PAG-IBIG application if you do not
have a birth certificate?
Voter's ID (you don't need a birth certificate to get this; just fill
out the form)
Postal ID (you don't need a birth certificate to get this either)

Philhealth ID (you can get Philhealth ID using these

documents: http://www.philhealth.gov.ph/downloads/membe
rship/pmrf.pdf)

SSS ID (you can get an SSS ID using these

documents: https://www.sss.gov.ph/sss/uploaded_images/fo
rms/normal/e1.pdf)

Then, you can remit payments at the nearest PAG-IBIG office.

Unfortunately, banks only accept loan repayments, not member
contributions.
The PAG-IBIG website also says we can now pay monthly
contributions through Gcash. However, there has been issues with
the posting of payments this way, and there is currently no way that
I have found of verifying posting of contributions via online.
On the other hand, you will receive a confirmation from Globe that
your payment has been processed, so if you keep records of these
verifications, you should be able to update your posted contributions
using such records.
How much to pay? PAG-IBIG contributions are 4% of the
kasambahay's salary, with maximum salary set at P5,000.
So if your kasambahay is earning, say, P4,000 per month, you pay
the entire 4%, or P160, every month.
If your kasambahay's salary is P5,000 or more, you need to pay
P200, but you can split this amount 50-50 between you and your
kasambahay, so you only pay P100 each.
More Info
Page 3 of 19

DOLE's FAQ: If you have more questions about the Kasambahay Law,
like "Is our live-out yaya considered a kasambahay?" or "Am I
required to provide my kasambahay with shampoo and soap, etc.?"
then check out this FAQ published by the DOLE: Q&A on Batas
Kasambahay.
For an easy-to-understand document on the Batas Kasambahay,
here's GMA's Batas Kasambahay infographic.
Sample contract that you can use for your kasambahay: check
out Smart Parenting's sample kasambahay contract. (Look at the
bottom of the Smart Parenting page for the contract links.)

If your kasambahay has never been an SSS member, then you need
to register as household employer so that your kasambahay can get
an SSS number. (If your kasambahay has been an active member
before being employed with you, he/she can simply continue as a
volunteer member. Click here for details.)
Here are the things you need to know in registering, paying, and
reporting your kasambahay's SSS contributions, as an SSS
household employer.
1. To register yourself as an employer, get the forms R-1, R-1A,
and L-501 from an SSS office, or download them from the SSS portal,
then fill them out and submit to the SSS office nearest you.
2. To register your kasambahay, get the form E-1 and ask your
kasambahay to fill it out. You will need to submit this to the SSS,
along with the original copy (for presentation) and photocopy (for
submission) of supporting documents.
You will find all required supporting documents at the back or
bottom of the forms.
Also, bring a USB where you can upload the installer for the SSS R3
generator. The SSS requires employers to encode your contribution
reports using this software, and they will not receive your forms if
you do not submit a soft copy along with the printouts.
Important reminder: In the form R-1A, you will be asked for your
kasambahay's date of employment. The SSS will require you to pay
your kasambahay's contributions starting from the date of
employment. Therefore, if you have receipts of payment in previous
years, bring your receipts with you so you do not get charged a
second time. It is also good to bring your kasambahay with you, in
case the SSS wants to interview him/her, to make sure that the
payments have been made in the past years.
3. Start paying your kasambahay's SSS contributions. Do so before
the 10th of the following month. For your convenience, it is better to
Page 4 of 19

pay through SM Payment Centers, Bayad Centers, or SSS accredited

banks, such as Chinabank, Metrobank, and BPI.
How much should you pay? Please refer to the 7th, 8th, and 9th
columns in the table below (click the image to enlarge).
Note that if your kasambahay is earning less than five thousand
pesos per month, you are required to shoulder 100% of the
contribution. If your kasambahay is earning five thousand pesos or
more, the contributions are divided, as indicated on the table (click
image to enlarge):
4. Report your contributions quarterly. After you have paid your
employees' premiums, you need to submit a summary of your
employees contributions using forms R-3, R-5, and a copy of the
bank's receipts within 10 days after the applicable quarter.
You can submit your R3 form online by logging on to
https://www.sss.gov.ph/sss/register.jsp, and choosing Employer,
then Household.
Reader's question: What if our kasambahay has been employed with
us since the year 2000 but we only began paying contributions this
year? Click on the link to see the answer: SSS Arrears and the
Kasambahay Law.

Under the Kasambahay Law, kasambahays need to be registered as

Philhealth members. If your kasambahay is not yet registered as an
Individually Paying Member of the Philhealth, you could fulfill the
Kasambahay Law by registering as a household employer and
declaring your kasambahay as a household employee.
So what are the steps for registering as a Philhealth household
employer? And what are your obligations after you have registered?
Here's a step-by-step guide:
1. To register as employer, fill out the forms ER-1 and ER-2.
NOTE: As per my call to Philhealth, if you report your kasambahay's
start date to be earlier than the month that you register, then you
and your kasambahay will be required to pay arrears based on the
amounts required before the Kasambahay Law, with a 2% penalty
(more or less I am not sure about the exact computation) on the
amount due to you as employer.
2. To register your kasambahay as member, have him/her fill out
the Philhealth Member Registration Form for enrollment or to update
Page 5 of 19

member details.
3. To complete your registration, submit the forms and required
supporting documents to a Philhealth office.
4. Start paying your kasambahay's Philhealth contributions.
If your kasambahay is earning less than P5,000 per month, you
are required to pay P200 per month. You shoulder this entirely.
If your kasambahay is earning from P5,000 to P7,999 per
month, you are required to pay P100 while your kasambahay is
required to contribute P100 as well.

If your kasambahay is earning P8,000 or more per month, click

on the Premium Contribution Table link at Philhealth's
Employed page to see how much you and your employee needs
to pay.

Remit your employees' Philhealth contributions on or before the

10th of the following month. Use the PhilHealth Premium Payment
Slip to remit contributions.
Where to pay: Click on the link to find a list of Philhealth accredited
collecting partners.
5. Report your payment to Philhealth on or before the 15th of the
following month using the Remittance Report Form, or RF-1. To do
this, you either go to a Philhealth office or report online using
the Electronic Premium Reporting System (EPRS). Bring a USB to
download the files you need for the EPRS.
Short news: Last Tuesday, my husband Neil suffered a cardiac
episode, so we had to rush him to the National Kidney Transplant
Institute which, by the way, is currently the cheapest good-quality
government hospital in Quezon City.
(Special thanks to Neil's excellent cardiologist, Dr. Joseph Michael
Jaro, who obviously knows very well what he's doing. I would
recommend him to anybody. Doc, you rock!)
It was a mere case of supraventricular tachycardia (SVT, i.e., toofast heartrate and too-low blood pressure) so we were home the
very next day.
But during that incident, I learned a few things about Philhealth that
I would like to share with you today.
Question: If I have been a Philhealth member for only one month,
can I use it if I get hospitalized today?
No. Alas, although I had been a Philhealth member for years, I had
Page 6 of 19

neglected paying my dues since I started doing freelance work. I

had only been able to start paying again last month, in August, so I
was not able to get Philhealth benefits for my husband, who shares
my Philhealth insurance.
In order for one to get Philhealth benefits, one needs to have made
at least three payments in a span of six months. Since Neil got
hospitalized in September, I could have gotten Philhealth benefits if,
say

we had paid in June, July, and August; or

March, April, May; or even

March, May, August.

Question: Can I pay in advance?

Yes. In fact, just to be sure I never get into the same predicament
again, I have already paid my dues until December. In January of
2012, I will probably pay for the whole year. (You can pay for a
maximum of one year advance only. I've heard that Philhealth does
not accept payment for more than 12 months advance.)
Retroactive payments are not allowed.
Question: Does my spouse still need to get his own Philhealth
account, if he/she is already my dependent?
No and yes.
For immediate purposes, your spouse does not need a Philhealth
account if he/she is listed as your dependent. You spouse will get
Philhealth benefits under your account.
However, the question is, what happens if you die or retire?
Once a Philhealth member retires at 60, he or she qualifies as a nonpaying member but only if he/she has already made at least 120
Philhealth payments. That's approximately 10 years of monthly
dues.
If I retire and my spouse hasn't got those 120 Philhealth payments
in his name, then I will have Philhealth benefits in my old age, when
I need them most, but he won't.
There is also the question of "What if the Philhealth member dies?"
Then the member's dependents will be left high and dry. You do not
want that to happen to your loved ones, especially if the cost is only
P100 per month.
Page 7 of 19

UPDATE 1: As of June 2013, the required Philhealth contribution has

been increased to P150 per month for individually paying members
and P175 per month for employed members, total of employer and
employee contribution.
UPDATE 2: I just found out that if you had been a member of
Medicare, the government insurance program before Philhealth
existed, your contributions in Medicare will be counted as part of the
120 Philhealth contributions required for you to qualify for free
lifetime membership after retirement.
More questions?
I hope this post has answered some of your Philhealth questions.
For more questions (or to verify what I have written here), you may
call their customer service hotline at (02) 441-7442.
You can also ask some of your questions in this blog. Perhaps some
of the readers or maybe even I can answer them.

Somebody asked me today about registering her freelance work with

the BIR. Her question was what category she should register under.
Since she is working as a regular freelancer (e.g., Web designer,
writer, event manager) not as a licensed professional (e.g. doctor,
accountant), she needs to register as a sole proprietor, even if she
has no employees and practically no office.
If she has investors, she could also register as a corporation.
But I would like to address a more basic question: Should she
register in the first place?
Let me just tell you about my experience when I decided to register
my business, and you decide.
The preliminaries
Before you can register as a freelancer with the BIR, you need to
register with

The DTI, to get your trade name and DTI certificate;

The barangay, for your barangay permit, which is a
requirement for getting the mayor's permit; and

The mayor, to get your mayor's permit

Page 8 of 19

The DTI certificate and mayor's permit are requirements for getting
your BIR certificate of registration.
I've written about getting my own DTI certificate. Read the
details here. You can apply for your DTI certificate online and pay
with Gcash.
For your barangay permit, you need to personally go to your
barangay hall, bring with you your DTI certificate, and pay for
registration. I've written about that too. Details here.
Now comes the municipal permit, which I think is the most difficult
part of all. To get your municipal permit, you also need to go
personally to your municipal hall, fill up the application form, and
pay the fee.
The amount of the application fee depends on your municipality
type. Since I live in a "first-class municipality," I paid around
P1,500. It probably costs more if you live in, say, Makati, and less if
you live in a second- or third-class municipality.
The municipal permit is much more complicated to get than the DTI
or barangay permit because it also entails inspection from the
sanitation and fire departments of your municipality. You have to
pay extra fees for those inspections as well.
To get the sanitary permit, you and all your registered employees
need to undergo health certification (X-ray, stool and urine labs,
blood test) even if you never meet your employees or clients and all
your work is done online.
To get the fire safety certification, your office (a.k.a. house) needs to
have at least two exits and, in our municipality's case, a fire
extinguisher.
Incidentally, not all municipalities require a fire extinguisher.
Antipolo doesn't. Makati does.
There is no specific fire extinguisher size requirement stated in the
building code, but we were advised to get a 10lb carbon dioxide type
rather than the dry chemical type because the former does less
damage and leaves no mess as it is just gas.
The BIR registration
Web citizen that I am, I got the requirements for BIR registration
from the BIR Web site. Well, there were a few things it did not
include:

If you have your office address at a place that is not your own
and you are using the place for free, you need to have a letter
Page 9 of 19

signed by the house owner certifying that he/she allows you to

conduct your business in that place free of charge.
You also need to draw a map of your place on a clean sheet of
bond paper.

I found these requirements out when I reached the BIR office. The
latter, I hastily drew up right then and there. The former, I had to
bring back another day before my COR could be processed.
Once my requirements were complete, I had to pay the P500
registration fee and attend the seminar.
I must say, that seminar was pretty useful, and I advice all business
owners to attend it themselves rather than send in some liaison
officer who is not even an accountant. For a preview, you can read
the BIR seminar's contents in this post, but at the actual seminar,
you can ask questions and maybe even get some answers.
Oh, by the way, you may be thinking now, "Gee, it's not so expensive
to register after all. Five hundred pesos is not so bad."
True, but I've so far neglected to mention one important thing: The
moment you are registered with the BIR, you will need to issue
receipts.
It doesn't matter if all the work you do is online. If your client is in
the Philippines and they declare you as one one of their expenses
which means they pay taxes for you, which they probably deduct
from your service charge, in which case they should be issuing you a
Certificate of Taxes Withheldthen you need to issue them a receipt.
(This does not apply if you are not registered with the BIR as a selfemployed individual.)
It doesn't matter if that receipt never reaches their hands; you just
have to issue it and record it in your books of accounts.
There are printers that are accredited by the BIR to print out
receipts. You can find them at Sulit.com.ph or even in the BIR office
itself. Just ask the guard, and he should be able to tell you which
employee has that sideline.
The minimum number of booklets for printing is usually 30, and the
cost can be P40 per booklet if you get the smallest size.
Post-registration
Page 10 of 19

After the registration, I encountered a few more glitches

(amendments in tax activities, correction in business type, other
stuff too tedious to detail here) that eventually prompted me to give
up trying to do things myself and get an accountant to do my taxes
for me.
The advantages of getting a good accountant are (1) you never have
to step out of the house to do all your filing yourself, (2) you can be
sure your taxes and all other government fees such as SSS, Pag-ibig,
and Philhealth are paid on time, and most importantly, (3) you have
an expert to help you avoid falling into all those little legal pitfalls
tiny little laws that you could end up breaking simply because you
did not know they even existed.
I am not about to stick my neck out by listing here the tiny little
laws I had almost broken from sheer ignorance, but take my word
for it: a good accountant is a great helpand an incompetent one
may have a smaller retainer fee but will cost you more in the tax
penalties you'll end up paying.
But between you and me, if I were working solely with foreign
companies who don't declare my earnings to the Philippine
government, and if I didn't need an ITR as proof of income for stuff
such as loan applications, I would never register my business
activitiesnot anymore, after all the hassle I'd been through just to
write some articles for some magazines on a single computer in a
tiny bedroom at home.
As much as I want to do my part in being a good citizen by paying
taxes, the government just makes doing the right thing too hard and
too expensive in this country.
if you're renewing your municipal permit, here are what you need to
bring -- at least, as far as my experience is concerned:
1. New barangay clearance. You get this from the barangay hall
before you go to the municipal hall. You need to bring your old
barangay clearance from the previous year, and exactly the
same amount of money you paid last year (in our municipality,
it was a total of Php450), plus maybe a hundred pesos or two,
just to be on the safe side. That's all.
2. Cedula (community tax certificate). In our town, you have to
get your previous year's gross income computed first before
you can get your cedula. For this, I had to bring a statement of
gross sales from my accountant.
Page 11 of 19

3. Statement of gross sales. I only found out I needed this when I

got to the municipal hall. I normally call government offices
before I go, to avoid surprise requirements such as these, but
the two phone numbers I used to call them last year are no
longer functioning this year.
To get my statement, I called my accountant, who prepared my
statement of gross sales and e-mailed it within 10 minutes.
4. Previous mayor's permit. Oh, there's something I discovered
upon studying my previous mayor's permit. I was, at that time,
registering a new business, not an old one. They asked me how
much it cost me to put up this writing and editing business. I
truthfully answered, "Nothing, because the computer and
Internet I use, I have had for more than a year already."
Still they insisted that I put in an amount. I realized just
yesterday that the amount you declare as your start-up cost
defines how much they charge you for getting your new
business registered.
So if you really needed only P100 pesos to start your home
business, don't let them convince you into putting P1,000.
5. Sanitary permit. In our municipality, you only get this after
you've paid all your registration fees. Cost is P150. You may
still have to have a health examination, which could cost you
up to P1,000.
6. Fire safety certificate. You can get your fire safety inspection
scheduled after your fees have been computed, as the fire
department bases their fees on how much the municipal hall is
charging you. In our town, it's 10% of what the municipal hall
is charging, plus P100.
7. SSS, PAGIBIG, and PhilHealth clearances. This is only
applicable if you have five or more employees in your company.
8. Annual building inspection certificate (for apartments only).
For the barangay clearance, you'll probably be charged the same as
what you were charged last year.
For the municipal clearance, it depends on what your industry is and
how much you earned. For my industry classification, it was 2% of
Page 12 of 19

my gross income. I don't know what the percentages are for other
industries.
For the cedula, expect to pay P100 for every P100,000 reported in
your statement of gross sales.
Posted in: government requirements

Register
To register as an HDMF household employer, go to the Pag-Ibig
online registration portal and choose Employer's Registration.
Fill out the form. For Business Name (per DTI/SEC registration), you
can put your own name. For Start of Business Operation, put the
date that your first househelp (who is still with you) started working
for you.
Once you have completed and submitted the form, an employer
number will be generated for you, along with a filled-out copy of the
form.
Print this form and submit to the HDMF office, Marketing Division,
a.k.a. Counter 1, along with
1. your kasambahay's membership data form (MDF), which was
generated when you registered your kasambahay online (if you
haven't done that yet,click here and choose Household
Employee as your kasambahay's membership type);
2. your SSS form R1-A, R1 (photocopy), and R-3; and
3. your Member's Contributions Remittance Form (MCRF).
Why is the HDMF looking for SSS documents? According to the SSS
contact center, the two government offices are not yet connected,
but they soon will be.
Interestingly, the agent I spoke with also mentioned that when she
applied as household employer in June 2013, the HDMF did not ask
her for any of the abovementioned documents, and they did not ask
her to register as employer at the online portal either.
So apparently, between then and now, there has been a change in
policy.
After you register yourself as employer and your kasambahay as
employee, you will be asked to pay the initial contribution.
Pay and Report

Page 13 of 19

If your kasambahay is earning less than P5k per month, you will pay
4% of the kasambahay's salary. If your kasambahay is earning P5k
or more, you will pay P200 to the HDMF, but you are allowed by law
to collect P100 from your kasambahay, as his/her 50% share.
You need to go to the Pag-Ibig office to remit the payment, along
with the Member's Contribution Remittance Form.
Arrears
Note that if you report your kasambahay to have been with you since
2005, youmay be charged as far back as 2010, based on the Home
Development Mutual Fund Law of 2009, which took effect in January
2010. The interest for HDMF arrears is 1% per month.

This morning, I attended the seminar required by the Bureau of

Internal Revenue for newly registered businesses. I
registered Escrive Writing and Editing, a writing and editing group.
So today I am writing about what I learned at the BIR seminar.
1. BIR is divided into different regional offices, which is divided into
different revenue districts, with their own revenue district offices
(RDOs). Since I used to work in Quezon City, I was registered under
RDO 040. Now that I have left my QC job and have put up a business
in Rodriguez, Rizal, which is in RDO 045, I had to move my BIR
registration from RDO 040 to RDO 045. (Incidentally, I had to do
that before I could register my business.)
2. You need to pay at the revenue district where you are
registered. Now that I'm registered at RDO 045, if I pay my taxes
anywhere in revenue district 040, they may accept my payment
there, but I will be penalized 25% of my basic tax due to wrong
venue of filing.
3. You don't have to go to the BIR office to pay. You can pay at any
authorized agent bank (AAB) within your revenue district, or you can
pay at a BIR collection office, often found at the municipal hall. Just
be sure to bring your required forms with you, for stamping.
4. There are two kinds of businesses: VAT and non-VAT. If your
gross income is 1.5 million pesos per year or more, you are
automatically classified under VAT. If your gross income is less than
1.5 million per year, you qualify for non-VAT.
Page 14 of 19

However, even if you are earning less than 1 million annually, you
may also want to register as VAT if you are targeting VAT
clients. The reason: VAT businesses will normally not transact with
non-VAT businesses, because then, they will not be able to declare
their purchases from you under their expenses. (There is a
somewhat complex explanation to that. For now, just trust me on
this.)
5. There are required forms for registering a business, depending on
whether you are registering as an individual or as a
corporation/organization. For more information on business
registration, click here.

6. Schedule of payments

Monthly income: If non-VAT, pay 3% of gross income, and

use Form 2551M. For VAT, you need an accountant to compute
and sign this document for you. Use Form 2550M.
Due: 20th day of the following month for both VAT and nonVAT. If no income, put in "no transaction" and have the form
stamped by the bank or BIR officer.

Monthly remittance return of creditable income taxes

withheld: This is applicable if you rent/lease your place of
business, or if you hire freelancers.
Due: 10th day of the following month. For December, it is due
on the 15th day of January.
This is 5% of your monthly rent, deductible from your total
arrangement with your landlord. For instance, if you and the
landlord agree to a P10,000 rent, you only need to pay him/her
P9,950, then you should pay the P50 (5%) to BIR using Form
1601E. (For details on using this with freelancers, see item 8 of
this blog article.)
The law authorizes you to withhold and remit this tax. Your
landlord should be aware of this law if he is registered with the
BIR. If he is not aware of it and he would not allow you to
withhold and remit the 5%, you can report him to the BIR, and
he will be penalized P50,000 for operating an unregistered
business (i.e., rentals).

Monthly remittance return of income taxes withheld on

compensation:You are required to file this monthly if you have
regular employees from whom you are withholding taxes. This
includes household help if you registered them as employees
Page 15 of 19

when you registered your business. Use Form 1601C.

Due: 10th day of the following month.

Quarterly income: amount depends on income. Minimum of 5%

if your quarterly taxable income is not over P10,000. Can reach
up to 32% if your income exceeds P500,000. Use Form
1701Q for individuals, 1702Q for corporations. You can deduct
expenses here, but not your personal exemptions.
Due: April 15 for the first quarter, August 15 for the second
quarter, November 15 for the third quarter

Annual income: similar to quarterly income but mainly reflects

your fourth quarter income and here you can now deduct your
personal exemptions. UseForm 1701 if individual and 1702 for
corporations.
Due: April 15 the following year.

7. Official receipt (OR) for services, sales invoice (SI) for

goods. Only now did I realize that the SI is as good as an OR for item
sales. Our lecturer said, "If your customer insists on an OR, you can
give both OR and SI, but mark the OR "non-deductible for tax
purposes" so that they can't declare the same expense twice."
8. Freelance services can be declared as expenses using the Monthly
Remittance Return of Creditable Income Taxes Withheld (Expanded),
or Form 1601-E. Then you have to issue to the freelancer payee a
Certificate of Creditable Tax Withheld At Source form (Form
2307). This was of especial concern to me because I work with
freelance writers, whom I cannot declare as employees because (1)
they are already employed and (2) assignments are seasonal.
To be able to issue a Form 1601-E, you need to have "Withholding
Tax - Expanded" among your registered activities. (I had to have my
Certificate of Registration amended for this.) Then, you need to file
this form monthly, along with your percentage tax, whether or not
you had freelancer services that month. If you do not have anything
to pay, just mark "no" in the question "4. Any taxes withheld?"
Note that for freelancers, the tax you need to withhold is usually
10% the first half of the year and 15% the second half. The usual
practice is to deduct this from the amount you pay the freelancer, so
make sure the freelancer knows what you are doing or they will
wonder why they received only P900 when your agreed upon
payment was P1,000.
This can also be useful for businesses that get other part-time,
contractual, or freelance help. (I did not learn this from the seminar
Page 16 of 19

but from calling the Tax Payers' Assistance Service department, at

929-7676, loc. 7241.)
9. You need to file your taxes for the month that you get your
certificate of registration. If you get your certificate of registration
on March 30, you have to file for the month of March, because the
computer will not care that it's only one day to April. Just put in "No
Transaction" in the monthly form you file.
10. You need to get your books of account stamped before you use
them.You can get them stamped when you have your certificate of
registration. You don't need to have them restamped every year. You
can use them year after year after year until the pages are used up.
(UPDATE: It seems the rules have been changed. Two people -- one
of my readers and my accountant -- have told me the books of
accounts now need to be re-registered on or before December 31
every year.)
So that's what I learned from the BIR seminar.
Oh, there's one more thing:
Remember that at the start of the year, our Congress and Senate
allocate trillions of pesos in the country's budget to fund the salaries
of our policemen, teachers, health workers, etc., and award
contracts for the building of infrastructure.
All this money is practically spent at the start of the yearbut it has
not been collected yet. This is where the Bureau of Internal Revenue
comes in.
If the Bureau of Internal Revenue is not able to collect this money,
the government will need to borrow it from other countriesthen we
are left to suffer from the interest rates.
Or the government is forced to enter into Build-Operate-Transfer
(BOT) contracts, such as those that created our expressways and
metrorails. These were all built without spending a single centavo of
tax payers' money. But when they inevitably get transferred to the
investor, the government is left helpless to control toll price
increases and fare hikes on the metrorail.
This helplessness could have been avoided if we had paid tax so that
the government did not need to enter BOT contracts. We reap what
we sow.
This is why we need to pay our taxes.
Page 17 of 19

By the way, dear readers, if you have questions on how to fill out
your tax forms or other tax-related concerns, here is the Bureau of
Internal Revenue's hotline: 981-8888. They have very helpful phone
agents. But do not try to email them your questions; their email
agents do answer after many days, but the answers are practically
useless.
I would like to thank Mr. Elmer A. Torcuator for giving us this free
seminar at RDO 045. I hope, sir, you are reading this so that you can
correct any errors in information that may have inadvertently
slipped in.

Individual

Corporation/Organization

Form 1901: basic information

Form 1903: basic business

information

Form 0605: P500 for each

business, plus penalty if you
register with the BIR more than
a month after you get your
municipal/mayor's permit

Form 0605: payment form, also

P500 for each distinct business
entity

Form 2000: needed only if

you're leasing/renting your
place of business; cost is P1 for
every P1,000 annual rent

Form 2000: needed only if

you're leasing/renting your
place of business; cost is P1 for
every P1,000 annual rent

Contract of lease or proof of

ownership or certification from
owner that they allow you to use
their property for business
without charge (attach proof of
ownership from the signatory)

Contract of lease or proof of

ownership or certification from
owner that they allow you to use
their property for business
without charge (attach proof of
ownership from the signatory)

DTI registration (original and

copy)

DTI registration (original and

copy)

Mayor's permit (orig + copy)

Mayor's permit (orig + copy)

Page 18 of 19

Marriage contract (orig + copy)

SEC Certificate of Registration

(Certificate of
Incorporation/Certificate of CoPartnership

Birth certificates of children

(orig + copy)

Corporation by-laws

Location sketch

Location sketch

Page 19 of 19