The Scientist’s Guide to the BIR and Paying Taxes

The University of the Philippines System recently issued a memo that all contractual staff have to be registered with the Bureau of Internal Revenue (BIR) as “professionals” and provide UP with official receipts for services rendered. Unfortunately, project-based research assistants are included in this category. MSI was nice enough to bring in a Certified Public Accountant to give a short talk/lecture about what the new memo means and how to go about the registration process and the additional tax forms we have to submit. That was the first time I’d seen an entire auditorium of MS and PhD students and graduates dumbfounded and confused. I’ve already started the registration process because of my freelance science writing gigs for GMA News Online, which started requiring ORs just last July, so I’m in a better position compared to the other RAs who are just doing it now. I hope this little blog post can help my fellow researchers navigate the murky waters of registering as a professional and what that means for taxes.

Note: This post is not a discussion about whether requiring RAs to provide UP with ORs is right or fair, but for the record, we work for unremarkable salaries, no benefits, no paid leaves, and no healthcare. The visiting CPA fielded a ton of questions about what registration means for ongoing contracts (those with ongoing contracts are essentially f*cked) and the additional tax filings (more on that later).

WHAT YOU NEED TO DO:

1. Check if you need/want to transfer your TIN (Tax Identification Number) from your home Revenue District Office (RDO) (the RDO where you got your TIN) to the RDO near your current place of work (in my case, RDO 39 for UP Diliman).

In my case, I got my TIN from RDO 39 but chose to transfer it to my home address’ RDO because I wanted to use my home address as my registered business address. This was more convenient for me since our family business is also registered to our home address so I can just ask them (very nicely) to submit my personal tax filings whenever they submit the business’s.

For RAs who got their TINs in the provinces, it makes more sense to transfer the TIN to Quezon City so that they can file their taxes in Quezon City. To transfer the TIN, you need to submit Form 1905 to your current RDO, mark “Change in Registered Address”, and list the new RDO. Because you need to file this with your original RDO, if you got your TIN in Tawi-Tawi, YES you will have to file form 1905 in Tawi-Tawi. If you don’t have any relatives/friends/people who owe you in the area who can file it for you, you’re out of luck. BIR said that it takes 3-5 working days for your TIN to transfer between RDOs, though it took about 10 days in my case.

2. File Form 1901 to register as a professional. Take note that once you do this, you will FOREVER be considered a professional and you WILL have to file tax returns for your profession regardless of whether you made money or not (just declare “zero income” for that time period). This means that even if you get a full-time job later on, the company’s HR will no longer be able to do substitute filings on your behalf because you’re still going to be considered a “mixed income” earner.

BIR application for registration

What to bring when you file Form 1901:
– the completed form in triplicate
– original copy and photocopy of your birth certificate and any valid government ID
– a copy of your work contract (if you have one already)

In Form 1901, you have to declare the profession that you’ll be practicing. I initially put down “Scientist” but BIR told me that they don’t have that as a work category @_@ They initially put me in the “Writer – Radio, Television, Film” category because of my writing gigs but I managed to change it a few days later when I got a more knowledgeable agent who made more of an effort and classified me under “Research and Experimental Development in the Natural Sciences” (category # 7311). See the list of work categories used by BIR.

BIR also initially insisted that I needed a copy of my work contract because they needed “proof” that I was practicing the profession that I was registering*. I countered that UP won’t give me a contract until I show proof of my registration status. They also asked for a copy of my work contract with GMA but I told them that I didn’t have one since I get paid on a per-article basis. In the midst of the argument, I kept thinking “How the heck can first-time freelance writers register when they don’t have any clients yet for the work contracts?”.

[*They usually ask for your Professional Regulation Commission (PRC) card but scientists don’t have board exams, so there.]

When you file 1901, you will need to pay the annual registration fee of P500, which you can pay using BIR Form 0605 (accomplish four copies)  at any BIR-accredited bank. You pay this every calendar year before the end of January. Once you pay, photocopy the bank’s receipt, submit it to BIR, and pay the P15 Documentary Stamp Fee so they’ll issue you the Certificate of Registration.

3. Once you have the Certificate of Registration, you can then register your books of account with BIR. You’ll need at least one ledger and one 12-column book, more if you have a lot of transactions to record. You can buy the books at any bookstore.

4. To get Official Receipts, submit the Authority to Print (ATP) Receipts and Invoices (form 1906) (accomplish in triplicate) to BIR. Releasing the ATP usually takes 3-5 working days.

I highly suggest that you already bring your books of account and Authority to Print with you when you register because you can already process these as soon as you have the Certificate of Registration.

5. Once you get the ATP, give the ATP to the BIR-accredited printer and order your receipts. The minimum order is 10 booklets. The ones I got cost P1,600 for 10 booklets: P160 per booklet for 50 receipts, 2 copies per receipt, and regular paper only (not the fancy carbonless ones). These receipts are valid for 5 years after printing or until they run out, whichever comes first. Also, some printers offer to file and claim the ATP for you so you should ask around.

This is what 2-3 weeks of work looks like:

Easy, right? You’re now a BIR-registered professional! But wait! As a professional, you are responsible for monthly, quarterly, AND annual tax filings, regardless of whether you made money or not.

Monthly filing – BIR form 2251M for the percentage tax. If you earn P1,919,500 or less per calendar year, you are considered non-VAT and pay 3% of your gross income. If you earn more than that, you are considered VAT and have to pay 12% of your gross income. This is submitted on or before the 20th of the following month (i.e. percentage tax for January is due on or before February 20).

Quarterly filing – BIR form 1701Q for the quarterly income tax return.

Annual tax filings – BIR form 1701 for the annual income tax return.

The 1701 forms must be submitted on or before:

1701Q
1st quarter
January to March
Due April 15
1701Q
2nd quarter
April to June
Due August 15
1701Q
3rd quarter
July to September
Due November 15
1701
Final return
October to December
Due April 15 of the following year

Forms for download:

BIR 1701 Annual Income Tax Return

BIR 1901 Application for Registration page 1

BIR 1901 Application for Registration page 2

BIR 1905 Application for Registration Information Update

BIR 0605 Payment Form

BIR 1906 Authority to Print Receipts and Invoices

And this is why people hire accountants.

34 Replies to “The Scientist’s Guide to the BIR and Paying Taxes”

  1. Good job, Macy! I’ve been looking for a how-to guide without actually going to the BIR (I’m allergic to government offices haha). This is so comprehensive (short of outlining what to do in my occupation when one is a “consultant” which has a different taxation structure).

    The BIR’s Register-File-Pay campaign would have been effective if it had an outline of what to do like this blog entry. But the last time I went to your website, it had nothing except the calendar and the RDO list. 🙁 good thing that’s changed now.

    Anyway, thanks for the info haha 🙂

    1. Glad it was helpful! This post was borne out of 2-3 weeks and several trips to the BIR. And YES walang laman ang BIR website! Puro list of requirements lang and even that’s not complete. Hassle talaga >_<

    1. UP actually deducts 13% from your salary: 10% witholding tax and 3% percentage tax. You can see this when you claim your BIR form 2307 from UP Accounting every 10th of the succeeding month.

          1. Sweet.. Been anxious with all the taxes since the BIR seminar. Thanks!

            The difference between the salary on my contract and what I received is 5% tho

          2. That’s a new ruling by UP or BIR (I didn’t get to clarify). Instead of 10% withholding, all non-UP contractuals earning less than Php 50,000 AND don’t have a PRC (i.e. engineers) only get charged 2% as a “Skilled Worker” + 3% percentage tax so total of 5% tax instead of 13%. This was applied starting December 2015.

  2. Hi, just a quick question about deductions. Why would UP deduct 13% from your salary if you are already paying the taxes on your own? What if they are not your only client?

    1. UP deducts 13% from your salary because they are mandated by law to do so. To prove to BIR that you already paid your taxes via the automatic deduction, you submit the copy of form 2307 from UP Accounting when you file your monthly and quarterly taxes.

      1. So that means if you have another client aside from them, you have to file separately, is that it? I’m asking because my potential job offers are mostly contractual, and I was under the impression that the company would just give me the entire salary and I would be filing everything on my own. 🙂

          1. A ok. By the way, thanks! You have been really helpful, especially with this confusing BIR process! 😀

    1. Use the eBIR software package to create your 1701Q. If you have tax due, pay at the bank. If you don’t have tax due, file in your proper RDO 🙂

      1. I was able to file my quarterly income tax. Realized it wasnt difficult at all tho I was expecting not paying anything (or at least just a few bucks 🙁 ) Thank you Ms. Macy. I love you and your blog XD

  3. Hello Miss Macy, what are the consequences of not filing this?, this is the first time i heard about it, and from what i have read, I won’t make it to the filing. I’m a non UP contractual too.Thanks.:)

      1. Ok, sorry for my ignorance, haha, but how can i know if i have a tax due?.I am only working for less than a year and it’s such a drag knowing that what they deduct on my salary is not actually, my payment on tax…

        1. Like I said to one of the other commenters, use the eBIR software package to produce your filing forms 🙂 It will calculate whether you have tax due. The tax withheld by UP is considered a tax payment already.

  4. Hi! I’m also a non-UP contractual. I understand that I will need the 2307 from UP when filing. Would I also need the ledger, book, and receipts? Should I issue receipt (to UP or the proj leader) for my monthly salary? May I know the process for the monthly filing? Thanks :).

      1. About the books- a friend said that it is not needed if UP doesnt require us to give receipts, according to one BIR OD. However, when I was at the RDO, I found out that I got a penalty for not applying for the books+receipts. The OD told me that I should have asked that the books be ‘waived?’ when I was applying for the COR (how would I have known that back then?). I suggest to just follow the procedure and apply for it (eventhough it might not be needed ) to avoid penalties.

  5. Hello! I am a research assistant in UP Diliman. If UP is automatically deducting 5% from my salary, do I still have pay other taxes? We didn’t get any briefing on this. They just asked us to get a 1901 form.

  6. Hello, this blog has really been really helpful especially for UP project staffs. I have a question on the ATP. What are the requirements in applying for ATP aside from the form and the ledgers? In their website kasi, they indicated the following:
    Job order

    › Final & clear sample

    › Photo copy of COR/paid ARF of TP & Printer

    › Last booklet or previous ATP

    › Permit to Use Loose-leaf, if applicable

    › Printers’ Certificate of Delivery (PCD)

    Hope you can reply.

    Thanks.

    1. Whatever’s on their website is what is needed 🙂

      Ledgers are not needed (I’m assuming you’re referring to your books of account) because they’re for accounting purposes, not printing the ORs.

  7. Thank you very much for this! I wish I knew this earlier. Would you know what I have to do if I want to shift as an employee of a company from being an RA (registered as self-employed? Do I need to cancel the COR?

  8. Hi, Macy! Thanks for this article. It’s super helpful! I have a question – how do you fill-up form 1701Q? Do you have a sample accomplished form I can look at? I’m also a ‘self-employed’ research assistant at UPD. UP gives me form 2307 monthly. Thanks again. 😀

    1. Download BIR’s software package. There are options for different types of forms and it will auto-compute the taxes you need to pay based on your inputs. The 1701Q is basically the same form as the 1701 annual tax return, except that it’s filed on a quarterly basis.

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