Sworn Declaration of Self-Employed and Professionals

Did you know that as an individual professional or broker your consultancy fees or commissions are subject to 5% or 10% withholding tax?

Of course, we want the lower rate of 5% tax! But how do I qualify for this lower rate?

BIR Revenue Regulations No. 11-2018, as amended, provides the following:

QUALIFICATIONS:

1) Annual gross receipts will not exceed P 3 million

2) Taxpayer is non-VAT registered

REQUIREMENTS TO SUBMIT TO PAYOR:

1) Copy of Certificate of Registration (COR) with BIR (BIR Form No. 2303)

2) Notarized Sworn Declaration that his gross receipts are estimated not to exceed P 3 million with attached documentary stamp tax

3) Should be submitted not later than January 15 of each year or at least prior to the initial payment of fees/ commissions

If you qualify to the above list and you can submit the requirements, then your payor should withhold the lower tax rate of 5% for the rest of the year. Note that you don’t need to submit this personally to the BIR RDO as your payor is the one required to do it.

It may be tedious to execute this sworn declaration, buy a documentary stamp tax and have it notarized, but if your take home pay is higher for the whole year, it will surely be worth your time.

For non-individual taxpayers like corporations or partnerships, the gross receipts threshold is lower (P 720,000) and the rate is either 10% or 15%, but the rest of the qualifications and requirements are the same.

Make sure you that you take advantage of this and receive a higher take home pay. 😊

#TaxBreak with #VPA

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