Tax 101: Things Beginners Need to Know About Payroll Tax

Tax 101: Things Beginners Need to Know About Payroll Tax

Many freelancers in the Philippines are people who are tired of the traditional office-style workplace, with fixed work schedules and confined environments, and young professionals who don’t want to experience the prior. Some of the newer people who do freelance in the Philippines are not sure if they are taxpayers, like the traditional employees. To those who are unsure, then do know that freelancers are still required to pay their taxes like any other worker.

These include income taxes and other withholding taxes that are deducted from your pay depending on your income bracket. The computations and numbers involved in filing your taxes can be quite overwhelming to someone who’s just starting to learn. The payroll taxes for the Philippines, however, are quite easy to understand.

In the Philippines, there are three obligatory contributions apart from your income tax that are to be withheld from your income.

Social Security

Your Social Security System (SSS) contribution is a form of social insurance that covers sickness, disabilities, maternities, by giving employees additional financial assistance. Though you need to at least have

The current contribution rate is at 11% which is shared by the employer (7.37%) and the employee (3.63%). Self-employed and voluntary members of the SSS pay the 11% based on their own monthly earnings that they declare. OFWs, have to pay the minimum of Php5,000 each month.

If you’re working for a company, your employer will be the one who would do the processing of this. The payments of which follow a schedule that depends on the 10th digit of the 13-digit ER/HR number end in. The same goes for Self-employed and Voluntary members, but they look at the last digit (10th) of their SS number.


The Philippine Health Insurance Corporation aims to provide employees with access to quality medical and healthcare services.

2018 made a change in the way PhilHealth contributions are computed. The monthly premium contributions are now 2.75% of the BASE monthly salary. There is a salary floor of Php10,000 and a ceiling of Php40,000 to be EQUALLY shared by the employees and employer. Overseas Filipino workers now have to pay Php2,400 a year, which can be done annually, or bi-annually. Self-employed members, including freelancers, are to pay Php2,400/year if their monthly income is Php25,000 and below. If their monthly income is above Php25,000, then they must pay Php3,600/year.

PAGIBIG / Home Development Mutual Fund

Lastly, the contributions to PAGIBIG are for a housing program that is made to provide short-term loans and access to some housing opportunities for all workers in the Philippines. You and your employer’s share is both at Php200. Freelancers can choose to become a voluntary member and pay the Php100.

Key Takeaway

Whether you’re working in a large company or you’re just committed to being freelance, doing taxes in the Philippines and anywhere else in the world is hard especially when you don’t know where your money is going to. Hopefully learning about these payroll taxes would help ensure that your money will not go to waste.

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