If you’re a freelancer, small business owner, online seller, or professional earning below ₱3 million annually, chances are you’ve heard of percentage tax, and maybe wondered if you need to file it, how to compute it, and what BIR forms are involved.
Don’t worry! This guide will break everything down so you can understand exactly what percentage tax is, who’s required to file, how to compute it, how to file it online, and how to use a simple simulator to estimate how much you owe.
Tax Calculator
Manually computing your tax due can be daunting. And even though you will encounter sample tax computations throughout this article, you don’t actually have to do your calculations manually.
Use the tax calculator below by simply inputting your gross sales and you will know your tax due right away. This is a useful tool for taxpayers wondering how much their percentage taxes would be based on their gross receipts.
Percentage Tax Calculator (3%)
What Is Percentage Tax?
Percentage tax (PT) is a type of business tax required from individuals or businesses that are NOT VAT-registered and whose annual gross sales/receipts do not exceed ₱3,000,000.
Under the TRAIN Law, you are required to pay percentage tax if:
- You are a non-VAT registered taxpayer. Meaning, you did not register for the 12% VAT system.
- Your annual gross sales/receipts are ₱3,000,000 or below.
- You did NOT choose the 8% income tax rate option. Choosing the 8% rate automatically exempts you from percentage tax for that year.
Common examples of people who file percentage tax:
- Sole proprietors under non-VAT registration
- Freelancers and consultants
- Online sellers
- Small sari-sari stores or restaurants
- Tutorials, coaching, training businesses
- Professionals earning below ₱3M and under OSD/itemized deductions
How to Compute Percentage Tax
The formula is simple:
Percentage Tax = Gross Sales/Receipts × Tax Rate
For example, a freelancer who earned ₱120,000 in Q1 will pay ₱3,600 based on the following calculation:
Gross income: ₱120,000
PT Rate = 3%
PT = ₱120,000 × 0.03 = ₱3,600
If you want to skip the manual calculation, use this percentage tax calculator instead.
When Do You File Percentage Tax?
Percentage tax is filed quarterly using BIR Form 2551Q.
| Quarter | Period Covered | Deadline |
|---|---|---|
| Q1 | Jan 1 – Mar 31 | Apr 25 |
| Q2 | Apr 1 – Jun 30 | Jul 25 |
| Q3 | Jul 1 – Sep 30 | Oct 25 |
| Q4 | Oct 1 – Dec 31 | Jan 25 (next year) |
Missing the deadline means penalties (interest, surcharge, compromise penalty).
How to File Percentage Tax
There are two ways to file your percentage tax. It is recommended to use the eBIR form to save yourself from the long queues in BIR offices.
OPTION 1: File Online via eBIRForms
- Download and open eBIRForms.
- Select BIR Form 2551Q.
- Fill out your basic information
- TIN
- RDO code
- Line of business
- Taxpayer type
- Year and quarter
- Input your gross sales/receipts. Use all receipts issued for that quarter.
- Let the system compute your tax due. eBIRForms automatically calculates based on the rate.
- Submit the form and wait for the email confirmation.
- Pay your tax through e-Payment channels.
- GCash
- Maya
- Landbank
- UnionBank
- DBP Paygate
- AUB, Metrobank, etc.
- Print or save your payment receipt and attach it to your BIR Form 2551Q.
OPTION 2: File and Pay Through Revenue Collection Officers (RCO)
For people without internet access or those who think online filing is intimidating and unsecured, you can always go the traditional way and file your percentage tax in BIR offices.
- Manually fill out Form 2551Q.
- Bring 3 copies to your RDO.
- Pay thru RCO or Authorized Agent Banks.
This option is slower but still valid.
Common Mistakes to Avoid
- Forgetting to file because you earned “little”. PT is based on gross, not net.
- Thinking 8% applies automatically. You must formally elect it (usually via 1701Q or registration update).
- Reporting receipts only when paid. BIR uses the actual receipts issued (accrual/cash basis depending on your registration).
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