03/06/2026
๐๐๐ฆ๐ฉ๐ฅ๐ ๐๐๐ฑ ๐๐ฎ๐๐ฌ๐ญ๐ข๐จ๐ง ๐ข๐ง ๐ญ๐ก๐ ๐๐จ๐จ๐ค ๐จ๐ ๐๐ญ๐ญ๐ฒ. ๐๐ซ๐ง๐จ๐ฅ๐ ๐. ๐๐ฉ๐๐ฎ๐, ๐๐๐:
๐๐ฎ๐๐ฌ๐ญ๐ข๐จ๐ง ๐๐จ. ๐๐ ๐๐ก๐จ ๐๐ซ๐ ๐๐ข๐ฌ๐ช๐ฎ๐๐ฅ๐ข๐๐ข๐๐ ๐๐ซ๐จ๐ฆ ๐๐ฅ๐๐๐ญ๐ข๐ง๐ ๐ญ๐ก๐ ๐% ๐ข๐ง๐๐จ๐ฆ๐ ๐ญ๐๐ฑ ๐จ๐ฉ๐ญ๐ข๐จ๐ง ๐ฎ๐ง๐๐๐ซ ๐๐ฎ๐ซ๐ซ๐๐ง๐ญ ๐ฅ๐๐ฐ ๐๐ง๐ ๐ซ๐ฎ๐ฅ๐๐ฌ?
Suggested Reference Materials:
(C) Self-Employed Individuals Earning Income Purely from Self-Employment or Practice of Profession. โ Individuals earning income purely from self-employment and/or practice of profession whose gross sales/receipts and other non-operating income does not exceed the value-added tax (VAT) threshold as provided under Section 109 (BB) of the Tax Code, as amended, shall have the option to avail of:
1. The graduated rates under Section 24 (A) (2) (a) of the Tax Code, as amended; OR
2. An eight percent (8%) tax on gross sales or receipts and other non-operating income in excess of two hundred fifty thousand pesos (P250,000.00) in lieu of the graduated income tax rates under Section 24 (A) and the percentage tax under Section 116 all under the Tax Code, as amended.
Unless the taxpayer signifies the intention to elect the 8% income tax rate in the 1st Quarter Percentage and/or Income Tax Return, or on the initial quarter return of the taxable year after the commencement of a new business/practice of profession, the taxpayer shall be considered as having availed of the graduated rates under Section 24 (A) (2) (a) of the Tax Code, as amended. Such election shall be irrevocable and no amendment of option shall be made for the said taxable year.
The option to be taxed at 8% income tax rate is not available to a VAT-registered taxpayer, regardless of the amount of gross sales/receipts, and to a taxpayer who is subject to Other Percentage Taxes under Title V of the Tax Code, as amended, except those subject under Section 116 of the same Title. Likewise, partners of a General Professional Partnership (GPP) by virtue of their distributive share from GPP which is already net of cost and expenses cannot avail of the 8% income tax rate option.
A taxpayer who signifies the intention to avail of the 8% income tax rate option, and is conclusively qualified for said option at the end of the taxable year [annual gross sales/receipts and other non-operating income did not exceed the VAT threshold (P3,000,000.00)], shall compute the final annual income tax due based on the actual annual gross sales/receipts and other non-operating income. The said income tax due shall be in lieu of the graduated rates of income tax and the percentage tax under Sec. 116 of the Tax Code, as amended. The Financial Statements (FS) is not required to be attached in filing the final income tax return. However, existing rules and regulations on bookkeeping and invoicing/receipting shall still apply.
A taxpayer shall automatically be subject to the graduated rates under Section 24 (A) (2) (a) of the Tax Code, as amended, even if the flat 8% income tax rate option is initially selected, when taxpayer's gross sales/receipts and other non-operating income exceeded the VAT threshold during the taxable year. In such case, his income tax shall be computed under the graduated income tax rates and shall be allowed a tax credit for the previous quarter/s income tax payment/s under the 8% income tax rate option.
In addition, a taxpayer subject to the graduated income tax rates (either selected this as the income tax regime, or failed to signify chosen intention or failed to qualify to be taxed at the 8% income tax rate) is also subject to the applicable business tax, if any. Subject to the provisions of Section 8 of these Regulations, an FS shall be required as an attachment to the annual income tax return even if the gross sales/receipts and other non-operating income is less than the VAT threshold. However, the annual income tax return of a taxpayer with gross sales/receipts and other non-operating income of more than the said VAT threshold shall be accompanied by an audited FS.
Taxable income for individuals earning income from self-employment/practice of profession shall be the net income, if taxpayer opted to be taxed at graduated rates or has failed to signify the chosen option. However, if the option availed is the 8% income tax rate, the taxable base is the gross sales/receipts and other non-operating income.
๐๐๐ฏ๐๐ง๐ฎ๐ ๐๐๐ ๐ฎ๐ฅ๐๐ญ๐ข๐จ๐ง๐ฌ ๐๐จ. ๐๐-๐๐, ๐๐๐ง๐ฎ๐๐ซ๐ฒ ๐๐, ๐๐๐๐
At the beginning of each taxable year, all individuals are subjected to graduated income tax rates as provided under Section 24 (A) (2) (a) of the NIRC, as amended. Self-employed individuals who opted to avail of the 8% income tax rate is effective only for the current taxable year when the election has been made, and shall be automatically subjected to the graduated income tax rates at the beginning of the succeeding taxable years. Thus, the availment of the 8% income tax rate option is required to be signified and selected every taxable year, if the taxpayer wishes to be covered by such income tax rate.
๐๐๐ฏ๐๐ง๐ฎ๐ ๐๐๐ฆ๐จ๐ซ๐๐ง๐๐ฎ๐ฆ ๐๐ซ๐๐๐ซ ๐๐จ. ๐๐๐-๐๐, ๐๐๐ฒ ๐๐, ๐๐๐๐
๐๐ซ๐๐๐ญ๐ข๐๐๐ฅ ๐๐ง๐ฌ๐ฐ๐๐ซ: Taxpayers disqualified from the 8% option include those whose annual gross sales is above P3,000,000, VAT-registered taxpayers, taxpayers required to register as VAT, and other taxpayers not allowed by the applicable rules. The option is generally for qualified individuals earning business or professional income within the prescribed conditions, not for corporations or persons outside the rule.
๐๐ฎ๐๐ข๐ญ ๐๐ข๐ฌ๐ค ๐๐จ๐ญ๐: Audit risk arises when a taxpayer continues using 8% after exceeding the VAT threshold or becoming VAT-registrable. The BIR may assess income tax under regular rules and business tax exposure.
๐๐ซ๐๐๐ญ๐ข๐๐๐ฅ ๐๐จ๐ฆ๐ฉ๐ฅ๐ข๐๐ง๐๐ / ๐๐จ๐๐ฎ๐ฆ๐๐ง๐ญ๐๐ญ๐ข๐จ๐ง ๐๐ฎ๐ข๐๐๐ง๐๐: At the start of the year and during filing periods, evaluate VAT threshold, taxpayer type, income sources, and eligibility. Keep a monitoring worksheet of gross receipts and election status.
๐๐ซ๐๐๐ญ๐ข๐๐๐ฅ ๐๐จ๐ฆ๐ฉ๐ฅ๐ข๐๐ง๐๐ / ๐๐จ๐๐ฎ๐ฆ๐๐ง๐ญ๐๐ญ๐ข๐จ๐ง ๐๐ฎ๐ข๐๐๐ง๐๐: A common mistake is believing that once the 8% option is chosen, it remains available regardless of sales level or change in taxpayer status.
๐ก ๐๐๐ฌ๐ฌ ๐ ๐ฎ๐๐ฌ๐ฌ๐ข๐ง๐ . ๐๐จ๐ซ๐ ๐๐จ๐ง๐๐ข๐๐๐ง๐๐. ๐๐๐ญ๐ญ๐๐ซ ๐๐จ๐ฆ๐ฉ๐ฅ๐ข๐๐ง๐๐.
๐๐จ๐ฎ ๐ฆ๐๐ฒ ๐๐๐๐๐ฌ๐ฌ ๐ญ๐ก๐ ๐-๐๐จ๐จ๐ค ๐ญ๐ก๐ซ๐จ๐ฎ๐ ๐ก ๐จ๐ฎ๐ซ ๐ฐ๐๐๐ฌ๐ข๐ญ๐:
๐ ๐ฐ๐ฐ๐ฐ.๐ญ๐ฅ๐๐ฉ๐ก.๐จ๐ง๐ฅ๐ข๐ง๐
๐
๐จ๐ซ ๐ข๐ง๐ช๐ฎ๐ข๐ซ๐ข๐๐ฌ, ๐ฒ๐จ๐ฎ ๐ฆ๐๐ฒ ๐๐จ๐ง๐ญ๐๐๐ญ ๐๐ข๐ณ๐ฆ๐๐ค๐๐ซ ๐๐จ๐ง๐ฌ๐ฎ๐ฅ๐ญ๐๐ง๐๐ฒ, ๐๐ง๐. ๐ญ๐ก๐ซ๐จ๐ฎ๐ ๐ก:
๐ฉ ๐๐ฆ๐๐ข๐ฅ: ๐ข๐ง๐๐จ@๐๐ข๐ณ๐ฆ๐๐ค๐๐ซ๐ญ๐๐.๐๐จ๐ฆ
๐ฑ ๐๐จ๐๐ข๐ฅ๐: +๐๐ ๐๐๐ ๐๐๐ ๐๐๐๐
๐ ๐๐ข๐ฌ๐ข๐ญ: ๐ฐ๐ฐ๐ฐ.๐ญ๐ฅ๐๐ฉ๐ก.๐จ๐ง๐ฅ๐ข๐ง๐
๐ ๐๐๐๐๐ฎ๐ฌ๐ ๐๐ฏ๐๐ซ๐ฒ ๐ญ๐๐ฑ ๐ช๐ฎ๐๐ฌ๐ญ๐ข๐จ๐ง ๐๐๐ฌ๐๐ซ๐ฏ๐๐ฌ ๐ ๐ซ๐๐ฅ๐ข๐๐๐ฅ๐ ๐๐ง๐ฌ๐ฐ๐๐ซโ๐๐ง๐ ๐๐ฏ๐๐ซ๐ฒ ๐ฉ๐ซ๐จ๐๐๐ฌ๐ฌ๐ข๐จ๐ง๐๐ฅ ๐๐๐ฌ๐๐ซ๐ฏ๐๐ฌ ๐ ๐ญ๐ซ๐ฎ๐ฌ๐ญ๐๐ ๐ ๐ฎ๐ข๐๐.
