BIR Form 2551Q is the quarterly percentage tax return. Non-VAT freelancers, sellers and creators with gross sales up to 3 million pesos pay 3% of each quarter's gross sales or receipts on it, by the 25th day after the quarter ends. If you've chosen the 8% income tax rate, you don't pay percentage tax at all.
Percentage tax is the tax that surprises new freelancers most, because it's charged on your gross receipts, not your profit. Earn 100,000 pesos in a quarter and spend half of it on equipment, and the 3% still applies to the full 100,000. Knowing how 2551Q works, and how to avoid it legally, is worth a few minutes.
Who pays percentage tax
The BIR's guide puts it simply. If your business activity would normally be subject to VAT, but your gross sales don't exceed 3 million pesos and you aren't VAT-registered, you pay percentage tax instead. That's most freelancers, online sellers and creators in their first years. The BIR's RMC No. 97-2021 confirms that influencers are liable to income tax and percentage or value-added tax like any self-employed person.
The rate: 3% again
You may have read that percentage tax is 1%. It was, temporarily. Under the CREATE Act the rate dropped to 1% for a period, and RMC No. 69-2023 says it reverted to 3% of gross quarterly sales or receipts effective July 1, 2023. Anyone still filing at 1% is underpaying.
| Quarterly gross receipts (pesos) | Percentage tax at 3% (my own sum) |
|---|---|
| 50,000 | 1,500 |
| 100,000 | 3,000 |
| 250,000 | 7,500 |
The deadlines
| Quarter | 2551Q due |
|---|---|
| 1st (January to March) | April 25 |
| 2nd (April to June) | July 25 |
| 3rd (July to September) | October 25 |
| Fourth (October to December) | January 25 of the following year |
Note that unlike 1701Q, there is a fourth-quarter 2551Q. Four returns a year, every year you're on graduated rates.
The legal way out: the 8% rate
The 8% income tax rate is in lieu of both the graduated income tax and the percentage tax. RMC No. 69-2023 spells it out: the 3% applies to self-employed people and professionals within the 3 million pesos threshold except those availing of the 8% rate. So if you elect 8%, 2551Q drops out of your life.
Timing is everything. In your first year you elect 8% on Form 1901, or on your first 2551Q or 1701Q. In later years you file Form 1905 at the start of the year to end-date your quarterly percentage tax, or signify it on your first quarterly return. Leave it past that and you're paying 3% on receipts for the whole year, plus graduated income tax.
Filing 2551Q
- Total your gross sales or receipts for the quarter. Don't deduct expenses; percentage tax is on gross.
- Apply 3%.
- If a client withheld percentage tax, claim it through your SAWT.
- File in eBIRForms or eFPS and pay through any authorized agent bank, RCO or online channel by the 25th day after the quarter.
- Keep the confirmation with your books.
Where your 2551Q figure comes from
The figure is your gross sales or receipts for the quarter, taken from your books. For creators, that means platform payouts, brand payments and affiliate earnings recorded in the quarter. For sellers, start from gross sales rather than what's left after platform fees, because the tax is on gross. If you're unsure how to record a payment that arrives a quarter after the work, ask an accountant once and then do it the same way every time. Keep the payout reports; they're the evidence behind the number you file.
A quick comparison: staying on 3% versus electing 8%
Picture a creator with 250,000 pesos of receipts in a quarter. On graduated rates, percentage tax alone is 7,500 pesos for that quarter (my own sum at 3%), before any income tax. On the 8% rate there's no percentage tax at all; instead, income tax is worked out on sales above the 250,000 pesos annual reduction. For someone with low costs, the 8% route usually comes out simpler and lighter across the year, and it removes four returns from your calendar. That's why I always tell new freelancers to look at it in January.
Common slip-ups
- Filing at 1% because an old guide said so.
- Deducting expenses before applying the rate.
- Forgetting the fourth-quarter return due January 25.
- Electing 8% but continuing to file 2551Q out of habit, or the reverse: assuming 8% applies when it was never elected.
When you outgrow it
Once your gross sales pass 3 million pesos, percentage tax no longer applies and you move into VAT, filed on 2550Q on the same quarterly dates. The 8% option also closes at that point. If you're getting close, speak to an accountant before you cross the line, not after.
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My verdict
If your costs are low, the 8% rate usually beats paying 3% on gross every quarter plus graduated income tax. Decide in January, file 2551Q on the 25th if you stay on graduated rates, and never file at the old 1%. For more on planning your tax pot, see my guide to how much you can earn before tax and these tax tips for the self-employed.
Frequently asked questions
What is BIR Form 2551Q?
The quarterly percentage tax return for non-VAT taxpayers, including freelancers and creators, whose gross sales don't exceed 3 million pesos.
Is percentage tax 1% or 3%?
3%. The temporary 1% rate ended and RMC No. 69-2023 says the rate reverted to 3% effective July 1, 2023.
When is 2551Q due?
April 25, July 25, October 25 and January 25 of the following year.
Do I file 2551Q if I chose the 8% rate?
No. The 8% rate is in lieu of both graduated income tax and percentage tax, so percentage tax doesn't apply.
Is percentage tax based on profit?
No. It's 3% of gross quarterly sales or receipts, before any expenses.
What happens when my sales pass 3 million pesos?
Percentage tax stops applying and you move into VAT, filed quarterly on 2550Q. The 8% income tax option also closes above that threshold, so plan the switch with an accountant.
