Sworn Declaration of Gross Income (Philippines)

A Sworn Declaration of Gross Income in the Philippines provides a formal sworn account of the facts it concerns, executed in the manner the law requires for it to be relied on.

The Sworn Declaration of Gross Income mechanism was introduced by BIR Revenue Regulations No. 11-2018, implementing Sections 24(A) and 79(A) of the NIRC as amended by the TRAIN Law. Under BIR Revenue Regulations No. 11-2018 (RR 11-2018), self-employed and mixed-income individuals whose gross income is PHP 3,000,000 or below are entitled to the 8% flat income tax option (in lieu of graduated income tax plus percentage tax) under NIRC Section 24(A)(2)(b), and are subject to 5% creditable withholding tax on professional income instead of 10%. Those whose gross income exceeds PHP 3,000,000 are VAT-registered (or required to register for VAT) and subject to 10% CWT on professional fees.

The Sworn Declaration must be submitted at the start of each payee-payor engagement and annually at the beginning of each taxable year thereafter. BIR Revenue Regulations No. 11-2018, Section 2(B) specifies the form of the declaration: the payee must declare the estimated gross income for the current year and affirm under oath that the declaration is true and correct. The sworn declaration is executed before a notary public and submitted to each income payor.

BIR Revenue Memorandum Circular (RMC) No. 01-2018 provides the prescribed format of the Sworn Declaration of Gross Income and guidance on its use. The circular specifies that the 5% CWT rate applies only if the payee submits the sworn declaration; otherwise, the 10% rate applies regardless of actual income level.

For mixed-income earners — individuals with both compensation income (employment) and self-employment income — the gross income threshold for the Sworn Declaration is based solely on the self-employment or professional income, not the total income including compensation.

The legal framework governing the Sworn Declaration of Gross Income (Philippines) in Philippines draws on several key statutes and regulatory bodies. Under Philippine law, the Civil Code of the Philippines (Republic Act No. 386) governs contractual obligations. The Revised Corporation Code (Republic Act No. 11232) regulates corporate entities through the Securities and Exchange Commission (SEC). The Labor Code of the Philippines (Presidential Decree No. 442) and Department of Labor and Employment (DOLE) govern employment matters. The Data Privacy Act of 2012 (Republic Act No. 10173) and the National Privacy Commission (NPC) protect personal data. The Bureau of Internal Revenue (BIR) administers tax obligations under the National Internal Revenue Code. Parties executing a Sworn Declaration of Gross Income (Philippines) in Philippines should confirm the document reflects current law, including any amendments enacted since the original drafting date. The National Internal Revenue Code (RA 8424) sets the foundational requirements.

A Sworn Declaration of Gross Income in the Philippines is needed in the following specific circumstances.

A Sworn Declaration of Gross Income is required at the start of every engagement or contract between a self-employed professional (lawyer, accountant, doctor, engineer, architect, consultant) and a withholding agent payor — a corporation, partnership, or withholding agent individual — who is required to withhold creditable withholding tax (CWT) on professional fees under BIR Revenue Regulations No. 2-98. Without the declaration, the payor must withhold at the 10% rate regardless of the payee's actual income level.

A Sworn Declaration of Gross Income is needed at the beginning of each calendar year (typically submitted in January) by recurring service providers — freelancers, consultants, IT contractors — to each of their regular corporate clients who are withholding agents. The declaration covers the entire calendar year and indicates whether the professional expects gross income below or above PHP 3,000,000 for that year.

A Sworn Declaration of Gross Income is required when a self-employed individual opts for the 8% flat income tax rate under Section 24(A)(2)(b) of the NIRC (as amended by TRAIN Law RA 10963) instead of the graduated income tax plus 3% percentage tax. The election of the 8% option must be made in the first quarterly income tax return of the year and supported by the sworn declaration submitted to payors.

A Sworn Declaration of Gross Income is needed by medical professionals operating their own clinics or private practices who receive professional fees from HMO companies, hospitals, and private patients — each HMO or hospital that pays fees must receive the declaration before applying the 5% CWT rate per BIR RMC No. 01-2018.

A Sworn Declaration of Gross Income is required by online freelancers and e-commerce sellers registered with the BIR as self-employed individuals, when they enter into contracts with Philippine corporations or registered withholding agent payors for digital services, content creation, or product supply exceeding PHP 10,000 per year per payor.

A valid Philippines Sworn Declaration of Gross Income must contain the following essential elements.

Declarant Information: Full legal name, TIN, address, and contact number of the self-employed individual or professional. Specify the BIR RDO code where the declarant is registered. Include the declarant's professional license number (for PRC-licensed professionals: doctors, lawyers, engineers, CPAs).

Gross Income Declaration: A clear statement of whether the declarant's gross income from self-employment, practice of profession, or business for the current taxable year: (a) does NOT exceed PHP 3,000,000 — in which case the declarant is subject to 5% CWT under BIR Revenue Regulations No. 11-2018, is exempt from VAT under NIRC Section 109(BB), and may opt for the 8% flat income tax under NIRC Section 24(A)(2)(b); or (b) EXCEEDS or is expected to EXCEED PHP 3,000,000 — in which case the declarant is subject to 10% CWT, is VAT-registered (or required to be), and cannot avail of the 8% option.

PAYOR Information: The declaration may be addressed to a specific payor (for exclusive engagements) or may be a general declaration applicable to all payors (for freelancers with multiple clients). For each client-payor, include the payor's company name, TIN, and address.

Coverage Period: The taxable year covered by the declaration — typically January 1 to December 31 of the current calendar year. Specify the date of submission to each payor.

Sworn Statement and Notarization: The declarant's sworn statement that: (1) the income declaration is true and correct to the best of the declarant's knowledge; (2) the declarant will immediately notify each payor if the gross income exceeds PHP 3,000,000 during the year, triggering the change from 5% to 10% CWT prospectively; (3) the declarant acknowledges that false declarations subject the declarant to criminal prosecution for perjury under the Revised Penal Code and administrative sanctions under the NIRC Section 255.

Notarization: The declaration must be notarized before a commissioned notary public under the 2004 Rules on Notarial Practice, with the notary's seal, PTR number, IBP number (for lawyer-notaries), and commission expiry date.

Acknowledgment by Payor: Space for the payor's authorized representative to acknowledge receipt of the declaration, with date of receipt — creating a record of when the payor became entitled to apply the 5% CWT rate.

Additional compliance elements for a Sworn Declaration of Gross Income (Philippines) used in Philippines include: Under Philippine law, the Civil Code of the Philippines (Republic Act No. 386) governs contractual obligations. The Revised Corporation Code (Republic Act No. 11232) regulates corporate entities through the Securities and Exchange Commission (SEC). The Labor Code of the Philippines (Presidential Decree No. 442) and Department of Labor and Employment (DOLE) govern employment matters. The Data Privacy Act of 2012 (Republic Act No. 10173) and the National Privacy Commission (NPC) protect personal data. The Bureau of Internal Revenue (BIR) administers tax obligations under the National Internal Revenue Code. Forms-legal.com provides this template as a starting point for Philippines-compliant documentation.