8% or Graduated Rates?Both options computed side by side, with a verdict
Every freelancer and sole proprietor faces this choice at registration and again each January. Enter your expected gross receipts and expenses; the tool computes the year under both options and stamps the cheaper one.
Option A · 8%
Option B · Graduated + 3%
Assumes eligibility for the 8% election and the 3% percentage tax under Sec 116 for those not VAT registered. Expenses matter only under Option B.
Who cannot elect 8%
The election is closed to anyone VAT registered, anyone past the VAT threshold, and certain taxpayers the law excludes. It must be elected on time, at registration or on the first quarterly return of the year, or the year defaults to graduated rates. The deep guide on mybizmate.io ↗ walks through eligibility line by line.
Where the break even sits
Low expenses favor 8%; heavy expenses favor graduated, because only Option B deducts them. As expenses climb past roughly a third of receipts, the verdict starts flipping. Run your own numbers rather than a rule of thumb; the tool exists so you do not have to guess.
Questions people actually search
- Sino ang hindi pwede sa 8% option?
- Anyone VAT registered, anyone past the VAT threshold, and certain taxpayers the law excludes may not elect 8%.
- When do I elect the 8% option?
- At registration, or on the first quarterly return of the year. Missing the election defaults the year to graduated rates.
- Does 8% remove percentage tax?
- Yes. The 8% is in lieu of both the graduated income tax and the 3% percentage tax.
Related
Elected an option? mybizmate carries it through.
The software applies your election across every 1701Q and the annual return, so the choice you make in January holds all year.