What is Occupational Tax Receipt (OTR): Guide for freelancers

Freelance work is on the rise, and offers a great opportunity to earn - often remotely, carrying out work from home with nothing more than your laptop and an internet connection. But being self employed means managing every aspect of your business, including your taxes. If you’re not sure about what an Occupational Tax Receipt is or why you need it, read on.

Your Occupational Tax Receipt (OTR) is provided by your local City Hall. You’ll need it when dealing with the Bureau of Internal Revenue (BIR), or if you choose to register a business for example. This guide walks through the basics of the OTR, including how to get an Occupational Tax Receipt and the typical OTR requirements.

What is an Occupational Tax Receipt (OTR)

OTR stands for Occupational Tax Receipt. This is a document which shows you’ve paid your taxes to the Bureau of Internal Revenue (BIR). The OTR is needed by many freelancers - normally any freelancer who pays taxes and who is working in a field where a licence to practice is not required. If you need a licence to practice - as a doctor for example, but are self employed, you need a similar document - a PTR, which is a Professional Tax Receipt.

The process for getting an OTR varies depending on where you live. We’ll look at an outline of where to get an Occupational Tax Receipt and what you’ll need to prepare in advance in this guide.

Do I need an OTR to freelance?

As a freelancer you’ll usually need an OTR if you’re registering with BIR for tax purposes. OTRs are issued locally in City Halls around the country, so the process can vary a bit from place to place. However, getting an OTR is usually pretty easy and you’ll also normally find the fees are pretty low. It’s normally cheaper to get an OTR compared to a PTR for example.

You’ll usually need to get your OTR when you start to work as a freelancer, and then you must renew your OTR annually at the start of the year. Because the process for getting an OTR does vary from place to place you’ll need to get in touch with your own local authorities to make sure you’re clear on what’s needed - and when - before you get started.

What are the Occupational Tax Receipt (OTR) requirements?

The process for getting an OTR is managed by different City Halls and Municipal Halls around the country. Occupational Tax Receipt requirements can vary. You’ll generally need to get Barangay Clearance to prove your identity and residence information, and then take along some paperwork to your City hall to get your paper OTR. There’s a small fee to pay - while this can vary it’s normally in the region of 200 PHP.

Where to get your Occupational Tax Receipt

Getting your OTR is done in person. You’ll first need to get Barangay Clearance by going to your Barangay Hall with your proof of ID and residence. You’ll be asked to complete a form and can then receive your clearance certificate. You can then take your clearance to your local City Hall or Municipal Hall to get your OTR.

The exact place you get your OTR depends on where in the country you're based. For example, you may need to attend the Business Permits and Licensing Office or the City Treasurer's Office. Usually these offices are located in your City Hall or Municipal Hall though, so you can ask at the location where you need to head.

It’s worth noting that some online reports suggest that not everyone has heard of an OTR. If you arrive at City Hall and the person you’re asking for directions looks confused, mention the PTR instead - it’s usually the same department which issues both.

How to get your Occupational Tax Receipt

Once you have your Barangay Clearance you can go to get your OTR. The process and requirements can vary from place to place so you’ll need to contact your local authorities to understand what’s needed where you live.

The basic steps you need to take are as follows:

1. Visit your City Hall or Municipal Hall and ask which office to visit for an OTR or PTR
2. Head to the clerk to get the OTR form which you need to complete
3. Hand over you completed form with any other documents you’re required to present - this can vary depending on the sort of work you do, and the location you’re in
4. Pay your fees with the cashier - this is usually about 200 PHP

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