The House tax panel on Monday passed a substitute bill to a proposal submitted by Albay Rep. Joey Sarte Salceda that grants tax amnesty to freelancers and gives them a chance to begin anew with better legal protection and settle their tax liabilities smoothly.
Salceda, who chairs the House Ways and Means Committee, said House Bill 1527, or the Freelancers Protection Act, “wants to ensure that there are legal rights, protection, and benefits to the more than two million freelance workers in the country.
“We saw the need to help them start afresh with their tax liabilities, so they will be able to begin under new contracts with clean tax records,” he said.
“That’s why the tax amnesty provisions are important. They will help us recover uncollected revenues, while also helping freelancers to steer clear of any pending tax liability that could prevent them from having better contracts once this bill is passed,” Salceda said.
The amnesty will cover income taxes under Section 24 of the Tax Code, for freelancers earning less than P1 million a year.
The applicable rate will be 2 percent of gross receipts above the first P250,000. Salceda said he would manifest an amendment to include the percentage tax for VAT-exempt persons, which he said is more relevant to freelancers, while defining which paragraphs under Section 24 would be applicable.
Among the protections the proposed substitute bill will include are: a framework for contracts between employers and freelancers; eligibility for nightshift differential for freelancers who are required to be physically present in the workplace or those on field assignments; and jazard pay for freelancers deployed in dangerous areas.
The proposal also makes it unlawful to pay the compensation due the freelancer later than 15 days after the date of payment of compensation stated in the written contract, or after the rendition of services in cases where there is no written contract and require as a condition of payment of compensation, at any time after a freelancer has commenced rendition of services, that a freelancer accept less than the specified contract price; and retaliate against a freelancer under certain conditions.
Salceda said “freelancing has become the lifeline for millions of Filipinos, especially those who lost their regular jobs during the pandemic and as the economy becomes more digital, there will be more freelancing.”
"Without legal protections, we will also see more labor exploitation,” he said.
Salceda said many industries, including business process outsourcing outfits, would likely move towards freelancing in the coming years.
“Freelancing will be the natural consequence of the shift towards working from home. We have to protect workers in this sector now, while the potential problems are still on a scale we can solve,” he said.