While the employed Filipino has no choice but to pay taxes, most freelancers have been enjoying a tax-free income because they are not aware that they are required, while some do know it but they intentionally evade the obligation. What is the deal with freelancers and taxes, are they required to pay tax from their freelance income?
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Are Pinoy Freelancers Required to Pay Tax?
TAX. Ah yes, that three-letter word that instantly launches massive heated debates and arguments no thanks to the culture of corruption in the government. While the employed Filipino has no choice but to pay taxes, most freelancers have been enjoying a tax-free income because they are not aware that they are required, while some do know it but they intentionally evade the obligation. What is the deal with freelancers and taxes, are they required to pay tax from their freelance income?
The simple answer to that is, YES. Whether you’re a part-time or a fulltime freelancer, you are required to pay tax from your freelance income.
The Duty to Pay Taxes is in the Law
Income Tax is defined in the National Internal Revenue Code (NIRC) of the Philippines as “tax on all yearly profits arising from property, profession, trades or offices or as a tax on a person’s income, emoluments, profits and the like.”
Based on this definition, any payment received from services or products that arise from the practice of profession is taxable income. Freelancers generally earn from services coming from their practice of profession, they are required by law to file and pay income tax.
Freelancers Required to Pay Tax
There are various kinds of freelance work, and you might be wondering if your specific line of work is covered in the income tax law. As we have mentioned, part-time and full-time freelancers are required to pay tax. This includes online/offline freelance work as a graphic designer, copywriter/blogger, editor, SEO, and the like.
Online professionals might ask, how about if the payment comes from a client based abroad? Regardless of the source of income, it is still taxable by law.
Tax Evading Freelancers
If you’re a freelancer who doesn’t pay your taxes, then are you a tax evader? It looks a lot like it. A thief is still a thief regardless of the amount or value of the item that he stole, right?
If every freelancer in the country avoids fulfilling his tax obligation as a Filipino citizen, what do you think will happen? Sure, some freelancers don’t earn much but remember that our taxes make up the budget that the government uses for education, public health, infrastructure (hello MRT, please stop being a disappointment), etc. We need to be law-abiding citizens, we need to pay our taxes, even if we don’t trust our government officials. If freelancers don’t pay their taxes, then isn’t that similar to government officials who think they’re above the law and exercise corruption?
Now that’s all cleared up, the next step is to learn how to file your income tax properly. Here’s A Freelancer’s Guide to Paying Income Tax.