House tax panel Oks Salceda’s tax amnesty proposal for freelancers or “economy saviors”

Albay Rep. Joey Salceda

The House tax panel on Monday passed the substitute bill to a proposal submitted by Albay Rep. Joey Sarte Salceda that grants tax amnesty to freelancers, to the ‘saviors of the economy’ a chance to begin anew with better legal protections and settle their tax liabilities smoothly.  

Salceda, who chairs the House Ways and Means Committee said HB 1527, or the Freelancers Protection Act, “wants to ensure that there are legal rights, protection, and benefits to the more than two (2) 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,” he added. 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% of gross receipts above the first P250,000. Salceda says he will manifest an amendment to include the percentage tax for VAT-exempt persons, which he says is more relevant to freelancers, while defining which paragraphs under Section 24 will be applicable.

Among the protections the proposed substitute bill will include are: 1) A framework for contracts between employers and freelancers; 2) Eligibility for nightshift differential for freelancers who are required to be physically present in the workplace or those on field assignments; and 3) Hazard pay for freelancers deployed in dangerous areas.

The proposal also makes it unlawful to pay the compensation due the freelancer later than fifteen (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,” the lawmaker explained.

Salceda said he foresees many industries, including business process outsourcing (BPO) outfits, moving 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 added.