Govt Plans on Lowering Tax for Filipino Freelancers

As freelancing is called the “future of the service sector” in the country, the House Committee on Ways and Means and the Department of Finance’s Bureau of Internal Revenue (BIR) plan to lower the withholding tax on Filipino freelancers hired by companies in the US.

Noting a report by Hire Digital Corp. located in  New York, US, House Committee on Ways and Means Chairman Joey Sarte Salceda mentioned that 59% of Asia-Pacific marketers witnessed growth over the last five years in the freelancing sector.

“Freelancing, particularly freelancing for foreign clients, is the future of the services sector in the country. It’s basically micro-BPO [business process outsourcing] and it will change purchasing power and employment conditions in the countryside,”  said Rep. Salceda

He adds, “It’s already changing the landscape in towns in Albay.”

Salceda predicts that around two million Filipino workers are employed either as full-time or part-time freelancers with foreign employers and that this sector would be as big as the BPO industry in a decade.

He also adds that the majority of US-sourced income received by Filipino content creators and freelancers is subjected to a 30% tax in the United States. With this, there is “a reduced rate or exemption if there is a tax treaty between the foreign person’s country of residence and the United States.”

Salceda says that there is a double taxation agreement.” with the US but this does not apply to Filipino content creators and freelancers who pay 30% of the US-based income as tax in the US.

Source: Business Mirror