Taxes, freelancers, cultural work: Amnesty and kindness

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KATRINA STUART SANTIAGO

ONE of the more critical battles that any cultural institution should be waging at this point is the one against the unjust taxation of freelance cultural workers.

This was one of Daang Matuwid’s most unkind tax policies, which was put into effect by former tax chief Kim Henares, for whom it didn’t matter how much a person earned, what mattered was that government could collect taxes on those earnings.

I had hoped President Duterte’s men would take a look at this tax policy, and realize that freelancers and cultural workers are in a category of employment that is unlike “self-employed professionals” (doctors and engineers and lawyers), and unlike workers who suffer through contractualization.

At the very least, I wished they would declare a tax amnesty, just to bring back freelancers and cultural workers into the tax system, no questions asked, no penalties to be paid for honest but foolish mistakes. It’s just the kinder thing to do.


One still hopes.

Specificity
There was nothing just or kind about the past government’s decision to require freelance cultural workers to file (and pay more) taxes, no matter how little their earnings. After all, if you’re a freelancer, you’re earning on a per-project basis, and you could earn even less than minimum wage if you divide your earnings across the days when no money’s coming in. Freelancers for TV, movie, theater, and print would know this: we are dependent on the gigs that we get. We have no employee-employer relationships, we have no health or social security benefits, we have no company to fall back on in times of need.

Daang Matuwid did not care about the state of (non-) employment of freelancers. Instead, it considered freelancers as self-employed professionals, under which category falls doctors and lawyers with their own practice, architects and engineers who build their own offices. It didn’t matter that a majority of freelance cultural workers earn a fraction of what these self-employed professionals earn.

Of course, there are celebrities and models, TV and movie stars, box office film directors and scriptwriters, and some big shot writers who could be earning about as much as those self-employed professionals.

But that’s what the Bureau of Internal Revenue (BIR) is there for, isn’t it? To make distinctions between the different types of earners, and tax accordingly.

Sadly, the freelancer who is barely making ends meet, who is always on her toes wondering about when the next project will come, is being treated like she owns a medical or legal practice. There is absolutely no justice in that.

A taxing process
When I finally got my papers in order—and was able to pay the penalties through the kindness of a good Samaritan who had cash to spare—I realized that one of the things the BIR presumes everyone can afford is an accountant. But I couldn’t afford one, even as I found someone who was only charging P2,000 a month.

When there are months when one earns absolutely nothing, how could one pay an accountant?

I had to learn how to file the monthly taxes (1601E and 2551M), which requires using a computer with a Windows operating system. Yes, that online payment facility still does not work for all computers.

I also realized that even as all the payments I get are after taxes, i.e., there is already tax withheld at source, when I file my earnings for any given month, even if it’s just P5,000 pesos for writing a magazine cover story, I am made to pay an additional 3 percent in taxes. I then print the form out in three copies, go to the bank, and pay the P150.

To say that this is time wasted would be an understatement: I could just as well be at home trying to earn my keep by writing. Instead, one is in line to pay taxes on earnings that have already been taxed before I even got them.

I dread the annual filing in April, which requires that freelancers like me get Form 2307 from all the places I’ve written for, and which will mean filling up those ledgers.

How? I have no idea. Can I afford an accountant for that? Of course not.

Tax amnesty please!
Since writing about this tax policy of Daang Matuwid, I continue to get emails and Facebook messages from people who are faced with the same crises I faced when I needed to get my receipts and register as a freelancer.

Many people would go to the BIR, ready to apply for receipts or make sure they’re registered for the jobs that they currently hold, only to find the past catching up with them, with penalties to boot.

Say, an old business that closed down 10 years ago, but which to the BIR remains open because you didn’t know to close its books. Or maybe you got your TIN number for your first job, which would mean being registered as employee, but five years since you’d like to register as freelancer.

In instances like these, the BIR will require the freelancer to pay penalties based on what it calls “open cases.” These are penalties that are counted per month, and when it piles up, it is an amount that will cripple anyone–especially someone who earns minimum wage, or is a freelancer.

One hopes that the Duterte government would announce a tax amnesty for workers such as these. At the very least, one wishes that a blanket penalty be set for freelancers and wage earners who did not know to close books, or fix papers the moment their status of employment changed. One hopes the amount is affordable, and will not mean sacrificing one’s salary.

One holds on to the possibility of kindness and malasakit. We all know we could use more of that these days.

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5 Comments

  1. Have you tried Taxumo (www.taxumo.com) Katrina? They’re currently free of charge, and they make it easy for freelancers and solopreneurs to process percentage taxes. Very ideal when you don’t need/want an accountant.

  2. My problem is the company I am working in right now designated me as a contractor instead of as a part-time worker. I have no receipts since I am not a freelancer but was kinds forced to be one because the company cannot afford to pay me benefits like SSS, Philhealh and Pag-ibig that I shoulder myself. When I went to the BIR to ask how to file for my income tax, I was told that I was already late in filing but since I have final tax deducted from my pay, he said it was okay not to file since I am not registered and I have no receipts. That was what the BIR said to me. So I have decided not to register since I don’t want to be freelancer and I go through the process of getting receipts etc that I also need to pay for since I have no money to do that anyway. I took the risk and did not file my ITR since that was what the BIR personnel told me. Okay na raw kasi na taxan na raw ako. Of course it is his word against mine but I guess the measly 19,000 I got last year for being a contractor was not something they want to think of. Yep, that is the amount I got for the whole year. A minimum wage earner don’t need to pay tax at 10k a month but I got taxed for the measly 19k. Taxation should be fair, realistic, and less complicated.

  3. Meanwhile the big casinos are barely taxed, get gov’t subsidy protection and are used as fronts for criminal money laundering.

  4. the past admin’s taxation system is burden for the low income earners. how did they manage to collect taxes from chinese/taiwanese traders in divisoria mall or 168 mall and to the chinese restaurant who is not issuing official receipt?

  5. Ms. Santiago, i share your frustration as a legal practitioner who practices solo. From registering your receipts to submitting ebir forms and going to the bank (you can use gcash for BIR payments). Yes, it’s hard to keep a stiff upper lip especially during the shortfall months. Until the law is changed, we all must still comply. It’s not as hard once you’re used to the rigamarole (and yes, i’ve paid thousand peso fines for filing a day or two late) but one must plod on to make an honest buck. You can collect the form 2307 and use them early as credits for the form 2551 (if the windfall is big enough) or for the quarterly tax form 1701Q. Get them the following month after they’re withheld. You deserve a copy to use as a credit because there’s no dodging monthly payments lest you earn nil for that month. Could be worse, you pay 12% instead of 3% per month. Compliance is more difficult for paying and submitting SSS premiums (hope you’ll look into that given the looming increase in contributions). That being said, i wish you well in doing government compliance work as an independent contractor. But pray understand that even licensed professionals despite the titles have to bear this too themselves.