Any earning individual doesn’t like the words “income taxes.”
Why? Because it means less income for us to take home. Unfortunately, we have no choice on the matter. If you’re earning, that also means you have to pay your taxes.
Freelancers aren’t exempted from this.
In fact, paying income taxes as a freelancer is harder because we don’t have the luxury of having an HR department to do it for us.
What is so important about paying taxes?
Why do we need to do this in the first place?
According to theaseanpost.com, more professionals are joining the gig economy. The gig economy is another way to describe the freelance industry. Also, at least 2% of the Philippines’ population are freelancers. With online jobs on the rise, we are a growing breed of a new class of workers in our country. Our taxes are a huge contribution to the Government.
Now let’s go through some of the important reasons why we have to pay income taxes?
1.) It’s our civic duty
Whether we like it or not, we all have to do our part. And every Filipino citizen has a responsibility to pay their taxes. Regardless of your political affiliation, we are duty-bound by law to pay income tax as a freelancer. Some refuse to pay their taxes because they believe corrupt politicians will abuse them. This excuse would not validate why we don’t have to pay taxes.
2.) It’s our contribution to building the nation
What happens when we pay income taxes?
Taxes are used by the government to fund different projects for our fellow Filipinos. Here are a few of the government projects that are funded by our taxes.
First, we have the Education sector. The government uses part of the collected taxes to create schools and improve the education system. With our continued contribution, children can have easy access to affordable and quality education. These projects are really beneficial in rural areas in the province.
Another sector that is funded by our taxes is the Government Healthcare Services. Our taxes provide free medical services to almost all Filipinos. It will guarantee quality health service whenever we need it.
The Infrastructure Program is also a product of our collective taxes. This program includes road improvements, a new highway system, road widening, elevated skyways, new bridges, etc. With great infrastructure, it’s easier to attract investors and grow our economy. This kind of improvement is something we can all enjoy.
3.) It keeps us from paying penalties
Filling your income taxes is mandatory with strictly enforced laws. If you fail to pay your taxes and the government catches you, that’s a violation of the law. You can either be in violation of tax evasion and filing incorrect taxes.
According to the BIR website, failure to file or supply correct tax information will have a fine of not less than Php 10,000 and imprisonment of not less than one (1) year to ten (10) years. Evaders will also pay fines, interest compromise fees, and other penalties.
To check the list of penalties and their fines, click on this site https://www.bir.gov.ph/index.php/penalties.html.
Understanding and paying income tax in the Philippines is not rocket science. It also doesn’t require a doctoral degree. You can hire an accountant for your tax concerns. If you have the luxury of time, you can study it and take care of it yourself.
Here are some links you can check out if you want to know how much tax you need to pay. These are estimates but it will give you a ballpark figure.