An 8% flat rate tax for self-employed sector is proposed in Senate

July 6, 2017 - 4:30 PM
Image from Philstar files.

At the hearing conducted by the Senate committee on Ways and Means, a proposal emerged calling for a flat rate 8 percent tax for those in the self-employed sector.

Under the proposed scheme put forth by the Department of Finance, self-employed individuals earning up to PhP3 million annually are to be assessed the 8% tax, either on a graduated basis or computed according to a tiered formula depending on the income bracket they fall under.

There will also be a relevant computation for those earning above the P3-million threshold.

But, to minority floor leader Franklin Drilon, it would simplify the tax administration system to just impose a flat 8% rate, regardless.

Drilon said there will be those who would resort to contortionist tactics in order to get around the multi-tiered bracketing scheme.

Among the self-employed tax payers are various professionals like lawyers and medical doctors, as well as merchants, service providers and those operating their own businesses.

Senator Sherwin Gatchalian said Drilon’s suggestion to make it a flat-rate scheme deserves detailed study, while Senator Sonny Angara, who chairs the ways and means committee, pointed out that a progressive tax system can go a long way toward conserving the interests of affected businesses and enterprises.

Simplifying and rationalizing the tax regime for the self-employed sector can serve to expand the collection base as well as tax revenue generated.