When Freelancers Fail to Pay Taxes

When you start working for an employer, that employer immediately becomes your withholding agent. This indicates that you are giving them permission to deduct and withhold an amount of tax money from your monthly income. They are then required to transfer this sum to the Bureau of Internal Revenue (BIR), as well as submit an end-of-year report detailing all of the withholding taxes that they have transferred. All of this is obligatory for them to do as an employer according to the National Internal Revenue Code, which mandates the requirements.

But if you are rendering services and earning money without an employer but yourself, you would probably assume that you are not accountable for paying taxes, right? However, that is not the case. 

It makes no difference whether a freelancer works part-time or full-time for clients located in the Philippines or elsewhere in the world; they are still obligated to file and pay income tax. People who work independently are obligated to file taxes to register with the Bureau of Internal Revenue (BIR) as self-employed individuals. The inability to file and pay tax returns are two of the most prevalent offenses incurred by the taxpaying public.Our tax system includes corresponding penalties for such offenses, and these fines are applicable regardless of whether the non-compliance is a simple carelessness or a purposeful effort to commit fraud. In accordance with Section 248 of the Philippine tax code, failure to file a tax return bears a penalty of 25% of the tax due, in addition to the primary amount owed. Yet, if the taxpayer is proven guilty of deliberate negligence to file returns or knowingly filing a false or forged report, he or she must pay an extra penalty equal to 50 percent of the amount of tax needed to be paid.