Tax and welfare loopholes in online gig economy flagged
THE FLUID NATURE of online work has led to tax and social protection gaps, issues that have become more pressing with the increased adoption of remote work during the pandemic, according to a report by the Philippine Institute of development studies (PIDS).
In the report “Exploring Policies and Initiatives for Online Workers in the Philippines,” PIDS Senior Researcher Ramonette B. Serafica and Research Analyst Queen Cel A. Oren found that classiIfcation of line workers has affhave paid their taxes to the Bureau of Internal Revenue (BIR).
“Even though Filipino online workers want to register with the BIR and pay their fair share, anecdotal evidence reveals confusion about their appropriate category. Registration requirements and procedures could also be problematic,” the authors said.
Online workers are often freelancers hired on a per-project basis, which means earnings aren’t always stable.
Some jobs are subject to customer and contract availability. They can belong to different categories – entrepreneurs, part-time workers, freelancers or independent contractors – to difftime.
For example, freelancers are not on the list of persons who must file an income tax return (ITR) under the National Internal Revenue Code. But a freelancer can be categorized as an independent professional, mixed-income individual, or sole proprietor, depending on their profession.
“Even though Filipino online workers want to register with the BIR and pay their fair share, anecdotal evidence reveals confusion about their category,” PIDS researchers said.
Some online workers cannot register with the BIR because they cannot present a residence certificate without the required showcases.
“Platform workers have a diffcurrent perception of their employment status. Depending on the nature of their work, they may be recognized by the BIR as individual and non-individual taxpayers,” the authors said.
At the same time, the self-employed can access social insurance programs, but they often belong to overlapping employment status categories.
“Online workers could Ifand it is difficult to make regular contributions or may not be motivated to do so voluntarily,” PIDS said. “Thus, current social protection schemes will need to be reviewed and updated to meet the needs of new types of workers and working arrangements.”
Social security system and Pag-IBIG beneIfts have contribution-based eligibility rules, which means online workers who have not paid contributions for a certain number of months will not be able to receive the benefitsIfts.
The government should help simplify registration processes for social protection and use online payment systems, the PIDS researchers said.
“Like the Universal Health Care Act, the government may consider providing universal social protection,” the authors said.
“Whether designing a social protection scheme tailored to online workers or a mechanism to increase tax compliance, field experiments could be conducted to determine appropriate interventions that will encourage participation and reduce informality. online work.”
PIDS researchers expect an increase in online working, with a third of the workforce working partially or entirely remotely after Iffive years.
“With the COVID-19 pandemic, the online labor market is expected to grow further with the increase in outsourced tasks and the availability of workers due to job losses in other sectors.”
Several bills related to online workers are pending in Congress, including the Philippine Digital Workforce Competitiveness Act that would help improve digital training, and the Freelancers Protection Act that would entitle them social benefits and simplified tax registration. The National Digital Careers Act would introduce grants, scholarships and incentives for digital work. — Jenina P. Ibanez