Flat tax rate of 8% proposed for pros and self-employed

To encourage the correct payment taxes, the Senate version of the Tax Reform for Acceleration and Inclusion (TRAIN) bill has a provision for a flat tax rate, making the computation simpler and the compliance easier for selfemployed income-earners and professionals.

Senator Juan Edgardo “Sonny” Angara said that under Senate Bill No. 1592, self-employed individuals and professionals can choose between an eight (8)-percent flat tax on gross sales or receipts to be filed only once a year or the schedular personal income tax rate with allowable deduction.

Angara, chairman of the Senate Committee on Ways and Means, said the eight-percent tax will be in lieu of the personal income tax, which is currently filed quarterly, and the percentage tax, filed monthly.

“Congress is making a distinction between the tax treatment of compensation income earners and self-employed individuals and professionals because we recognize the need to really simplify the process,” Angara said.

Citing Bureau of Internal Revenue (BIR) data, Angara said selfemployed and professionals only contribute 15% percent of the total income tax collection. He pointed out that the self-employed file their taxes on their own while others do so with the help of accountants who make the tax computations but come with a price many taxpayers cannot afford.

He said the previous Aquino administration opted for the scare and shame tactic, “but I believe a developmental approach or incentivizing them to follow tax rules would be a more effective strategy.”