Gatchalian: Tax cuts for WFH employees

SEN. Sherwin Gatchalian is pushing for the early passage of a proposed measure providing new benefits in the form of allowable tax deductions to help ease the burden of telecommuting employees or those in a work-from-home (wfh) and hybrid work arrangement.

As employees in a WFH and hybrid work arrangement are likely to be in it for the long haul, Gatchalian said it comes with a lot of costs that workers are now facing, such as lack of logistical assistance, internet and utility expenses, and their mental well-being.

He cited a recent survey by Microsoft showing 42 percent of employees working from home after a year still lacking essential office supplies. One in 10 does not have internet connection to do their job while 46 percent said their employer does not help with remote work expenses. Another survey conducted by JobStreet.com Philippines some 10 months ago showed that 75 percent of the respondents claimed that they did not receive any compensation for their electricity and internet expenses from their companies. Eighty-seven percent said employers should shoulder their WFH costs while 38 percent claimed they experienced reduction in their income due to poor internet service.

Gatchalian said new benefits in the form of allowable tax deductions could help ease the burden of telecommuting employees, such as a reduction of P25 from their taxable income for every hour of work under WFH arrangement, which will lessen the taxes they have to pay and in effect increase their net pay.

Furthermore, allowances or other benefits not exceeding P2,000 per month granted to them by their employers can be legislated as a non-taxable benefit.

“In providing for these allowable tax deductions, it will effectively increase the workers’ take-home pay and somehow, these would suffice to cover part of their electricity, internet connectivity fees and other workrelated expenses. The amount will be substantial especially for cash-strapped individuals,” Gatchalian said.

These proposals are contained under Senate Bill 1706 or the “Tax Incentives for Individuals on a Work-From-Home or Telecommuting Program” coauthored by Gatchalian.

The measure also includes a provision allowing employers to claim an additional 50-percent income tax deduction for allowances granted within the specified ceiling.

Such provision, Gatchalian said, seeks to encourage employers to provide much needed allowances to their employees by allowing them to deduct an additional 50 percent of the amount they provide for income tax purposes.