Solon seeks final flat income tax for professionals

A lawmaker is seeking a final flat tax of 10 percent for all professionals based on their fees from all
sources within and outside the country which would even increase their tax contribution and government
revenue.
Rep. Dakila Carlo Cua !one District" #uirino$ said his proposal aims to simplify the taxes for
professionals by introducing a flat tax scheme which will significantly raise their tax contribution" thereby
increasing government revenue.
Cua" a %ice Chairman of the &ouse Committee on Appropriations" said 'resident A(uino" in his )tate
of the *ation Address )+*A$ in ,uly -011" cited that .according to the /ureau of 0nternal Revenue /0R$ we
have around 1.1 million self2employed and professional taxpayers who paid a total of '3.4 billion in -010 and
must have earned only '4"500 a month" which is below the minimum wage. 0 find this hard to believe.6
.0t is (uite alarming that there is approximately a 30 percent tax evasion rate among professionals such
as doctors" lawyers" accountants" engineers and architects"6 said Cua.
&e said the power of taxation is an inherent prerogative of sovereignty" the purpose of which is to
secure revenue for the support of the government and its functions.
.0n its (uest for additional tax revenues" the /0R continues to look to widen the country7s tax net" and
has been targeting in particular" self2employed professionals" such as doctors" lawyers" accountants and other
high2earning" self2employed individuals as it has already been pointed out that a problem with tax compliance
still exists in their sector of the economy"6 said Cua.
0n &ouse /ill 8500" or the proposed .9lat :ax :ate for 'rofessionals Act"6 he proposed the amendment
of )ection -- of the *ational 0nternal Revenue Code *0RC$ of 1331" as amended" by adding the definition of
professionals after )ubsection ;C$.
:he definition provides .:he term professionals shall mean persons who" independent of employer2
employee relationship" derive from their profession" the practice or exercise of which re(uire an examination
and<or license from a government agency.6
:he bill also seeks the amendment of )ection -8 of the *0RC of 1331" as amended" on income tax
rates by adding )ubsection A$=$ titled )implified 9inal 9lat 0ncome :ax for 'rofessionals.
:he new subsection provides that .A final flat tax of 10 percent based on the professional fees is
hereby imposed upon the taxable income from all sources within and without the 'hilippines by an individual
resident citi>en and from all sources within the 'hilippines by an individual" non2resident citi>en engaged in
the practice of a profession. :he income of the professional from other sources shall not be entitled to the flat
tax rate under this provision.6
:he bill further provides that all self2employed professionals shall register with the /0R for purposes
of a unified list of taxpayers (ualified to avail of this taxation.
9urthermore" the 9lat :ax for 'rofessionals Act shall apply to income earned or paid to professionals"
effective beginning taxable year -01?" the bill provides. =0$ rbb
NR # 3507
JUNE 24, 2014