I RECENTLY got fired by my online employer in relation to the issue of taxation. You see, I am an Internet writer and I opened my own company so I could organize the payment of my taxes. Part of the reason I was fired was that I informed my boss that I would be sending him official receipts every time he paid me, so that the Bureau of Internal Revenue (BIR) would not have a hard time figuring out the right amount of taxes I have to pay. However, my boss decided to fire me instead of accepting my terms.
You may be wondering what I did that was so wrong, After all, here in Manila where I live, asking for or giving official receipts is a normal part of business. However, in the online world, employers do not pay taxes. They go online specifically to avoid paying royalties for information gathered from other websites that are owned by other people, as well as avoid paying taxes to the government. That’s why they also use pseudonyms regularly. It makes it harder to track them down and that is the allure of Internet writing. They can hire anyone willing to write without citing sources and willing to do this at minimal pay without the burden of paying taxes or royalties.
I myself wish I could pay income tax. But my problem is that I don’t know how to compute for income tax. Since my employers don’t pay taxes either, I have no idea what the correct taxable amount is for my income from online writing. I tried looking for lawyers or accountants who specialize in online work taxation, but failed to find any. I decided to open my own company upon the advice of my sister who is a law graduate. I figured that this way I could start paying income tax, and the side effect of that is that I could apply for credit cards and other financial instruments because I would have the necessary documents. I already have a Tax Identification Number or TIN from a previous job.
Online employers refuse to pay taxes because it will cut into their profits. It’s that simple. Even though many employers earn big from online writing, they are always ready to do a disappearing act when the topic of taxation comes around. My boss told me that he is afraid of the government identifying him as an online employer then going after him. That’s why he never communicated with me via calls, only via e-mail and text. Taxation is a sticky issue and most writers opt not to bring it up at all, for fear of losing their job.
It seems that the BIR still has to figure out how to successfully impose taxation laws on online businesses like mine. But I chose to set up my company in the Philippines to make it easier for the BIR to tax me according to Philippine laws. International businesses are always a sticking point with lawyers because you need to determine which country has jurisdiction over how much of your earnings. There is also the danger of double taxation, meaning I could be taxed in the Philippines where I am based, and taxed in the United States where most of my clients originate from. And that costs big money all in all.
Online employers will keep avoiding taxation as much as possible in the near future. This piece I’m writing will probably be the kiss of death to my online writing career if word gets around that I wrote about the industry’s practices. Still, I strongly believe that online writing should be considered a taxable livelihood. Naturally I don’t want to pay too much taxes, but taxes are necessary for the government to be able to function. That’s why I’m still setting up my writing company — Quill Writing and Translation Services — this year despite losing my online job.