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Tax deductions proposed to help offset cost of work-from-home setup

As employees in a work-from-home (WFH) and hybrid work arrangement are likely to be in it for the long haul, Senator Win 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 wellbeing.


MANILA, Philippines – A full-time work-from-home employee, who was hired only during the Enhanced Community Quarantine mid last year, sets up his desktop which was sent by his Makati-based employer, 8 May 2021. Senator Win Gatchalian co-authored Senate Bill No. 1706 that will allow tax deductions to help offset the cost of work-from-home setup. Photo by Mark Cayabyab/OS WIN GATCHALIAN. Photo by Mark Cayabyab/OS WIN GATCHALIAN

A recent survey by Microsoft called the First Annual Work Trend Index, which was conducted among 31,092 full-time employed or self-employed workers across 31 global markets including the Philippines, shows that 42% of employees said that even after a year of working from home, they still lack essential office supplies and one in 10 don’t have adequate internet connection to do their job while 46% said their employer does not help with remote work expenses. While employees keep up with today’s fast-paced digital world, the same survey says 63% of workers in the Philippines said they feel overworked while 31% said they feel exhausted.

Another survey conducted by Philippines some 10 months ago showed that 75% of the respondents claimed that they did not receive any reimbursement or allowance for their electricity and internet expenses from their companies and 87% said employers should shoulder their WFH costs while 38% 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 P25.00 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. Also, allowances or other benefits not exceeding P2,000 per month granted to them by their employers can be legislated as a non-taxable benefit, the Vice Chairperson of the Senate Economic Affairs said.

“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 work-related expenses. The amount will be substantial especially for cash-strapped individuals,” Gatchalian said.

The said proposals are contained under Senate Bill No. 1706 or the Tax Incentives for Individuals on a Work-From-Home or Telecommuting Program co-authored by Gatchalian. In the said measure, it also included 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% of the amounts they provide for income tax purposes.

“Mahalaga ang pagbibigay ng insentibo lalo na sa maraming mga empleyado na hanggang ngayon ay nag-a-adjust pa rin sa “new normal.” Malaking tulong na ito sa kanilang buwanang gastusin, pampalubag loob din ito sa mga nakakaramdam ng stress habang naka work-from-home,” Gatchalian concluded.