Republic of the Philippines
HOUSE OF REPRESENTATIVES DATE October 20, 2022

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* TIME 1:47pm

NINETEENTH CONGRESS
First Regular Session

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HOUSE BILL No.5620 Wo npek

Introduced by Representative Rex Gatchalian

AN ACT
PROVIDING FOR TAX INCENTIVES FOR EMPLOYEES ON A WORK-FROM-HOME
OR TELECOMMUTING PROGRAM, FURTHER AMENDING FOR THE PURPOSE,
REPUBLIC ACT NO. 8424, OTHERWISE KNOWN AS THE NATIONAL INTERNAL
REVENUE CODE (NIRC) OF 1997, AND FOR OTHER PURPOSES

EXPLANATORY NOTE

The work-from-home (WFH), telecommuting, or remote work setup has been
used as an employment arrangement for cost reduction for both the employer and
the employee, better job satisfaction, increased productivity, lower turnover rates,
and access to more potential employees. It is also beneficial for the environment as
it contributes to the reduction of traffic congestion and air pollution. The necessity
of this employment arrangement in the Philippines spiked when lockdowns were
imposed due to the COVID-19 pandemic, Now that quarantine restrictions are
gradually being lifted, some employers still maintain a work-from-home setup for

several of their employees due to its benefits.

Nonetheless, this employment arrangement also has its disadvantages for
employees. For instance, they incur additional expenses at home due to higher power
consumption and the need to install a more reliable Internet connection. Thus, they
shoulder part of the operating costs that used to be paid by their employers when
they were still working on-site.

This bill seeks to amend the Tax Code to provide for additional deductions to
the compensation income of employees working from home, consequently lowering

their taxes due and increasing their take-home pay. The bill also provides for a tax

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benefit to the employers granting allowances to cover employees’ expenses necessary
for telecommuting.

In view of the foregoing, the passage of this bill is earnestly sought.

|. REX GATCHALIAN
Representative
* District, Valenzuela City


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Republic of the Philippines
HOUSE OF REPRESENTATIVES

NINETEENTH CONGRESS
First Regular Session

HOUSE BILL No. 5620

CC

Introduced by Representative Rex Gatchalian

V7

AN ACT
PROVIDING FOR TAX INCENTIVES FOR EMPLOYEES ON A WORK-FROM-HOME
OR TELECOMMUTING PROGRAM, FURTHER AMENDING FOR THE PURPOSE,
REPUBLIC ACT NO. 8424, OTHERWISE KNOWN AS THE NATIONAL INTERNAL
REVENUE CODE (NIRC) OF 1997, AND FOR OTHER PURPOSES

Be it enacted by the Senate and the House of Representatives of the Philippines in
Congress assembled:

SECTION 1. Section 34 of Republic Act No. 8424, or the National Internal
Revenue Code of 1997, is hereby amended to read as follows:

"Sec. 34. Deductions from Gross Income. - Except for taxpayers earning
compensation income arising from personal services rendered under an
employer-employee relationship where no deductions shall be allowed under
this Section, AND EXCEPT AS OTHERWISE PROVIDED FOR HEREIN IN
CASE OF WORK-FROM-HOME AND TELECOMMUTING EMPLOYEES, in
computing taxable income subject to income tax under Sections 24(A); 25(A);
9 26; 27(A), (B), and (C); and 28(A)(1), there shall be allowed the following 10

deductions from gross income:

(A) Expenses -

(1) Ordinary and Necessary Trade, Business or Professional Expenses-
(a) XXX
(b) XXX
(c) XXX


(D) WORK-FROM-HOME OR TELECOMMUTING EMPLOYEES.
NOTWITHSTANDING THE FIRST PARAGRAPH OF THIS SECTION,
INDIVIDUALS EARNING COMPENSATION INCOME SHALL BE ENTITLED
A DEDUCTION OF TWENTY-FIVE PESOS. (P25.00) FROM THEIR TAXABLE
INCOME FOR EVERY HOUR WORKED UNDER A WORK-FROM-HOME OR
TELECOMMUTING ARRANGEMENT. PROVIDED, THAT, THE EMPLOYEE
SHALL CERTIFY UNDER OATH, THE NUMBER OF HOURS SERVED
UNDER THE WORK-FROM-HOME OR TELECOMMUTING PROGRAM FOR
THE YEAR, WHICH SHALL BE FILED AS AN ATTACHMENT TO THE
EMPLOYEE'S INCOME TAX RETURN.

ALLOWANCES OR OTHER BENEFITS GRANTED BY EMPLOYERS TO
THEIR EMPLOYEES TO COVER EXPENSES NECESSARY FOR
TELECOMMUTING, NOT EXCEEDING TWO THOUSAND PESOS (P2,000)
PER MONTH, SHALL BE CONSIDERED AS A NON-TAXABLE BENEFIT.
AMOUNTS GRANTED IN EXCESS SHALL BE SUBJECTED TO EXISTING
TAX RULES; PROVIDED, THAT, EMPLOYEES RECEIVING THIS BENEFIT
SHALL NO LONGER BE ENTITLED TO THE HOURLY DEDUCTION FROM
INCOME TAX PROVIDED FOR IN THE PRECEDING PARAGRAPH;
PROVIDED FURTHER, THAT, EMPLOYERS SHALL BE ENTITLED TO AN
ADDITIONAL FIFTY PERCENT (50%) INCOME TAX DEDUCTION FOR
ALLOWANCES GRANTED WITHIN THE SPECIFIED CEILING.

SEC. 2. Implementing Rules and Regulations. — The Department of Finance,
together with the Bureau of Internal Revenue, shall promulgate the rules and
regulations to implement this Act within ninety (90) days from the effectivity of this
Act.

SEC. 3. Separability Clause. —If any provision or part thereof is held invalid
or unconstitutional, the remainder of the law or the provision not otherwise affected
shall remain valid and subsisting.

SEC. 4. Repealing Clause. — Any law, presidential decree or issuance,
executive order, letter of instruction, administrative order, rule, or regulation
contrary to or inconsistent with the provisions of this Act is hereby repealed,
modified, or amended accordingly.


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SEC. 5. Effectivity. — This Act shall take effect fifteen (15) days after its
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Publication in at least (2) newspapers of general circulation in the Philippines.

Approved,