FREELANCE TAXES

FREELANCE TAXES

Due to this pandemic, there is a huge rise in the growing rates of freelancers. For this reason, the Federal Board of Revenue (FBR) decides that freelance taxes need to be imposed.

This news has currently started a debate on social media. Although, it’s about a rise in a trillion-dollar workforce in the world.

FREELANCE INCOME IN PAKISTAN:

Freelancing is currently growing more in Pakistan. As many freelancers are planning to open up their own freelancing companies.

Which will ultimately provide more jobs and reduce unemployment at higher rates, resulting in increase freelance income.

freelance income

CURRENT SCENARIO:

In current times, the annual IT exports from Pakistani freelancers is about $200 million US with an expected growth rate of 40% annually.

This a result of the previous years’ courtesy programs and campaigns about freelancing and its benefits i.e. DigiSkills, eRozgar, and many mentors and YouTubers that give awareness about freelancing. 

Giving a good reason to FBR to make freelancers pay taxes

do-freelancers-pay-taxes

FREELANCERS DO NOT HAVE ANY FOOTPRINT ON THE ECONOMY:

Firstly, freelancers are not harmful to society as well as the economy in any way. They do not have any “Carbon Footprint” on the economy. Freelancers usually work from their homes.

Secondly, this has brought foreign revenue to the country which improves the ecosystem and strengthens the economy by providing more jobs.  

In conclusion, freelance taxes will only refer to “moving two steps forward then taking one step backward”.

fbr-freelancer-tax

THE CURRENT DEDUCTION/TAXES:

There are a number of freelancers that work on different marketplaces depending on their feasibility.

The marketplaces predominantly include Fiverr, Upwork, Guru.com, and Freelancer.com. Freelance tax from these marketplaces is already 20%.

freelance-tax-form

THE DEDUCTION OF OTHER TAXES IN DIFFERENT MARKETPLACES:

IN UPWORK: Upwork has set its amount of taxes based on the level of projects i.e. $0-$500 there will be 20% given to Upwork and then money withdrawal taxes, wire transfer fees, and then bank fees in Pakistan.

So, from $500 the freelancer could get $425 which is not okay! 

IN GURU.COM: in this marketplace, for instance, if you withdraw $100, $9 should be paid flat for the wire transfer fees.

This not includes the amount they had paid to the marketplace in order to get a job. 

freelance-taxes-2

CONS OF IMPOSING TAXES:

Freelancing is gaining a huge momentum these days and there is a huge rise in the market is seen and prediction about its growth has already been made.

But this rising amount of freelance taxes are breaking that momentum and also put a negative impact on the new freelancers planning to pursue their career in this field. 

In conclusion, freelancing is experiencing its early days and gaining a lot of growth which will increase in the future at higher rates as well the only.

And if we allow the freelancers to work in their respective marketplaces with a low amount of taxes. This will nourish the marketplaces as well.

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