The Harsh Truth About Freelancing in the Philippines
It’s been a while since I last shared my thoughts here; August of 2024, to be exact. Life has been moving fast, and like many freelancers, I’ve been navigating the highs and lows of this unpredictable industry. If you’ve been following my blog, thank you for sticking around despite the gaps between posts. Today, I return with a topic that directly impacts many of us: the true state of freelancing in the Philippines, especially with new challenges like digital product taxation.
I've been in the freelancing industry since 2019, experiencing firsthand both sides; being a client and a freelancer. If you think all freelancers are thriving, let me tell you: those showcasing success on social media represent only a small fraction. The reality is that most freelancers' earnings are inconsistent, heavily dependent on clients and available tasks.
In fact, many struggle to break even, as expenses for internet, electricity, devices, and digital tools often outweigh their income. Some have had to give up entirely, unable to sustain the financial demands of freelancing. I consider myself fortunate to have been given the opportunity to showcase my skills with my current employer, and I’ve made sure to maximize that chance. Through dedication and teamwork, we've achieved promising results, and for that, I am incredibly grateful.
However, I now find myself returning to freelancing despite the challenges. One of the biggest hurdles is the newly imposed 12% Value-Added Tax (VAT) on digital products and services. This tax applies to essential tools like cloud storage, online marketplaces, digital advertising, and subscription-based platforms—resources that freelancers, MSMEs, and real estate professionals rely on daily to operate efficiently.
Digital Taxation and Its Impact
The Bureau of Internal Revenue (BIR) introduced Revenue Regulations (RR) No. 3-2025 and RR No. 14-2025, which mandate the 12% VAT on digital services used in the Philippines, including those provided by foreign companies. This regulation affects platforms such as Netflix, Spotify, Google Drive, AWS, Facebook Ads, and Airbnb, making digital tools more expensive for freelancers and businesses.
According to the Cebu Chamber of Commerce and Industry (CCCI), these taxes will increase costs for businesses and limit accessibility to digital services, making it harder for MSMEs to thrive. Many small businesses depend on digital services for marketing, customer engagement, and operations. With the increased cost of digital tools, MSMEs may struggle to remain competitive, especially against larger corporations that can absorb these expenses more easily.
Similarly, startup real estate businesses are heavily affected. Many rely on digital platforms for property listings, virtual tours, customer relationship management (CRM) software, and online advertising. With the 12% VAT now applied to these digital services, the cost of running a real estate startup increases significantly. This makes it harder for new businesses to establish themselves in a competitive market, where larger firms already have the advantage of established networks and resources.
For real estate professionals, digital tools are essential for marketing properties, managing leads, and communicating with clients. Platforms like Facebook Ads, Google Ads, and CRM software are now subject to VAT, making advertising and client management more expensive.
Additionally, many real estate professionals use cloud-based services for document storage, contracts, and virtual meetings. With the new tax regulations, these services now come at a higher cost, adding financial strain to independent agents and brokers who rely on digital tools to streamline their work.
A Call for Strategic Tax Allocation
Freelancing, MSMEs, and real estate professionals all face similar challenges in the Philippines. In other countries, governments recognize the value of their workforce, investing in training and resources that help them succeed.
I can only hope the Philippine government will do the same—acknowledging the contributions of freelancers, MSMEs, and real estate professionals and creating a system that helps rather than hinders their growth. If these taxes are truly necessary, I hope they will be strategically allocated to improve digital infrastructure, education, and innovation, rather than simply adding to the financial strain of independent workers and small businesses.
