Practice question
Mara is a salaried employee and separately runs a qualifying independent consultancy. She validly elects the 8% option for the consultancy under the mixed-income rules. She proposes applying 8% to her salary too, since both activities involve expertise. Which treatment is correct?
- The salary remains subject to the graduated compensation-income rules; the valid 8% election concerns the qualifying independent activity
- All expertise-based income must be taxed at 8%
- Employment becomes independent practice whenever the worker also has clients
- The salary becomes a tax-free dividend
- The consultancy election repeals the compensation rules
Legal references
- NIRC Section 24(A), as amended by RA 10963, Section 5: https://lawphil.net/statutes/repacts/ra2017/ra_10963_2017.html
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