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💰 Tax Guide for Foreigners

Understanding your tax obligations in the Philippines

Tax Residency Status

Resident Alien

You're a Resident Alien if you:

  • Stay in Philippines for 180+ days in a year
  • Have a permanent home in the Philippines
  • Intend to reside in the Philippines
  • Have SRRV, 13(a), or similar long-term visa

Tax Obligation: Taxed on Philippine-sourced income only (not worldwide income)

Non-Resident Alien

You're a Non-Resident Alien if you:

  • Stay less than 180 days in Philippines
  • Don't have permanent home here
  • Are on tourist visa
  • Working temporarily (engaged in trade/business)

Tax Obligation: 25% flat rate on Philippine-sourced income

Income Tax Rates (Resident Aliens)

Progressive Tax Rates (2023 onwards)

Annual Taxable Income (PHP) Tax Rate
₱0 - ₱250,000 0% (Exempt)
₱250,001 - ₱400,000 15% of excess over ₱250,000
₱400,001 - ₱800,000 ₱22,500 + 20% of excess over ₱400,000
₱800,001 - ₱2,000,000 ₱102,500 + 25% of excess over ₱800,000
₱2,000,001 - ₱8,000,000 ₱402,500 + 30% of excess over ₱2M
Over ₱8,000,000 ₱2,202,500 + 35% of excess over ₱8M

💡 Good News for Expats

The Philippines does NOT tax worldwide income. As a resident alien, you're only taxed on income earned within the Philippines. Foreign pension, investment income, and income from work performed abroad is NOT taxable.

Types of Taxable Income

Income Type Taxable in Philippines?
Salary from Philippine employer Yes - Withheld at source
Freelance income from PH clients Yes - Must file returns
Rental income from PH property Yes - Must file returns
Interest from PH bank accounts Yes - 20% final tax (withheld)
Foreign pension No
Remote work for foreign employer Gray area - technically no if work is for foreign benefit
Foreign dividends/investments No
Capital gains on PH property sale Yes - 6% of selling price

BIR Registration

Do You Need a TIN (Tax Identification Number)?

You need to register with BIR and get a TIN if you:

  • Earn income in the Philippines
  • Own property in the Philippines
  • Open certain bank accounts
  • Start a business
  • Enter into contracts requiring TIN

How to Get a TIN

  1. Go to BIR Revenue District Office (RDO) where you reside
  2. Fill out BIR Form 1904 (for one-time taxpayers) or 1901 (for self-employed)
  3. Bring: Passport, ACR I-Card, proof of address
  4. TIN is usually issued same day

📅 Key Tax Deadlines

  • April 15: Annual Income Tax Return (Form 1700/1701)
  • Quarterly: Self-employed must file quarterly returns
  • Monthly: Withholding tax remittance (for employers)
  • January 31: Annual registration fee (₱500)

Tax Treaties

Countries with Tax Treaties

The Philippines has tax treaties with many countries that may reduce withholding rates or prevent double taxation:

Major treaty partners: USA, UK, Canada, Australia, Germany, France, Japan, South Korea, Singapore, and 35+ other countries.

Treaty Benefits May Include

  • Reduced withholding tax on dividends (typically 15% vs 30%)
  • Reduced withholding on royalties and interest
  • Exemption from taxation in certain circumstances
  • Foreign tax credits

To claim treaty benefits, you typically need a Certificate of Residence from your home country.

⚠️ Tax Warnings

  • Don't ignore taxes - Penalties are severe (25% surcharge + 12% interest/year)
  • Keep records - BIR can audit up to 3 years back
  • Remote work is complex - Get professional advice if working for foreign clients
  • SRRV doesn't mean tax-free - PH-sourced income is still taxable
  • Property transactions - Capital gains tax and documentary stamps are significant

Retirees & Passive Income

Good News for Retirees

If your only income is foreign pension or foreign investments, you likely have zero Philippine tax liability. The Philippines does not tax:

  • Social Security payments from abroad
  • Foreign pension income
  • Dividends from foreign corporations
  • Interest from foreign bank accounts
  • Capital gains from foreign investments

However, you may still have tax obligations in your home country. Consult a cross-border tax specialist.