Expatriate tax ebook - Philippines

Facts and Figures

Pre arrival procedures
Employment visas
Tax year
Tax returns and compliance
Income tax rates
Sample income tax calculation

Pre arrival procedures
Expatriates are required to obtain a work visa before taking up employment in the Philippines. It is therefore important that the expatriate’s employment contract and benefit package is structured tax efficiently before the contract is submitted to the Philippines immigration department.

Employment visas
Those seeking employment in the Philippines must secure an Alien Employment Permit and apply as non-immigrant under the pre-arranged employment visa. If the expatriate’s spouse and dependent family members relocate to the Philippines, they are required to secure dependent visas, and must also apply for a separate employment visa if they wish to work in the Philippines.

Tax year
For individuals, the Philippines tax year runs from 1 January to 31 December.

Tax returns and compliance
15 April is the due date for filing tax returns and paying the tax due. Subject to fulfilling certain conditions, some foreign nationals are no longer required to file income tax returns. The certificate of withholding tax issued by the employer shall be regarded as substituted filing of the expatriate's income tax return. Requests for extensions to file are not generally favoured.

Income tax rates
The tax rates for 2011/12 are for:

(a) Resident or non-resident aliens engaged in trade or business - graduated rates from 5% -32%
(b) Non-resident aliens not engaged in trade or business – final tax of 25% on gross income.
(c) Alien employees of regional or area headquarters, regional operating headquarters of multinational companies, offshore banking units, and foreign service contractors and subcontractors in petroleum operations in the Philippines - 15% on gross income.

Sample income tax calculation

2011/2012		Philippine Peso (P)
Employment income		1,400,000
Benefits provided	home	240,000
	host	200,000
	total benefits	440,000
Gross income		1,840,000
Less
Social security and other mandatory contributions		(10,500)
Personal allowance		(50,000)
Taxable income		1,779,500
Income tax due
On the first 500,000		125,000
On the excess 500,000 (32%)		409,440
Total tax due		P534,440

Information about Philippines:

tax planning opportunities

Last updated 29 June 2011

This information has been provided by Punongbayan & Araullo, the Grant Thornton International Ltd member firm in the Philippines, and is for informational purposes only. Neither Punongbayan & Araullo nor Grant Thornton International Ltd can guarantee the accuracy, timeliness or completeness of the data contained herein. As such, you should not act on the information without first seeking professional tax advice.

Grant Thornton International Ltd and the member firms are not a worldwide partnership. Services are delivered independently by the member firms.
Disclaimer

Contact us

For further information on expatriate tax services in the Philippines, please contact Lina Figueroa.

Related websites

Bureau of Internal Revenue (BIR)
General government information

Related publications

“Taxation of internationally mobile employees” published by P&A in Focus (Vol. 1, Issue 02, May 2006).

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