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Essential Tax Guide for Foreigners Working in the Philippines

Foreigners working in the Philippines are legally required to pay taxes on their Philippine-sourced income, a policy strictly enforced by the Bureau of Internal Revenue (BIR). Your specific tax obligations depend on your tax residency status:

Tax Status

Stay Duration

Income Taxable

Tax Rate

Resident Alien (RA) or Non-Resident Alien Engaged in   Trade or Business (NRA-ETB)

Over 180 days in a calendar year

Income sourced within 

the Philippines.

Graduated Rates (0% to 35%).

Non-Resident Alien Not Engaged in Trade or Business   

(NRA-NETB)

180 days or less in a calendar year

Gross income sourced 

within the Philippines.

Flat 25% final withholding tax.

 

Key Compliance Steps

  1. Secure an Alien Employment Permit (AEP): Mandatory work authorization from the Department of Labor and Employment (DOLE).

  2. Obtain a Taxpayer Identification Number (TIN): Required for all working foreigners as a prerequisite for AEP/work visa processing.

  3. Withholding Tax: Your Philippine employer is responsible for withholding the correct income tax from your salary and remitting it to the BIR.

  4. Annual Filing: RA and NRA-ETB must generally file an Annual Income Tax Return (ITR) by April 15 of the following year.


Critical Considerations

  • Tax Treaties: The Philippines has Double Taxation Agreements (DTAs) with many countries. You may be eligible for reduced tax rates or exemptions; consult a tax professional to avail of these benefits via the BIR's procedures.

  • Situs of Taxation: Income from services rendered while you are physically present in the Philippines is generally considered Philippine-sourced and, therefore, taxable.


Reference/Source: For official information and forms, refer to the websites of the Bureau of Internal Revenue (BIR) and the Department of Labor and Employment (DOLE). Professional tax advice is highly recommended to ensure full compliance.