All about taxes for expats in the Philippines

its a huge subject and some main MISSunderstood things about real etate and own business. I have studied Phil laws about such almost ten years to know how things can be done and I know how to make acounting, but I leave acounting and filling tax forms to an acountant in Phils anyway so I dont need to keep order of when things need to be left to BIR.   For business forms need to be filled much more often and concerning VAT crazy detailed, I suppouse to make control of OTHERS, but thats a huge work, so I suppouse BIR almost never check it so its WASTED work for the businesses...  (In Sweden they ask for such detailed info only if they find something in the given overview unclear, suspect that company or when they check up a whole business type.)

Concerning agreements between countries I know only with Sweden.
Plus I know USA have some type of exception for US citizens up to a max amount, which is good for people but on the other hand USA seem to want to tax incomes earned from other countries     according to what some say but I havent red the US laws about it.

I suppouse retirement pay are allways taxed in the country where they were earned, because its normal funding such during work years arent taxed then, the taxation is postponed.  But I dont know about all countries!!!   

Special15 wrote:

As a British expat I do not pay tax to the UK. In fact the British taxman refunded some tax I had overpaid when I emigrated.

Expat but not geting retirement pay  from UK 2020?

Indeed. This comes to mind. 

Tax his land, Tax his bed, Tax the table at which he's fed.

Tax his tractor, Tax his mule, Teach him taxes are the rule.

Tax his work, Tax his pay, He works for peanuts anyway!

Tax his cow, Tax his goat, Tax his pants, Tax his coat. Tax his ties, Tax his shirt, Tax his work, Tax his dirt.

Tax his tobacco, Tax his drink, Tax him if he tries to think.

Tax his cigars, Tax his beers, If he cries tax his tears.

Tax his car, Tax his gas, Find other ways to tax his ass.

Tax all he has, Then let him know, That you won't be done till he has no dough.

When he screams and hollers, Then tax him some more, Tax him till he's good and sore.

Then tax his coffin, Tax his grave, Tax the sod in which he's laid.

Put these words Upon his tomb, 'Taxes drove me to my doom...'

When he's gone, Do not relax, Its time to apply the inheritance tax.

As already noted here there are different countries with different requirements regarding foreign tax obligations.  Likewise, there are different tax structures or exemptions for certain Americans based on the US IRS rules. 

Important examples for me as a disabled veteran are: 

All disability pay a vet receives from the VA and/or social security (SSA-1099), it is not taxable or reportable on any tax return. 

However, these same Americans must be mindful of the FBAR (Report of Foreign Bank and Financial Accounts) when this same tax free money is deposited by:

"A United States person, including a citizen, resident, corporation, partnership, limited liability company, trust and estate, must file an FBAR to report:

a financial interest in or signature or other authority over at least one financial account located outside the United States if the aggregate value of those foreign financial accounts exceeded $10,000 at any time during the calendar year reported."

Source:  https://www.irs.gov/businesses/small-bu … ounts-fbar

American expats with Filipina spouses that purchased a house, may want to see how the Philippine land/house title list him (not as owner but as foreign spouse) and the name(s) on the house TD.  The land TCT most likely will not list the American foreigner as owner but it is possible for the foreigner to own the house and therefore, the separate house TD must be reviewed/considered under FATCA.

This is all part of the US Foreign Account Tax Compliance Act (FATCA) and is an automatic report function when the Philippine bank has a Global Intermediary Identification Number (GIIN).  Upon my last check of the FATCA Foreign Financial Institution (FFI) List database this week, there are 332 Financial institutions in the Philippines with a GIIN (making it highly unlikely any American expat would have a foreign account here that is not part of the FATCA system).  If the US tax payer must file Form 8938, it must be done as part of a tax return.  This requirement is not well understood and a person must be willing to drill down into the details.  I won't give my opinion but just quote the IRS:

"Under FATCA, certain U.S. taxpayers holding financial assets outside the United States must report those assets to the IRS generally using Form 8938, Statement of Specified Foreign Financial Assets. The aggregate value of these assets must exceed $50,000 to be reportable, in general,  but in some cases, the threshold may be higher.  This equates to a house/condo valued at about P2.5M.

The Form 8938 must be attached to the taxpayer's annual tax return.

U.S. taxpayers who do not have to file an income tax return for the tax year do not have to file Form 8938, regardless of the value of their specified foreign financial assets."

Source:  https://www.irs.gov/businesses/corporat … ndividuals

Here is the IRS table that one may use as a final check:  https://www.irs.gov/businesses/comparis … quirements

Americans that may be subject to these rules need to get professional help if they do not understand how to determine their tax obligations... for sure!

Here in the good old USA I have been fortunate to get nice refunds. I have been using Turbotax, which is as good as any account . A nd thats because they employ CPAs. Besides for that I lo-ok for true things that I can write off.. There is no law here that says you have to or should pay the most taxes.

frankanderson wrote:

Indeed. This comes to mind. 

Tax his land, Tax his bed, Tax the table at which he's fed.

Tax his tractor, Tax his mule, Teach him taxes are the rule.

Tax his work, Tax his pay, He works for peanuts anyway!

Tax his cow, Tax his goat, Tax his pants, Tax his coat. Tax his ties, Tax his shirt, Tax his work, Tax his dirt.

Tax his tobacco, Tax his drink, Tax him if he tries to think.

Tax his cigars, Tax his beers, If he cries tax his tears.

Tax his car, Tax his gas, Find other ways to tax his ass.

Tax all he has, Then let him know, That you won't be done till he has no dough.

When he screams and hollers, Then tax him some more, Tax him till he's good and sore.

Then tax his coffin, Tax his grave, Tax the sod in which he's laid.

Put these words Upon his tomb, 'Taxes drove me to my doom...'

When he's gone, Do not relax, Its time to apply the inheritance tax.

Hahahaha....
You must be a fellow countryman
😎

frankanderson wrote:

Indeed. This comes to mind.

Tax his land, Tax his bed, Tax the table at which he's fed.

Tax his tractor, Tax his mule, Teach him taxes are the rule.

Tax his work, Tax his pay, He works for peanuts anyway!

Tax his cow, Tax his goat, Tax his pants, Tax his coat. Tax his ties, Tax his shirt, Tax his work, Tax his dirt.

Tax his tobacco, Tax his drink, Tax him if he tries to think.

Tax his cigars, Tax his beers, If he cries tax his tears.

Tax his car, Tax his gas, Find other ways to tax his ass.

Tax all he has, Then let him know, That you won't be done till he has no dough.

When he screams and hollers, Then tax him some more, Tax him till he's good and sore.

Then tax his coffin, Tax his grave, Tax the sod in which he's laid.

Put these words Upon his tomb, 'Taxes drove me to my doom...'

When he's gone, Do not relax, Its time to apply the inheritance tax.

Will they Whine when they tax his Bar Fine.

As Monty Python made so clear so many years ago; “I think all people standing in water should be taxed”. And that all I have to say about this.

So South Africa does not have a DTA with the Philippines, however there is an exemption for the first R1.24m of foreign earnings as long as you spend 183 days outside of the country in any 12 month period, as long as 60 days is continuous.

At the moment I'm not paying tax in the Philippines but I'm not employed or paid in the Philippines. That will change once my 9G visa is approved, but for now I would be in violation of the terms of my visa if I was employed here.

@ Bazatt,
You make a very good point regarding not working until the 9G is approved.  Hopefully, your AEP process went without a problem.  As a holder of an SRRV, I must also obtain the AEP first to legally work here in the PI.  This same rule applies to holders of SIRV, Treaty Trader visa 9(d), or Special Non-immigrant Visa for executive, advisory, supervisory, or technical positions.

Bazatt wrote:

So South Africa does not have a DTA with the Philippines, however there is an exemption for the first R1.24m of foreign earnings as long as you spend 183 days outside of the country in any 12 month period, as long as 60 days is continuous.

At the moment I'm not paying tax in the Philippines but I'm not employed or paid in the Philippines. That will change once my 9G visa is approved, but for now I would be in violation of the terms of my visa if I was employed here.

Well. Needing work permit not only if employed in the Philippines,
but if you work for a foreign employer during being in the Philippines
as well as geting income from own internet business by working in the Philippines too.

If need to pay TAX or not can be an other question depending of agreements between countrries, income type or if being under a tax free amount.

Enzyte Bob wrote:

frankanderson wrote:

Indeed. This comes to mind.

Tax his land, Tax his bed, Tax the table at which he's fed.

Tax his tractor, Tax his mule, Teach him taxes are the rule.

Tax his work, Tax his pay, He works for peanuts anyway!

Tax his cow, Tax his goat, Tax his pants, Tax his coat. Tax his ties, Tax his shirt, Tax his work, Tax his dirt.

Tax his tobacco, Tax his drink, Tax him if he tries to think.

Tax his cigars, Tax his beers, If he cries tax his tears.

Tax his car, Tax his gas, Find other ways to tax his ass.

Tax all he has, Then let him know, That you won't be done till he has no dough.

When he screams and hollers, Then tax him some more, Tax him till he's good and sore.

Then tax his coffin, Tax his grave, Tax the sod in which he's laid.

Put these words Upon his tomb, 'Taxes drove me to my doom...'

When he's gone, Do not relax, Its time to apply the inheritance tax.

Will they Whine when they tax his Bar Fine.

My accountant says bar fines are not tax deductable even if you're in the country on business. Besides only newbies to the Philippines pay bar fines. Never heard of the 'sneak out' ?

Re ex pats working online, are they required to pay tax to the Phiippne Government ? if they are paid through their own country, working for a Company outside the Philippnes, I would immagine they are required , do they contact the local or nearest taxation office ? what about the guys and girls working on you tube , the vloggers ?

ericcoyle wrote:

Re ex pats working online, are they required to pay tax to the Phiippne Government ? if they are paid through their own country, working for a Company outside the Philippnes, I would immagine they are required , do they contact the local or nearest taxation office ? what about the guys and girls working on you tube , the vloggers ?

I have seen there is a law special about earning through internet.
I dont remember if I have seen/red a law - I have red many laws during almost 10 years - but I have seen texts saying all working in the Philippines demands some kind of work permit.  (Earlier there was at least one exception not needing, but needing a visa which allowed working, but I dont know if there is any exception left.)  Similar concerning all work done in Phils is counted taxable in Phils (if there arent any exception by country to country agreement.) And even if counted in Phils, then can be an amount lower than needed to pay tax at. How much that is depend of how many dependant are living of your income. And I did read an article saying earnings by internet get a higher tax free amount - IF register.  (They have a siminal law with benifits for other businesses, to make black market business owners register their businesses.)

(As I understand it) its NO DIFFERENCE if having a employer abroad. Why would it?     because its no difference in taxing point of view if a business in Phils get paid from customers in Phils or abroad.

If having an employer abroad, I dont know who's responsibility it is to tell Phil BIR.
If having income from own internet business, its sure your own responcibility to tell BIR.
If having Phil employer I believe BOTH are responcible to tell BIR, mainly the employer but you to check the employer have done it.     It isnt rare Phil employers make the deductions before paying the employers, BUT then not pay it further...

Register both at BIR, SSS, PhilHealth and Pag-Ibig. At least the three later can be done online. But you need a TIN-number which you get at BIR.

A NOT Tax difference though is if at least 60 % of the income in a BUSINESS is from abroad, it can get classification as "export business" and such can foreigners own  WHOLE of. (The normal is owning max 40%.)

ericcoyle wrote:

what about the guys and girls working on you tube , the vloggers ?

No difference. Other than if BIR check its easier for them to find such cheat tries     than other incomes through internet.

Thanks for your comments diksha!Take care-

A word of Caution!  In the last 2 years there has been some tuning related to e-commerce in the PI and an expat would be wise to review corporate Negative/Negative B listing update along with the DTI offerings on "micro. small and medium enterprises" (MSMEs), as it relates to the status of the person's citizenship and type of visa. 

For Investment Visa status/requirements see:  Republic Act No. 7042 or the Foreign Investments Act of 1991 (FIA)   [ https://www.lawphil.net/statutes/repact … _1991.html ]

For more "MSMEs" info go to: https://www.dti.gov.ph/covid19/tech-too … 24bac3f229
Additionally, most local city offices are not updated on how to license a home business/e-commerce enterprise outside of the local Sari Sari provisions for citizens here. 

For US Citizens wondering about reportable e-commerce based income?, see: Publication 334 (2020) https://www.irs.gov/publications/p334

For "all persons doing business, specifically those engaged in digital transactions using digital means wondering about reportable e-commerce based income", see: BIR Revenue Memorandum Circular No. 60-2020 (https://legaltree.ph/blogs/bir-orders-o … by-july-31)

This is another area where each expat needs to review the requirements and decide accordingly.  Do not be shocked if you are told you can't get a lic/BIR/Brgy permit approval for an e-commerce business without a "brick & mortar" business address.  Some may think RA 11165 (Telecommuting Act) passed in 2018, takes care of this issue but the key status of being a "Philippine worker" or employee must be understood.  Most expats are not qualified to be considered a worked or employee here (special allowance given to SRRV holders that do the extra processing, not withstanding).

In summary, most expats will not get past the checks and balances in this new Telecommuting Act, without the Department of Labor and Employment (DOLE) reviews/approvals.