Expatriate tax ebook - Philippines

Tax Planning Opportunities

Expatriates on a short-term assignment to the Philippines may be entitled to income tax relief in accordance with the international tax treaties entered into by the Philippine government. Under most tax treaties, an expatriate who is a resident of a treaty country shall not be liable to income tax on employment exercised in the Philippines if the following conditions are satisfied: 

• the expatriate's stay in the Philippines does not exceed 183 days; and
• the expatriate's compensation is not borne by a Philippine enterprise.

Expatriates are only liable to Philippine income tax only on Philippine- sourced income. Hence, in the case of expatriates working in the Philippines but who are often outside the country to perform their other responsibilities, tax savings can be made if their Philippine- sourced income can be segregated from the income related to their services abroad. However, this requires proper documentation and will require a review of the expatriate’s employment contract.

Employers of expatriates under tax-equalization programmes should study the implication of the programme on their withholding tax liabilities.


Information about Philippines: