Expatriate tax ebook - Philippines

What taxes?

Capital gains tax
Inheritance, estate and gift taxes
Investment income
Local taxes
Real estate taxes
Social security taxes
Stock options
Wealth taxes
Other specific taxes

Capital gains tax
Capital gains from the sale or exchange of stocks in any domestic corporation and gains from the sale of real and other properties located in the Philippines are taxable in the Philippines.

Inheritance, estate & gift taxes
Estate duty is levied on the transfer of the net estate of a foreign national. Gift tax is imposed upon the transfer, by a foreigner, of property by gift or donation.

If the deceased or donor is a non-resident at the time of death or donation, as the case may be, his real and personal property outside the Philippines shall not be included as part of the taxable estate or gift.

Investment income
Interest, dividends and other investment income from sources within the Philippines are taxable.

Local taxes
Foreign nationals who are liable to file income tax returns are required to pay community tax annually in the Philippines. Expatriates owners of condominium units are also liable to real property tax.

Real estate tax
The local real property tax chargeable to expatriates owning condominium units varies depending on where the condominium property is situated. In case of a city or a municipality within Metro Manila, the local real property tax is imposed at the rate not exceeding 2% of the assessed value of the property while it is 1% for properties located in the provinces.

Social security taxes
Social security coverage is compulsory for all individuals working in the Philippines, except for citizens of Austria, Belgium, Canada, France, Korea, Netherlands, Quebec, Spain, Switzerland and United Kingdom, with which the Philippines has existing social security agreements. In such cases, a request for exemption will be filed with the Philippines social security authorities.

Stock options
Income from stock options received as compensation for services rendered in the Philippines is taxable based on the difference between the exercise price and the market value of the shares at the time of their exercise. The Philippines’ tax authority treats the difference either as an additional compensation income subject to the regular income tax or fringe benefits liable to fringe benefit tax.

Therefore, expatriates are advised to seek special advice on the taxation of stock options, especially those that were granted prior to their assignment in the Philippines.

Wealth tax
There is no wealth tax in the Philippines.

Other specific taxes
There are no other specific taxes that apply to expatriates in the Philippines.

Information about Philippines:

• introduction 
• facts and figures
• basis of taxation
• what taxes?
• tax planning opportunities