As non-resident earning income in the Philippines, what do i need to know?

         As an individual

         As a foreign corporation?

Application and claims under the tax treaties.

If a nonresident has income source in the Philippines and is a resident in another country, it may be liable to pay tax in both countries under their tax laws. To avoid 'Double Taxation' (DT) in this situation, the Philippines has negotiated DT treaties with 39 countries. A nonresident in another country with which the Philippines has a DT treaty may be able to claim exemption or partial relief from the Philippines tax on certain types of income from Philippines sources. The precise conditions of exemption or relief can be found in the text of the relevant treaty.

Below is a guide that will give you an overview of Double Taxation Relief claims, mainly by nonresident with Philippine income sources - who can claim and how to claim, and the types of income covered by the treaties.

  • Who can apply for Tax Treaty Relief Application (TTRA)?

Non-resident Individuals and Non-resident Corporations or their duly authorized representative who are income recipients from the Philippines and whose country of residents has an effective tax treaty with the Philippines.

  • What are the type of Philippine income maybe subject of preferential tax rate/and or tax exempt under the DT treaty?

a. Preferential tax rates:

Dividends, Interest, Royalties and Shipping and Air Transport.

b. Tax Exempt:

Depending on the provisions of the DTA, you may claim the benefits of an exemption from the tax on income for personal services, teachers, researchers, artistes, athletes, students, trainees, directors fees, pensions, government service, gains from the sales of shares/alienation of property and independent personal services not rendered more than 183 days.

  •  Where to apply TTRA?

All tax treaty relief application shall only be submitted to and received by the International Tax Affairs Division ("ITAD")

  •  Requirements for applying TTRA?

A non-resident individual or corporation must first secure Tax Identification Number for TTRA from Revenue District Office No. 39 before filing the TTRA in ITAD.

Duly accomplished TTRA BIR Forms 0901 (back to back) with the attachments prescribed document under Revenue Memorandum Order No. 72-2010 or documents written at the back portion of the BIR Form No. 0901.