Working outside the Philippines.

A.What do I need to know about my taxation if I am working outside the Philippines?

Taxation of Foreign-Source Income

B.  What is the taxation on income derived from sources outside the Philippines?

Resident citizens and domestic corporations are taxable on all income derived from worldwide sources and it is not unlikely that the income derived from sources outside the Philippines may be exposed to the risk of international juridical double taxation, i.e., the imposition of comparable taxes in two (or more) States on the same taxpayer in respect of the same subject matter and for identical periods.

To avoid or at least minimize the risk of double taxation, these taxpayers may avail of the benefits provided under the valid and effective tax treaty, which may either be in the form of tax exemption or a preferential tax rate.  Subject to the limitations provided under the Tax Code, the appropriate amount of taxes paid in the foreign country may be used as a credit against the Philippine tax payable in respect of that income. 

C.  How may a resident citizen or domestic corporation avail of treaty benefits?

In order to avail of treaty benefits, the resident citizen or domestic corporation must submit a Tax Residency Certificate (TRC) to the tax authority of the foreign jurisdiction to prove that he/she/it is a resident of the Philippines and is, therefore, subject to tax in the Philippines on the basis of his/her/its worldwide income by reason of citizenship, residence or place of incorporation, as the case may be. 

D. How do I apply for a TRC?

A TRC shall only be issued to a resident citizen or domestic corporation with an existing Tax Identification Number (TIN) who (that) has complied with the following documentary requirements:

For Individuals

For non-individuals

E.  What BIR Form should be accomplished?

The taxpayer-applicant should completely and truthfully accomplish BIR Form No. 0902.

F.  What is the effect of failure to obtain a TRC?

Taxpayers who fail to secure a TRC shall not be allowed to claim foreign tax credits in excess of the appropriate amount of tax that is supposed to be paid in the source state had the income recipient invoked the provision/s of the treaty and proved his/her/its residency in the Philippines (Section 5, Revenue Memorandum Order No. 43-2020).

G.  Related revenue issuances

Revenue Memorandum Order No. 51-2019

Revenue Memorandum Order No. 43-2020