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

  1. As an individual

ü  What are my tax liabilities

ü  How do I pay and file my income tax return?

ü  Income payments to a non-resident individual subject to final withholding tax

     2. As a foreign corporation

ü  What are my tax liabilities?

ü  How do I pay and file my income tax return?

ü  Income payments to a non-resident foreign corporation subject to final withholding tax

Application and claims under tax treaties

       A resident taxpayer of a country with which the Philippines has an effective tax treaty who has earned an income from sources within the Philippines may avail of the relief/s provided by the said treaty so as to avoid double taxation. Tax relief on certain types of income may either be in the form of tax exemption or a preferential tax rate. To date, the Philippines has concluded tax treaties with 43 countries

        Below is a guide on tax treaty relief availment by a non-resident with income from sources within the Philippines – types of income covered by tax treaties, who can claim and how to claim relief -

What are the types of Philippine income that may be subject to a preferential tax treaty rate and/or tax exemption under effective Philippine Double Tax Agreements (DTAs)?

a.   Preferential rates:

Dividends;

Interests;

Royalties;

Profits of shipping and air transport in international traffic; and

Remitted branch profits.

b.   Exemption:

Business profits;

Capital gains;

Income from employment;

Income from independent professional services;

Income of athletes and performers supported by public funds;

Income from government service;

Pensions;

Income of visiting teachers and researchers;

Allowances and remuneration of visiting students and trainees; and

Other income.

Who can apply for a tax treaty relief?

          Non-resident individuals or corporations with income derived from sources within the Philippines and whose country of residence has an effective DTA with the Philippines or their duly authorized representatives may apply for a tax treaty relief.

How to avail of tax treaty relief?

  1. For dividendsinterests and royalties –

The preferential tax treaty rates for these incomes shall be applied and used outright by the withholding agents upon submission of a Certificate of Residence for TaxTreaty Relief (CORTT) Form by the non-resident pursuant to Revenue Memorandum Order (RMO) No. 8-2017, which took effect on 26 June 2017.

2. For any other income, such as, but not limited to, business profits, capital gains tax, income from services, et. al. –

For Philippine-source income other than dividends, interests and royalties, the provisions of RMO No. 72-2010, which prescribes the guidelines on the processing of Tax Treaty Relief Applications (TTRAs) pursuant to existing Philippine tax treaties, shall apply; thus, securing a ruling is still required.

 Where to apply TTRA?

              All TTRAs shall only be submitted to the International Tax Affairs Division (ITAD).

Requirements for applying TTRA?

  • The non-resident individual or corporation must first secure a Taxpayer Identification Number (TIN) from Revenue District Office (RDO) No. 39- South Quezon City;
  • Duly accomplished TTRA BIR Form No. 0901
  • General and Specific Documentary Requirements enumerated under RMO No. 72-2010.