OVERSEAS FILIPINO WORKERS, CONTRACT WORKERS OR MIGRANT WORKERS: SUBJECT TO PHILIPPINE INCOME TAX?

Overseas Filipino Workers; Overseas Filipinos; Filipino Overseas; Filipinos abroad; Filipinos working abroad; Filipino Migrant Workers; Overseas Contract Workers; Seaman or Seafarer; Overseas Contract Workers in Canada; Overseas Contract Workers in USA; Overseas Contract Workers in UAE; Overseas Filipino Workers in Singapore; Rights of Overseas Filipino Workers; Rights and obligations of Overseas Filipino Workers; OFWs in Hong Kong; OFWs in Taiwan; OFWs in Dubai; OFWs in Japan; OFWs in United Kingdom; Life of a Seaman; OFWs in Australia; OFWs in New Zealand; OFWs in Israel; OFWs in Saudi Arabia; Filipino Seafarers or Seamen; Rights of Filipino Seafarers or Seamen; Pinoy Seafarer or Seaman; Overseas Filipino Workers in Middle East; Tax liability of a Filipino Seaman or Seafarer; OFWs in Qatar; Working abroad; Life as a domestic helper abroad; life as an overseas migrant worker; plight of overseas contract workers; rights of OFWs; tax privileges of overseas Filipino workers; OFW and Philippine Income Taxation; Are OFWs taxable on their income? Are the income of overseas Filipino workers taxable in the Philippines? Tax exemption of overseas Filipino workers; Overseas Migrant Workers are exempt from income tax on their income earned abroad; The National Internal Revenue Code provides that: “Section 23. General Principles of Income Taxation in the Philippines. – Except when otherwise provided in this Code: xxxxx (C) An individual citizen of the Philippines who is working and deriving income from abroad as an overseas contract worker is taxable only on income derived from sources within the Philippines: Provided, That a seaman who is a citizen of the Philippines and who receives compensation for services rendered abroad as a member of the complement of a vessel engaged exclusively in international trade shall be treated as an overseas contract worker.

REVENUE REGULATIONS NO. 1-2011

SUBJECT: TAX TREATMENT OF INCOME EARNINGS AND MONEY REMITTANCES OF AN OVERSEAS CONTRACT WORKER (OCW) OR OVERSEAS FILIPINO WORKER (OFW)

TO: All Revenue Officials, Employees and Others Concerned

Section 1. Objective

These Revenue Regulations are issued to clarify who are considered as OCW or OFW for taxation purposes and to define the tax treatment of their income earned within and without the Philippines of such persons considered as an OCW or OFW.

Section 2. Definition of an OCW

OCW refer to Filipino citizens employed in foreign countries, commonly referred to as OFWs, who are physically present in a foreign country as a consequence of their employment thereat. Their salaries and wages are paid by an employer abroad and is not borne by any entity or person in the Philippines. To be considered as an OCW or OFW, they must be duly registered as such with the Philippine Overseas Employment Administration (POEA) with a valid Overseas Employment Certificate (OEC).

Seafarers or seamen are Filipino citizens who receive compensation for services rendered abroad as a member of the complement of a vessel engaged exclusively in international trade. To be considered as an OCW or OFW they must be duly registered as such with the Philippine Overseas Employment Administration (POEA) with a valid Overseas Employment Certificate (OEC) with a valid Seafarers Identification Record Book (SIRB) or Seaman's Book issued by the Maritime Industry Authority (MARINA).

Section 3. Tax Treatment

A) Income Taxes:

However if an OCW or OFW has income earnings from business activities or properties within the Philippines, such income earnings are subject to Philippine income tax…”

C) Other Taxes and Fees:

Section 35 of Republic Act No. 8042 otherwise known as the "Migrant Workers and Overseas Filipinos Act of 1995," as amended by Sec 22 of Republic Act. 10022, provides that all migrant workers shall be exempt from the payment of travel tax and airport-fee upon proper showing of proof entitlement (i.e. Overseas Employment Certificate [OEC]) issued by the POEA.1avvphi1

The remittances of all OCWs or OFWs, upon showing of the OEC of valid Overseas Workers Welfare Administration (OWWA) Membership Certificate by the OCWs or OFW beneficiary or recipient, shall be exempt from the payment of documentary stamp tax (DST) as imposed under Section 181 of the National Internal Revenue Code of 1997, as amended. For this purpose, in addition to the original copy, a duplicate copy or a certified true copy of the valid proof of entitlement referred to above shall be secured by the OCW or OFW from the POEA or OWWA, which shall be held and used by his/her beneficiary in the availment of the DSAT exemption.

In case of OCWs or OFWs whose remittances are sent through the banking system, credited to beneficiaries or recipient's account in the Philippines and withdrawn through an automatic teller machine (ATM), it shall be the responsibility of the OCW to show the valid proof of entitlement when making arrangement that for his/her remittance transfers.