OFW’s Income Abroad is Tax-free in the Philippines

Filipino working abroad asked us if the Bureau of Internal Revenue (BIR) will tax their income and dollar remittances to the Philippines. The answer is a big “NO”

If you would be working in the Philippines you would noticed that your salary is deducted with Withholding Tax but for the OFW is no more. This is because it is not allowed by the law that a person would be tax more once in their earnings like salary. The Philippine Government signed “Tax Treaties” to most countries of the world to avoid double taxation in doing business with them; and since the OFW working abroad is already taxed by such country where they were working, then they must not have to be tax in the Philippines. It is for direct tax only because so many indirect tax which is shouldered by all people who step in the land of the Philippines regardless of the nationalities.

What are Indirect taxes paid by the OFW and all Nationalities who step in the land of the Philippines?

1. VAT from goods purchases (12%)
2. VAT for transportation or fares (12%)
3. Custom duties for imported goods subject to tax in the Philippines
4. Airport tax (Direct)
5. Other form of indirect tax

The Philippines has a lower rate of Taxes compare to India or Denmark but it is not fix and in many forms which sometimes you would not noticed that you been taxed.

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68 thoughts on “OFW’s Income Abroad is Tax-free in the Philippines

  1. Its just doesn’t mean that OFW is just a hero for their family but for the entire country as well.. When the global recession came, the Philippine Economy remain stable because of the OFW Dollar remittances to the Philippines. Billions of US dollars remitted by OFW Overseas Filipino Workers worldwide; which sustain the US Dollar Needs of the country. Without OFW, the Philippine economy would become worst than ever but since the OFW is now a business of the country, exporting global forces, then the country’s economy remains stable.

    Overseas Filipino Workers (OFW) are truly hero for the Philippine.

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  3. Im a seaferer for almost 9yrs i bring all my personal eletronics such as laptops speaker and LCD/TV etc. as a OFW we are intitled to pay tax or tax free coz the custom ask all the reciept of all my electronis and some of those are messing co’z i buy those is like 5months ago and all of those is personal use and of course i need to bring home and i pay a tax for those the place tht i bought, as an indibedual i want to clarify this issue. yhank you and regards!

  4. @Cesar P. Gevara:

    In the Philippine Laws for Taxation;

    It is specified that Balik Bayan or OFWs are tax free from its income abroad so it means you dont need to file for income tax yearly as you are already considered paying tax from the country where you are working and what you receive is already net of tax and since the Philippine have Tax Treaties to most countries of the world it could help to avoid Double Taxation.

    For the Custom Duties of the Philippines, you could fine related information here http://www.aseansec.org/14298.htm

    TARIFF AND DUTY RATES

    Types of duty:

    Import Duty

    All imported goods for consumption are subject to the payment of import duty prior to release of unless otherwise exempted in accordance with law by the Department of Finance.

    Value Added Tax (VAT)

    All imported goods are also subject to the payment of VAT at the uniform rate of 10% of the total landed cost. Even if the shipment is duty free, it may still be subject to VAT.

    Ad Valorem Tax

    A few commodities, like passenger automobiles, jewelry, alcohol, tobacco, etc. may also be subject to the payment of Ad Valorem Tax aside from the import duty and VAT. The rate of Ad Valorem Tax depends on the make-up of the commodity such as the engine displacement cost in case of automobiles, or alcohol content in case of beverages.

    Like VAT, Ad Valorem Tax is an internal revenue tax, the collection of which is delegated to the Bureau of Customs in so far as imported goods are concerned. Imported goods subject to Ad Valorem shall be covered by an Authority to Release Imported Goods (ATRIG) issued by the Bureau of Internal Revenue before they can be released from the port.

    Rates of Duty

    The rate of import duty varies depending on the commodity imported, ranging from 3 to 50%. The schedule of rates is listed under Section 104, Tariff and Customs Code of the Philippines (TCCP), as amended.

    Under the unilateral tariff reduction programme, Section 104 has been modified and amended reducing the tariff structure of most commodities to its present level under Executive order (EO) 470; EO 189 which reduced the tariff on capital equipment, EO 204 on textile, textile articles and chemical inputs; and EO 264 which gradually reduces thetariff further to the uniform rate of 3% for raw materials and 10% for finished products by year 2003, and finally to a flat rate by year 2004.

    Payment of Duties

    Duty is paid will all the other taxes and charges due on the shipment prior to release of the goods for consumption. Payments are made through banks which are electronically connected to Customs. Under the automated On-line Release System(OLRS), when the fact of payment made through the banks are relayed to Customs, Customs in turn keys in such payment and lifts the hold status of the shipment allowing the port operator to release the goods to the importer or his representative.

    Duty Concessions

    Certain commodities are exempt from the payment of import duties upon compliance with formalities prescribed and approved by the Secretary of Finance. Section 105, TCCP governs what is termed as Conditionally-Free Importations. Other special laws also provide tax and duty-free treatment on certain importations.

    VALUING YOUR PRODUCTS

    Valuation for Customs purposes is based on the Fair Market Value of the Philippines (FMV), a system peculiar to the Philippines. The basic principle of the FMV is that the dutiable value of an imported article is the cost of SAME, LIKE, SIMILAR articles as bought and sold or offered for sale freely in the usual wholesale quantities. In the ordinary course of trade on the date of exportation or where there is none on such date, then on the date nearest to the date of exportation in the following principal markets in the descending order of preference:

    Exporting country;

    Country of manufacture or origin

    When the dutiable value of the article cannot be ascertained in accordance with the preceding parameter or where there exists a reasonable doubt as to the cost, then the same shall be ascertained as follows:

    SGS-CRF (Societe Generale de Surveillence-Clean Report of Findings);

    Published value;

    Domestic wholesale price of such or similar article in Manila or other principal markets in the Philippines.

    CLEARING IMPORTS

    General information:

    Imported goods coming to the Philippines by air and sea are required to be manifested by the carrier. Upon arrival of the carrier, an inward foreign manifest must be submitted to Customs. There are four major steps involved in the processing of import documents:

    Documentation;

    Examination and appraisal;

    Pre-liquidation and payment; and

    Release of goods from the customs zone

    Documentation

    Philippines Customs introduces Formal and Informal Entry. Goods imported for commercial purposes where dutiable value of which is less than USD 500, personal or household effects not in commercial quantity being brought into the Philippines in passenger’s baggage and mail for personal use will be cleared on Informal Entry. Other shipments will be cleared through a Formal Entry.

    A separate form for Formal and Informal Entry are applied which must also be completed with the bill of lading, packing list, commercial invoice.

    All imported goods are required to undergo pre-shipment inspection (PSI) which will be conducted by the government contracted inspection company in the port of exportation. The goods must also be covered by a Clean Report of Findings (CRF), issued following the PSI, and that should be attached to the entry.

    Customs Duty

    Types of duty that are applicable in the Philippines:

    Import Duty

    Value Added Tax (VAT)

    Ad Valorem Tax

    CLEARING EXPORTS

    General information:

    Goods for importation may be declared by exporters or their authorised agents and they must complete an Export Declaration (ED) form which can be obtained from any Authorised Agent Bank (AAB) of the Banko Sentral ng Pilipinas (BPS). The price disclosed on the ED shall be the fair market value of the current market price of the goods exported on the date of sale.

    Documentation

    ED should be accompanied with the following documents:

    Commercial invoice

    Packing list

    In the case of goods classified under regulated exportation, clearance of goods will be issued by the concerned government agency.

    GOODS WITH PROHIBITIONS, CONTROLS, AND RESTRICTIONS

    These are commodities which are not allowed for importation under existing laws:

    Dynamite, gunpowder, ammunition and other explosives, fire-arms and weapons of war, and parts thereof, except when authorised by law;

    Written or printed articles in any form containing any matter advocating or inciting treason, or rebellion, insurrection, sedition or subversion against the government of the Philippines, or forcible resistance to any law of the Philippines;

    Written or printed articles, negatives or cinematographic film, photographs, engravings, lithographs, objects, paintings, drawings or other representation of an obscene or immoral character;

    Articles, instruments, drugs, substances designed, intended or adapted for producing unlawful abortion, or any printed matter which advertises or describes or gives directly or indirectly information regarding where, how or by whom unlawful abortion is produced;

    Roulette wheels, gambling outfits, loaded dice, marked cards, machines, apparatus or mechanical devices used in gambling;

    Lottery and sweeptakes tickets except those authorised by the Philippines government, advertisement thereof, and lists of drawings therein;

    Any article manufactured in whole or in part of gold, silver or other precious metals or alloys thereof;

    Any adulterated or misbranded articles of food or drug;

    Marijuana, opium or any other narcotics or synthetic drugs;

    Opium pipes and parts thereof, of whatever material; and

    All other articles or part thereof, the importation of which is prohibited by law or rules and regulation issued by competent authority (as amended by Presidential Decree no. 34).

    Other prohibited importations:

    Onions, potatoes, garlic and cabbages, except for seeding purposes; Republic Act (RA) no. 296

    Coffee (RA no. 2712)

    Used clothing and rags (RA no. 4653)

    Toy guns (Letter of Instruction no. 1264)

    TEMPORARY ADMISSION

    In the Philippines, temporary imports are among those referred to as Conditionally-Free imporations wherein certain articles for specific purposes may be allowed to be imported without payment of duties but upon posting of a bond equivalent to 150% of the ascertained taxes and duties due conditioned for the re-exportation thereof within a specified period or the payment of taxes and duties as ascertained.

    Temporary imports which may be availed of by filling an application to this effect with the Department of Finance cover the following:

    Articles brought for repair, processing or reconditioning to be re-exported upon completion of the repair, processing or reconditioning within six-months from acceptance of the entry.

    Personal and household effects and vehicles belonging th foreign consultants and experts hired by and/or rendering service to the government, and their staff of personnel and families accompanying them or arriving within a reasonable time, in quantities and of the kind necessary and suitable to the profession, rank or position of the person importing them, which shall be re-exported within six months after the expiration of their term of contract, extendable by another six months on meritious grounds.

    Articles used exclusively for public entertainment, and for public display or exhibition or competition for prizes, and devices for projecting pictures and parts and appurtenances which shall be re-exported within six months from acceptance of the Entry.

    Articles brought by foreign film procedures directly and exclusively used for making or recording motion picture films on location in the Philippines which shall be re-exported within six months from acceptance of entry, extendable by another six months.

    ATA Carnet

    The Philippines has taken steps to accede the ATA Carnet Convention. Along this line, the Tenth Congress of the Philippines is Senate Bill no. 1380 proposes to amend among others Section 105 of the Tariff and Customs Code of the Philippines by reducing the bond requirement for the temporary release of conditionally-free shipments from the present 150% to not more than 100% of the ascertained taxes and duties.

    OBTAINING REFUNDS/DRAWBACKS ON YOUR DUTY PAYMENT

    All imported fuel used by vessels in foreign and coastwise trade are subject to refund or tax credit up to 99% of the duty paid upon such fuel. Petroleum oils, oils obtained from bituminous minerals, and crude oils used to generate electric power or the manufacture of city gas are subject to refund or tax credit up to 50%.

    Exported articles locally manufactured or produced from imported materials in whole or in part are also subject to refund or tax credit up to 99% of the duty paid on the imported materials so used, including the packaging and labelling thereof provided that there are no locally available substitutes for the imported materials used.

    Provided further that the manufactured articles are exported within one (1) year from the importation of the materials used and that the claim for refund or tax credit shall be made within on (1) year from the exportation of the manufactured articles.

    Section 106 of TCCP governs claims for duty drawbacks.

    LICENSES/BONDED WAREHOUSES

    Articles made in whole or in part of imported materials may be manufactured in bonded warehouse without the payment of duty on the imported materials used in the manufacture of such article, including the containers, brands and labels used in placing it in condition for exportation, if the manufactured product is exported within nine (9) months, extendable by another three (3) months on meritorious grounds, from the date of transfer or conveyance of the imported materials into the manufacturing bonded warehouse.

    The imported materials shall however be covered with a warehousing bond which may be liquidated upon the exportation of the manufactured products.

    The Collector of Customs subject to the approval of the Commissioner of Customs may allow the establishment of manufacturing bonded warehouse which shall be under the supervision of a designated Customs officer. Before commencing business, the operator of the manufacturing bonded warehouse shall file a list of all articles, intended to be manufactured in such warehouse and state the formula of manufacture, including the names and quantities of the ingredients therein. He also files a satisfactory bond for the faithful observance of all laws and regulations governing its operations aside from the warehousing bond put up for the imported materials.

    The Collector of Customs keeps an account of all articles entered into the bonded warehouse. A sworn monthly return, verified by the Customs officer assigned thereat, shall be made by the manufacturer containing details for exportation within the prescribed period, as well as the wastage shall also be subject to the corresponding duties.

    CLEARANCE FOR PASSENGER

    Articles brought in by Filipinos and visitors alike, whether in accompanied or non-accompanied baggage arriving within reasonable time, consisting of used personal effects in non-commercial quantity are not subject to taxes and duties. Other duty-free items are wine and spirits not exceeding two bottles, tobacco and cigarettes not exceeding 200 sticks, cosmetics and perfumery not exceeding one bottle.

    Returning Filipinos known as Balikbayan, those who have stayed abroad for more than a year, may in addition bring in duty-free used electric or electronic appliances, one of each kind.

    FOR THE OFW EXEMPTION FOR TAXATION IT IS JUST FOR THE INCOME TAX BUT NOT FOR OTHER INDIRECT TAXES SUCH AS VAT AND CUSTOM DUTIES. NO BODY IS EXEMPTED FROM PAYING TAXES IN ALL COUNTRIES OF THE WORLD. EVERY TIME YOU PURCHASE ANY GOODS IT IS INCLUSIVE WITH VAT ANYWHERE YOU ARE EXCEPT SAUDI ARABIA.

  5. to jpia,
    thanks for the info, it has been a very long time since i searched for an advice like these. just would like to ask little more. i am an ofw from middleast, and many of us here are having vehicles for our daily work. by the time we decide to resign, we use to sell our cars for a very low low price or even just leave it when nobody wants it. that’s why it came to our mind if we can just bring it to philippines. and if we did, how much will we pay all in all? Please give some advice and also give some tips where to have these processing papers to be initiated.in other words, where will we start?say my car here costs around 1million pesos, how much do you think will it cost all in all.please advice…thanks

  6. For the case of OFW income, since Philippines have DTT (Double Tax Treaty) in most countries so the Double taxation is no longer an issue.

    Income from abroad is already considered taxed abroad and not to be tax again in the country except if you have income also in the Philippines then it would be subject to Taxation.

    For your case, it is not money anymore but car. Base on the Tax system in the country, your car must pay taxes almost the same as how much did you purchased it but…. if your car is already used and depreciated, I think it could be negotiated but I am not so sure for the ruling of used imported used cars because we are in the same situation now. I am also outside the country and I want to buy a slightly used van but I need to make inquiry to the Customs of the Philippines regarding the matter.

    For more information I think, you need to visit the Bureau of Custom website and read their ruling for imported used cars. I think the procedure is also there and if you could not find it then try to email them. Don’t worry the corruption issue in the Philippines is already almost “0″ so you could have the information with no worry that if you will pay something for sure it would reach to the government treasury and not to any pocket.

  7. Sir I would like to ask if how can I bring my used car to Philippines. Right now I am working in UAE and I want to know how much I will pay for tax if ever.

    Thanks and waiting for your immediate response.

    Ms. Len

  8. Hello sir, I’m currently an OFW. I would like to ask if I will bring an lcd/led 37″ or 40″ to Philippines, how much is the tax that will be added let’s say the amount of the lcd is worth PHP30000, if any?

    Thank you sir/

  9. Hi Earl Bunao, I think I know you, sorry. Anyway could I invite you to join our group in hikot.com our link is http://www.hikot.com/index.php?do=/group/jpia/ so soon many JPIA member in the forum will answer your question.

    So for your problem about, 37″ to 40 ” LCD/LED TV is a very small amount but it is already taxable. In some other case, you could avoid paying tax for that. I don’t mean to avoid paying taxes but there are some instances that your case would be consider as non taxable. I would advice you to send it via International Courier or any other Filipino Shipping Company located around you. They are licensed to operate and most of the packages they send to the Philippines from OFW abroad would be consider as non taxable.

    Compulsory taxable good are tobacco & wine but TV its a rare case that you will pay taxes except if it’s value is more than Php 100,000

  10. Hi!

    Regarding OFW tax-free income, does it include all other income that can be derived? For example:
    1. An employee agreed with his employer to Manage another business with say 20% share in profits. This is in addition to his normal monthly salary. Is this extra income taxable?
    2. An OFW based in the Middle East, normally employed receiving monthly salary. In addition, he engaged in online-commerce deriving income. The website is registered outside the Philippines (NOT .com.ph) Is this extra income taxable?
    3. An OFW based in the Middle East won a substantial cash lottery prize (say more than 100K pesos) outside the Philippines. Is this taxable?
    Any reliable or govt tax law-verified response will be highly appreciated. Thanks.

  11. Hi!
    Regarding OFW tax-free income, does it include all other income that can be derived? For example:

    1. An employee agreed with his employer to Manage another business with say 20% share in profits. This is in addition to his normal monthly salary. Is this extra income taxable?

    Answer:

    a) Since most of the Middle East countries do not have Personal Taxation or your Personal income is tax free E.g. Saudi Arabia, then income derived from salary is tax exempted in the host country and since the Philippines exempt all OFW income then all income derived from employment is exempted for Personal Income Tax

    b) Income derived from Business partnership (Managing partner to Manage a certain Business) is taxable in the host country (E.g Saudi Arabia, Bahrain, etc) usually it is taxable to 5% (Dividend). If you are working in any country with Double Taxation Treaty (DTT) with the Philippines, then you don’t need to pay Personal Income tax in the Philippines. DTT is to avoid double taxation from the host country and from the country where you are recognize as Citizen. If you are working in any country without DTT with the Philippines then all of your income is supposed to be taxable in the Philippines but the Tax law of the Philippines exempts OFW from paying Personal Income Tax, then if you are a recognize OFW then you could avail the benefits of Tax Exemption ( You are earning as OFW and as a Business Partner)

    2. An OFW based in the Middle East, normally employed receiving monthly salary. In addition, he engaged in online-commerce deriving income. The website is registered outside the Philippines (NOT .com.ph) Is this extra income taxable?

    Answer:

    a. You are doing an online business as offshore. You do not have any office or registered office in any country as it is an online business. Offshore income is taxable only to which country you are consider as a Citizen. Since you are Filipino, then you are oblige to pay Personal Income tax in the Philippines at the end of the year and you must have to declare you gross income of your offshore business at a rate ranging from 5 -32 %. It is a common law to all countries of the world saying “As a resident, all income derived from any sources around the world is taxable in your country. The exemption is just for OFW income which income derived from Salary. In order for you to pay taxes, you must hire local bookkeeping firm or you may contact us to do it in your behalf.

    3. An OFW based in the Middle East won a substantial cash lottery prize (say more than 100K pesos) outside the Philippines. Is this taxable?

    Answer:

    a. Winning from lottery outside the Philippines is taxable at a rate of 20%
    b. Winning from lottery from PCSO is tax free (Within the Philippines)

    Any reliable or govt tax law-verified response will be highly appreciated. Thanks. (You need to hire a paid consultant to provide you all information with articles and provision of the law) We could not do it here because commenting back is limited. We could not attached any file

  12. Hi jpia,

    Greetings to you. I would like to ask how much will i pay for custom tax when bringing used 40′ LCD TV? I just brought it from a friend last december 2010 & there was no official receipt.
    Hope you can find time to answer my query. Thank You

  13. For OFW who purchased LCD TV price higher than Php 100,000.00 Peso I would advice so there is no hassle at all to shipped it via courier service in your area. International Courier Service will manage all duties for it.

    I experienced it before when I visited Damman, Saudi Arabia, a friend of mine send his TV to the Philippines tax free.

    For your question here, I could not give you definite answer because you did not declare the place of origin of the TV and its value. In order for us to give a good advice, you must have to provide important information.

  14. Hi!

    I am an OFW working here in Kuwait. I would like to purchase a solar system from a company in China and ship it direct to Manila. Pls advise me of the procedure to avoid hussle at the customs in Manila. Will I have to pay duties for the goods and if I have to … what will be the rate? Since the government is encouraging the use of renewable source of energy, is there a possibility that I can import these types of things tax free … if I see people from the Dept of Finance? Will truly appreciate your reply … many thanks in advance!

  15. I think it is easier to purchase PV solar power system within the Philippines than purchasing it abroad and shipping it to the Philippines which could not guarantee assurance from damage during shipment.

    This time the Philippine government doesn’t have special tax ruling for the renewable energy related investments so we could not say that it would be tax free. But if the supplier will ship it through international courier then taxes is already included so you might ask the supplier about the other charges and duties.

    Bureau of customs will act only if you will arrive in the airport with excessive luggage and you would be tax on it but shipment from international courier would be treated differently because they would be tax base on the bulk package or the weight of the imported goods and not by piece.

    You may better visit the Bureau of Customs website and ask them directly.

  16. Sir I would like to ask if how can I bring my used car to Philippines. Right now I am working in Saudi Arabia and I want to know how much I will pay for tax if ever.

    Thanks and waiting for your immediate response.

  17. Hi Jpia!

    I would like to ask if there is any tax (and how much) I have to pay for a 40″ lcd tv that I’ll be bringing home via check-in baggage. The tv is worth around 30, 000 php. I hope you can give me a prompt response. Thanking you in advance.

  18. Read this Yen. if you could not see the link, copy and paste this into a new browser http://somosophils.wordpress.com/2011/06/26/tariff-law-and-duty-rates-in-the-philippines/

    http://somosophils.wordpress.com/2011/06/26/tariff-law-and-duty-rates-in-the-philippines

    BALIK BAYAN FILIPINOS (OFW) FREE TAXES AND DUTIES

    Returning Filipinos known as Balikbayan, those who have stayed abroad for more than a year, may in addition bring in duty-free used electric or electronic appliances, one of each kind. This means if you are OFW, you could bring electronic appliances one of a kind NO TAX… or Free of DUTY.

    You could also see the same information in http://www.asean.org/14298.htm but it is not updated because their VAT is still 10% which is in fact it is already 12%.

    You might have to print this and show to the custom authorities if they will ask for duties because this tariff law is implemented already and you are also OFW.

    For non-OFW who stayed less than 1 year outside the country; you might be tax for electronics goods at 7% Custom Duties + VAT 12% of the total value of the goods.

  19. Hi JPIA,

    I am an OFW in Singapore. My company here has offered me a flexible work conditions. Meaning they will renew my working visa here in Singapore at pay my salary here but will be allowed to work from home (Philippines). I will be going back and forth between Singapore-PHL a several days within the year. For sure I will be paying tax in Singapore because of my working visa and will still be registered with OWWA. Would I still be paying income tax in the PHL also and if so whould the tax I paid in SG be deducted from my tax liabilities in PHL. Thank you.

  20. Hi Drake,

    Let’s wait for Sir Denis Somoso to answer you question. It is his expertise. Anyway, Its sounds complicated for me but I knew Sir Denis will answer this soon. Thank you for raising this question.

  21. Hi JPIA!

    Thank you so much for the help. I’ll print it out. I’ll let you guys know how it goes. Hopefully, all will turn out well. You are a blessing!

    Thanks again and God bless you all! :)

    Yen

  22. Hello Drake..

    PERSONAL TAXATION IN SINGAPORE

    A foreigner is considered resident in Singapore if the individual is physically present or exercises a Singapore employment for 183 days or more during the basis year.

    Personal Taxation Rate

    Taxable income ($) (%)
    Up to 20,000 0%
    20,001 – 30,000 3.50%
    30,001 – 40,000 5,5%
    40,001 – 80,000 8.5%
    80,001 – 160,000 14%
    160,001 – 320,000 17%
    Over 320,000 20%

    Non-resident individuals exercising an employment in Singapore are subject to income tax depending on the number of days in Singapore. Employment income derived from short term employment (not more than 60 days) is exempt from Singapore income tax for the non-resident employee. [SO, YOU MUST HAVE TO COUNT HOW MANY DAYS IS YOUR STAY IN SINGAPORE]

    This exemption does not apply to non-resident company directors, non-resident public entertainers or non-resident professionals including foreign experts, foreign speakers, queen’s counsels, consultants, trainers, coaches etc. Non-resident employees exercising an employment in Singapore for a period of 61-182 days will be taxed at the higher of 15% (without personal tax reliefs) or the progressive resident rates (with personal tax reliefs). Non-residents deriving rental income are taxed at 20%.

    PERSONAL TAXATION IN THE PHILIPPINES

    Income is divided into the following three categories which are taxed separately, as summarised below.
    Compensation employment income: This income is taxed at progressive rates on gross income after deduction of personal and additional exemptions but without deductions for expenses.
    Passive income: This income (i.e. dividends, certain interest, royalties, etc) is subject to final withholding tax only.

    Business income and professional income: This income is taxed at progressive rates on net business income, or income from the practice of a profession, i.e. after deduction of certain specified expenses and any excess of personal and additional exemptions over compensation income.
    For the Overseas Filipino Workers (OFW) who are working outside the Philippines;
    - Income abroad which is already taxed abroad is tax exempted in the Philippines. Regardless if your host country have a Double Taxation Treaty (DTT) in the Philippines or not. As the special tax law to “ALL OFW”
    - OFW who are registered in OWWA which is presently living in the Philippines and continue receiving Salary from Abroad for doing Job online; who’s income or salary from the host country is withheld, then income from the host country is tax exempt in the Philippines (DTT applies) (a) you must provide a tax clearance from Singapore if you will declare your global income to avoid double taxation (b) If you are also earning from your another work or business in the Philippines then you would be tax from you income in the Philippines separately. But, you cannot use your tax deduction in Singapore as another deduction for your Philippines’ income. If you are not filing a tax return in Singapore, then you could file a consolidated report in the Philippines (Singapore + Philippines) and you could deduct your payment of taxes in Singapore.

  23. Hi Denis,

    Thank you for your reply. Just to clarify some things. If I don’t have any additional income’(salary or business) here in the Philippines”, I dont have to file anything with the BIR? Is that correct? For sure I will be paying taxes in Singapore as my working visa and will be exercising employement for more than 183 days. Only my stay in Singapore will be less. Again, thank you in advanced.

  24. hi JPIA,

    i need your advice ASAP, i plan to bring in some of my personal electronics belonging to PH but would like to know if they are taxable when i arrive in PH (NAIA).

    ->laptop (invoice value around PHP 40,000)
    ->DSLR camera (IV around php 50,000)
    ->32 inch LED tv(IV around php 24,000)

    by the way i will be coming from Qatar. i hope to hear from you soonest!

    thanks,

    jam

  25. hi jpia,

    i asked a relative who is an OFW in Singapore to buy me a rather cheap 42″ LCD TV. they’ll be coming back next month. i just want to clarify the clause stating “Returning Filipinos known as Balikbayan, those who have stayed abroad for more than a year..” since Singapore is quite near, they’ve been going back to Philippines rather often (sometimes every 3 to 4 months or for any special occasion). they’re last trip back home was just last March and i don’t know if that “nullifies” the free taxes and duties for OFW. i’m concerned of course on the possible tax that will be imposed on the TV.

    thanks and hope to hear from you soonest.

    regards,
    Mark

  26. BALIK BAYAN FILIPINOS (OFW)

    FREE TAXES AND DUTIES

    Returning Filipinos known as Balikbayan, those who have stayed abroad for more than a year, may in addition bring in duty-free used electric or electronic appliances, one of each kind.

    Mark read this carefully ” one of each kind” and “More than 1 year” regardless of keep on coming in and out as long as the OFW is working morethan 1 year then it could be a valid reason for tax exemption. Print this and show to the custom administration

  27. thanks jpia. i’ll let you know how it goes a few weeks from now.

    more power to you guys!

  28. Dear Fellow OFWs,

    Sharing some informations regarding the TAX FREE for us. This will help us a lot having this privileged that was given to all of us.

    I hope that everyone of us (OFW), been a member of SSS. Its a big help for everyone to have a pension from your contributions someday. Pls. have a time to inquire personally in the SSS offices nearby.

    You won.t regret it. So quick while we are still in abroad.

    Cheers and God bless!

  29. Hi,
    If I am now holding Singapore PR, and no longer a OFW, will I be taxed if I bring a 32″ TV back to Manila?
    Any way to avoid the tax?
    How much would be the tax if that is really unavoidable?
    Thanks in advance

  30. I have worked in China for few years . My daughter in the Philippines is going to take a government exam but one of her requirement is to submit my Income tax return . How can I get this ? If I have to do it in the Philippines , Do I need to go back home and file this ?or can it be done online ? How ?( any idea pls )

  31. I am an OFW here in UAE, I would like to bring home my Pajero, can you give me some details on the procedures or the like, much better a contact person who can assist me.

    Thanks

  32. I found this article in the Bureau of Customs Website, this seems conflicting about OFW getting a tax exempt when bringing electronic items as stated in the “Tarrif Law and Duty RaTes”…

    How are we to reconcile the two guidelines?

    WHAT IS THE EXTENT OF DUTY AND TAX FREE PRIVILEGE OF RETURNING FILIPINOS/BALIKBAYANS?

    The extent varies as follows:

    1. Returning Resident. Personal effects and household goods used by him abroad for at least six (6) months and the dutiable value of which is not more than Ten Thousand Pesos (10,000.00) are exempt from duties and taxes. Any amount in excess of P10,000.00 is subject to 50% duty to the first P10,000.00 exemption across the board as provided for under Section 105 (F) of the TCCP.
    2. Overseas Filipino Worker (OFW). In addition to the privileges granted to Returning Residents as described above, an OFW may be allowed to bring in, duty and tax free Ten Thousand (P10,000.00) of USED home appliances, provided:
    1. the quantity is limited to one of each kind;
    2. the privilege has not been enjoyed previously during the calendar year which fact must be declared under oath by the owner;
    3. the owner�s passport is presented at the port/airport of entry;
    4. any amount in excess of P10,000.00 will be subject to duty and tax.

  33. Hi, my father is an OFW. I will be enrolling in a public university this coming school year and one of the requirements is that i present my parent’s Income Tax Return (ITR). From what i read on your previous posts, OFWs like my father need not pay their annual taxes here in the Philippines, what will i show to the university where i will be enrolling or what will i tell them? Thank you very much, i really need you answers because i don’t want to pay an excessive amount of tuition fee in other private university. I really need this. Thank you! :-(

  34. To Anne:

    We are thankful for your comment here. Please follow our advice as this is a very interesting case.

    1. Since your father a breadwinner of the family which is an OFW then you could ask your mother to file an ITR or income tax return in behalf of your father. You must declare as “0” income as your mother is not earning and your father is tax exempted.

    2. If you are below 18 year old, then you could apply for OFW scholarship. Just visit of POEA or DFA office and apply for OFW scholarship for children of OFW’s who are below 18 year old. OFW scholars would be free for all tuition fees plus an allowance of at least ₱30,000 every semester.

    we invite you to join JPIA at Hikot http://www.hikot.com/index.php?do=/JPIA/

  35. Hi ,

    Im bringing with me 34T pesos worth of LED TV,, though i read from the post that i should be working 1 year as ofw. Im only 6 months in qatar and having a vacation soon, Is my unit tax free still? tnx.

  36. I would be bringing a brand new 32″ TV back home as a present to my mom for Christmas. Will i be taxed for that?

  37. Hi there. I am glad to have found your website.

    I would like to seek information regarding my case. I have been working abroad since 2004 and would like to come back to the Philippines in the near future to settle permanently. What would be my tax obligations to the Philippines if ever i do decide to return and work? I understand that the Double Tax Treaty is not automatic and I need to apply for Tax Treaty Relief. What would be the normal process for this?

    Thank you.

  38. Hi, I am an OFW working in Qatar. I am planning to bring home a 42 inches LED TV worth Php 30,000. Is there any tax I need to pay at the airport?

    Thanks.

  39. BALIK BAYAN FILIPINOS (OFW)

    FREE TAXES AND DUTIES

    Returning Filipinos known as Balikbayan, those who have stayed abroad for more than a year, may in addition bring in duty-free used electric or electronic appliances, one of each kind.

    What if the OFW have not yet reach his 1 year working abroad (just 10 months only) and wants to bring an Electronic Items Like LED TV (worth 33,000.00). Is he required to pay the tax or how?

    Thank you!

  40. Hi,

    I’m an OFW since July 2011 here in Taiwan and I need ITR as one of the requirements in buying a house. How can I get it? (Sorry, I didn’t read the article if ever the answer is already here)

  41. I was just recently employed by a US-based company that has regional offices in Singapore and Hong Kong. My job covers supporting the whole Asia Pacific clients which requires me to travel often. I was placed under the Singapore office but was given a choice to live in the Philippines and is not being deducted for income tax in Singapore. My monthly salary is just being money-transferred to my dollar account. i am probably one the workers bringing in the most amount dollars into the Philippines. Am I suppose to pay taxes in the Philippines?

  42. Since it is mentioned as “1 Year” OFW working abroad, then it is not applicable to you because you only worked for 6 months. To avoid duty issues; I may advice you to send your LED TV via courier. The Courier company will pay all necessary tax for it as they are the expert in the matter then you are safe. The same thing if you will carry it with you; you must have to declare it as check-in baggage and the same handling system applies.

  43. I think you dont need to complicate the issue. The same as what you did when you are in the Philippines before. You must file ITR every end of the year and if needed to declare your SALN then do it. The government will not ask you to pay previous year’s taxes as long as you could show documents that you are an OFW or you are staying abroad.

    It is automatic according to the Law you would consider only as a resident of the country if you are living in such particular country with its particular limits to be called as resident or non resident.

    You could ask OEC or other documents to prove that you are working abroad.

  44. If you could not understand the taxation law that we keep on reiterating how are you going to deal with the issue then my advice is send it via courier.

  45. They know about it. OFW is not required to secure ITR. I am an OFW also. When I ask the bank for my car financing they told me that OFW is exempted from showing the ITR but you are not exempted from showing your Job Contract or Certification from the company abroad showing your salary.

  46. Try to analyze the following cases that would apply

    1. OFW is exempted from paying Tax – in your case you are exempted if you are a legal OFW
    2. If you think you are earning much without paying tax then it is your initiative to help the Philippines government as every individual must have to pay tax
    3. Case 3. This is very important. If you are living in Singapore for 182 days and above then you must have to pay Taxes in Singapore. You must declare your worldwide income to Singapore as you could be consider as resident in Singapore. BUT… If you are living in the Philippines regardless if you are OFW or NOT as long as you are considered as a resident of the Philippines for staying 182 days – up then you must declare your worldwide income to the BIR as it is a requirement.

    The Term OFW basically means people who are working abroad and staying abroad. In your case you are just like a consultant or an outsourced professional from a foreign firm which you are allowed to stay in the Philippines which taxability of your all income must be declare in the Philippines

  47. hi Derick,

    Please be advised Singapore don’t deduct income tax right away, they will give your monthly salary completely and by January or Feb the following they will be a process where they will inform you of your tax liability which you have to pay. This will be dependent also if you where issued a working visa in Singapore even if you stay most of the time in the Philippines. (this may have to something to do on how they declare your position in their accounting books).

  48. @jpia~I’d like to know if dollar payment shall be made in a bussiness transaction in the philippines, instead if peso, will the dollar payment be subjected to 12% VAT?
    THANKS.

  49. @Pam Ferrer: If you are using US Dollar for payment while inside the Philippines; any transaction is still subject to VAT of 12%. There is no exemption regardless of the currency being used. The equivalent value of the US Dollar into Peso could be an alternative also in computing the VAT of 12%.

    It is also mandated to use the default currency which is the Philippines Peso in any business transaction while inside the Philippines.

  50. I understand that OFWs are exempted from paying taxes. But is it not required by law that they still submit the BIR Form 1703? Or Annual Income Information Return for Non-Resident Citizens / OCWs and Seamen (for foreign-sourced income)….

  51. @jpia~how about if it’s the other way around, the client paying in dollar, will it still be taxed? I was informed that if they’ll be paying dollar then it will not be taxed. I’m sorry, but I’m confused. Thank u so much.

  52. @Pam: US Dollar is not the oficial currency of the Philippines. It is a mandate by the law that transactions happened in other currency must be converted into Philippines Peso equivalalent. The logic is if paying USD is exempted from tax then everybody will use USD in paying transactions to be exempted from taxes.

    Initiative is needed. Do not be confuse as the law mandated that all sales of goods and services must be subject to VAT of 12%. The transactions happened in the Philippines and the Philippines law must be strictly followed.

    How to computed VAT? Convert the value into Peso and that’s it. If they will not pay VAT then you must obliged to pay VAT for them. BIR will check your official receipt then charged you including VAT.

    Remember in the Philippine law that you or anyone who are residents dealing business are an agent of taxes for the Philippines government and it is every one’s obligation to report the VAT collected to the BIR. I hope it is clear now.

    Everything you do must be favorable to the country and not to any other aliens, as a Filipino do your duty as a citizen of the country.

  53. @Del. the logic is here. How could you report a BIR form 1703 if you are outside the country? I maybe in doubt if in your case, you are an OFW or not.

    In favor of you as OFW, the host country already paid your taxes to their country and the Philippines government make it in general that OFW are tax exempted even though working to the other country without DTT or Double Tax Treaty agreement with the Philippines.

    Supposed to be OFW who are working in the country without DTT with the Philippines must have to pay taxes both host country and the Philippines but the Philippines government is so lenient in giving consideration.

    As long as you are documented OFW then you are tax exempted. If you are not a documented OFW but you are not a resident of the Philippines for more than 182 days because you are an alien of the other country, then you will pay taxes to your host country and you could be consider as Tax exempted in the Philippines because you are no longer a resident of the Philippines.

  54. Hi, OFW here. I just want to ask, do i have to pay any taxes when i go back to philippines? Because I will be bringing my personal electronics such as my laptop and my camera(dslr) and some a few lenses. Also, does souvenir items like tshirts for “pasalubongs” or something alike counted as dutiable and must be paid for taxes etc.? Thanks in advance.

  55. Thank you first of all for sharing very helpful information. I read most of the comments above and though some may have similar questions/cases, you still give your answers without hesitation.
    I understand that OFWs are tax exempted in the Philippines due to the DTT. Is it still required to file with BIR? Just for the purpose of filing, not necessarily taxing. My husband and I are both registered OFWs. Some institution in the Philippines require an ITR and we don’t have that since we are not filing. If in the future, I would need to declare my SALN, say if I run for public office, I will not have any ITR to show. Will that have a bearing with proper declaration of SALN if no ITR is used as reference of income earned?

  56. Hi,,, im OFW,,, i would like to ask if there is taxes to paid in philippines if i bring 32inch LED samsung tv? some kabayan said no need to pay taxes,,, others said have to paid 12% of what is the price of the LED tv… please help me to clear this,,, i hope you help me… thank you so much…

  57. Hi.. Im a son of an OFW.. What if I am asked to present an ITR form? What would I present? :) thanks

  58. Hi, I need some advise before accepting a job offer, A agency in Malaysia is hiring me for a Job back home, They will be paying my salary and will be transferred to my account. Do I have to pay income tax since their client is a base in the Philippines.

  59. Good day! Your sharings are very helpful to all of us. Just as others have been inquiring, kindly provide advise. I am working as an OFW in the Middle East for mor than 6 years now. My wife (a plain housewife with no source of income) and I went to a bank planning to apply for a housing loan in the Philippines. One of the Bank’s requirement is to provide a W2 or ITR of borrower working abroad. My children are all under age and our family’s only source of income depends only on my salary as an OFW. Kindly advise…

  60. Hello,
    I’m an OFW working in Dubai for 6 years and planning to go back to Philippines for vacation. I’ll be carrying with me gold jewelries weighing 30 gm and amounting to 60k pesos as a present to my parents. Am I going to pay any tax for these items???Thanks

  61. James,

    Just think where is your permanent residence. If you are in the Philippines then you must pay your taxes in the Philippines.

    If you are outside the Philippines for more than 183 days for job purpose and you are earning abroad then you are required to pay taxes in your host countries.

    To all readers: If you are living in the Philippines and you are reporting your income in the Philippines it means that your income worldwide wherever is the source of income must be reported in the Philippines because you have a permanent residence status in the Philippines. You are also required to pay taxes in the Philippines.

    Note: If some of your income derived from the other countries with DTT or Double Tax Treaty with the Philippines and they withheld a certain amount of your income then at the end of the year, it could be deductible to your Tax Payable provided that you could present the Withholding Tax Certificate from the country.

    Withholding Tax is considered as advance payment of tax and would be deductible to your final tax.

    Exemption: Withholding tax withheld from the other foreign country without DTT with the Philippines is not acceptable as deductible advance payment tax in the Philippines

  62. If you are carrying imported items for commercial purpose then you are required to pay tax but if it is for personal use then there could be an exemption to pay tax.

    While you are onboard, the Flight stewards would be distributing form from BOC, read it if you are carrying a certain amount of money which is required to be declared then you must declare it to the BOC and you must pay taxes

  63. Just inform the bank that you dont have ITR because you are OFW and they will require you other requirements such as Job contract, proof of remittance and etc.

    Just visit the bank and ask them for alternative requirements for OFW

  64. Hi JPIA!

    Can you please give us a link to a website that says that we OFW dont need to pay taxes for bringing in Electronics or Appliances so that we can show it when we go for vacation. Just to be on the safe side because you know most of the people especially on the airport can use this in taking advantage of someone that is not aware of such law. THANK YOU!

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