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.