Non-residents who are engaged in business or a trade and are receiving income from sources within the Philippines are required to file an income tax return covering income from the previous taxable year on or before the 15th of April of the current year.
BIR Income Tax Rates
The BIR Income Tax Rates from 2018 to 2022 are as follows:
|
Taxable Income Bracket |
Income Tax Rate |
|
0 to 250,000 PHP |
0% |
|
250,000 to 400,000 PHP |
20% of the excess over 250,000 PHP |
|
400,000 to 800,000 PHP |
30,000 PHP plus 25% of the excess over 400,000 PHP |
|
800,000 to 2,000,000 PHP |
130,000 PHP plus 30% of the excess over 800,000 PHP |
|
2,000,000 to 8,000,000 PHP |
490,000 PHP plus 32% of the excess over 2,000,000 PHP |
|
8,000,000 PHP and above |
2,410,000 plus 35% of the excess over 8,000,000 PHP |
For non-residents, these same graduated rates apply per bracket, however non-resident aliens who are not engaged in business or trade in the Philippines are subject to a flat rate of 25% based on their gross income.
Tax compliance requirements upon departure from the Philippines
Non-residents who have acquired resident status for tax purposes in the Philippines will retain their tax status until the moment of departure from the country.
No special requirements are observed for tax purposes upon leaving the country.
Tax treaty relief application
Non-resident taxpayers originating from a country with which the Philippines has an effective tax treaty are allowed to avail of reliefs stated in the treaty in order to avoid double taxation. Tax relief applies to several types of income, and is available in different forms such as tax exemption or a preferential tax rate. The Philippines currently has tax treaties with 43 countries.
According to BIR’s website, types of Philippine income that can be subjected to a preferential tax treaty rate/tax exemption under Philippine Double Tax Agreements or DTAs are:
- Preferential rates:
- Dividends
- Interests
- Royalties
- Profits of shipping and air transport in international traffic
– Remitted branch profits.
- 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
- Other income
Eligibility for tax treaty relief
Non-residents (individuals or corporations) with income earned from sources within the Philippines and from a country with an effective DTA with the Philippines or their authorized representatives are eligible to apply for a tax treaty relief.
Availing of tax treaty relief
Preferential tax treaty rates for income types such as interests, dividends, and royalties shall be applied and used outright by the withholding agents following the submission of a Certificate of Residence for Tax Treaty Relief or CORTT Form.
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