REAL ESATE LAWS AND REFERENCES 5.10

How are foreigners taxed in the Philippines? How much?

Non-resident aliens are taxed at 25% of gross income from sources within the Philippines if their stay within the country does not exceed 180 days in the calendar year. Otherwise, they are taxed on the basis of graduated rates as in (1) below:

(1)     Taxable income from employment, business, trade and exercise of profession including casual gains, profits, and prizes of PhP10,000 or less; except items of income subject to final tax and special treatment, e.g. capital gains and passive income mentioned in items 4 and 5 below, derived by resident citizens from all sources within and without the Philippines are subject to the graduated tax rates of 5% to 32%. The top rate of 32% applies to taxable income in excess of PhP500,000. Resident aliens and non-resident citizens are subject to the same graduated tax rates but only for income derived from all sources within the Philippines.

Aliens who are employed by regional or area or regional operating headquarters of multinational corporations, representative offices, offshore banking units, petroleum service contractors and subcontractors are subject to income tax at 15% of their gross income from such employers (e.g. salaries, annuities, honoraria and allowances).