Frequently Asked Questions and Answers

REVENUE REGULATION NO. 9-99

INCOME TAXATION OF NON-RESIDENT CITIZENS

Q: Who is a non-resident citizen?

A: A Filipino non-resident is someone who:

Leaves the Philippines to reside abroad either as an immigrant or for employment on a permanent basis

Works and derives income from abroad and such employment requires him to be physically present abroad most of the time during the year.

Establishes that fact of his physical presence abroad with a definite intention to reside therein. Some of the factors that the BIR Commissioner considers in establishing the residence of a citizen are:

the number of days that an individual stayed abroad during the year i.e if he was out of the country for six months or a longer period during the year;

the existence of a permanent home in the Philippines;

the existence of economic and other connections in the country.

Has been previously considered as a non-resident citizen and he stays in the Philippines to reside in the country permanently. The income that he earned abroad prior to his residence in the Philippines is not taxable under the Philippine tax laws.

Q: How are non-resident citizens taxed?

A: A non-resident citizen is taxable only on his income that is earned from sources within the Philippines. Income that was derived from abroad is not subject to the Philippine income tax.

For example, a Filipino immigrant who works for a computer company in London is exempt from paying the Philippine income tax on his London salary. However, his rental income, interest income, or other income from the Philippines are subject to income tax.

Q: How are overseas contract workers taxed?

A: A Filipino who is working as an overseas contract workers is exempt from paying the Philippine income tax on his foreign income. He should only pay an income tax on any income that was earned from sources within the Philippines.

A Filipino working as a seaman and who receives compensation for services performed abroad as a member of the complement of a vessel engaged exclusively in international trade is treated as an overseas contract worker.

Q: Is a non-resident citizen required to file an income tax return?

A: Yes, he should file an information return. He should accomplish either BIR Form 1701C or the new computerized FORM 1703. He must write the word EXEMPT in the appropriate space i.e on the space where the "TAX DUE" SPACE should be provided. A statement from his employer of foreign income must be attached to the information return. A financial statement must be made by a non-resident citizen with business, trade or professional income..

The information must be filed every year, or before April 15 before the Revenue District Office No. 51 (Pasay City) by the Philippine Embassy or Consulate.