A non-resident citizen is taxable only on his income derived from sources within the Philippines. A Filipino citizen is considered a "non-resident" if he:

• Establishes to the satisfaction of the BIR Commissioner the fact of his physical presence abroad with a definite intention to reside therein;
• Leaves the Philippines during the year to reside abroad either as an immigrant or for employment on a permanent basis;
• Works and derives income form abroad and such employment requires him to be physically present abroad most of the time during the year;
• Has previously been considered as a non-resident citizen and he arrives in the Philippines at anytime during the year to reside permanently. He is considered a non-resident with respect to his income derived from sources abroad until the date of his arrival in the Philippines.

A Filipino who is working and deriving income from abroad as an overseas contract worker is taxable only on his income 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.

Even if the full amount of his income is tax-exempt, a non-resident citizen must file an information return wherein he must indicate the word "EXEMPT" in the appropriate "TAX DUE" space. For this purpose, he may accomplish either BIR Form 1701 C or the new computerized Form 1703. The information return must be filed not later than April 15 of the following taxable year with the Foreign Post or the Revenue District Office which has jurisdiction over the place of residence of the taxpayer. The non-resident must attach to the information return his Employer’s Declaration of Income Earned or Financial Statement.

These regulations also apply to income earned by non-resident citizens in 1998. The information return covering income earned in 1998 must be filed not later than July 15, 1999. Non-resident citizens who file their returns after this date, or those who have not filed any such return, will be subject to penalty.

The Foreign Post is required to forward the information returns to the Revenue District Office No. 51 (Pasay City) for compilation/processing purposes. The respective Revenue District Offices receiving similar returns must likewise process the returns filed within their own premises. These offices will then submit to the Chief of the International Tax Affairs Division an annual report consisting of statistical information on the gross income per country, total and type of income, and number of filers according to the above classification.