Taxes of an OCW/OFW. Taxable Income and Requirements for Claiming Certain Tax Exemptions

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1 Taxes of an OCW/OFW Taxable Income and Requirements for Claiming Certain Tax Exemptions

2 Situation I am an Overseas Contract Worker (OCW) or an Overseas Filipino Worker (OFW). I am earning income from abroad and I have businesses in the Philippines. On occasion, I send money to my family in the Philippines. (a) Is my income from abroad subject to Philippine taxes? (b) I invested some of my money in businesses in the Philippines. Are those subject to Philippine taxes? (c) I won a prize in a contest I entered before I left the Philippines./My lottery ticket won. Is that subject to Philippine taxes? (d) I remitted money to the Philippines. Is that subject to tax?

3 Is my income from abroad subject to Philippine taxes? As a rule, YES. BUT income derived from abroad as an OCW/OFW is not subject to Philippine income tax ONLY IF: 1. You are duly registered as an OCW/OFW with the Philippine Overseas Employment Administration (POEA) with a valid Overseas Employment Certificate (OEC); and 2. If you are a seafarer /seaman, aside from a valid OEC, you must likewise have a valid Seafarers Identification Record Book (SIRB) or Seaman s Book issued by the Maritime Industry Authority (MARINA).

4 I invested my money in businesses in the Philippines. Are those subject to Philippine taxes? YES. An OCW/OFW s income derived inside the Philippines, is subject to income tax, (just like a Filipino residing in the country.) Your taxable income may be subject to either: - Income Taxes (IT) and 12% Value-Added Tax (VAT); or - If exempted from VAT, IT and 3% Percentage Tax. *Note that IT may vary depending on the type of income.

5 I won a prize in a contest I entered before I left the Philippines. Is that subject to Philippine taxes? 1. If the prize is worth more than 10,000, a 20% final tax will be withheld from the prize. 2. If the prize is less than or equal to 10,000, the amount of the prize will be added to your gross income. (Your resulting taxable income is subject to the 5-32% income tax rates.) 3. Winnings derived from the Philippine Charity Sweepstakes (PCSO) or Lotto are not taxable.

6 I remitted money to the Philippines. Is that subject to tax? Generally, YES.** Remittances from abroad are subject to a 0.30 DST* on every (or a fraction thereof), of the face value of the bill of exchange or order, or the Peso equivalent if expressed in foreign currency. *DST = Documentary Stamp Tax **see next slide for exemption Example: If you remit , the DST is 0.90.

7 Can my remittance be exempted from tax? YES, there is an exception. An OCW/OFW is entitled to an exemption from DST only upon showing of any of these documents: 1. A valid OEC; 2. A valid membership certificate from OWWA; 3. A POEA-issued electronic receipt (e-receipt). OWWA = Overseas Workers Welfare Administration NOTE: You must secure a duplicate or a certified true copy of any of the above documents from the POEA or OWWA and give such copy to your intended beneficiary or recipient. Then, he/she will present this to avail of the DST exemption.

8 Other Exemptions OCW/OFWs are also exempt from the payment of travel taxes and airport fees if they are able to show a valid OEC issued by the POEA.

9 Sources National Internal Revenue Code, Secs. 22(E), 23 (C), 24, and 106 to 109. Bureau of Internal Revenue, Revenue Regulations (Tax Treatment of Income Earnings and Money Remittances of an Overseas Contract Worker (OCW) or Overseas Filipino Worker (OFW)issued on February 24, 2011, as amended by Revenue Regulations No , issued on August 17, 2012 R.A. No. 8042, Migrant Workers and Overseas Filipinos Act of 1995, as amended by R.A [Uploaded on 21 October 2015]]

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