Question & AnswerQ&A (BIR REVENUE REGULATIONS NO. 1-2011)
OCWs or OFWs are Filipino citizens employed in foreign countries, registered with the Philippine Overseas Employment Administration (POEA), possessing a valid Overseas Employment Certificate (OEC), and physically present in a foreign country as a consequence of their employment there.
Seafarers must have a valid Overseas Employment Certificate (OEC) issued by the POEA and a valid Seafarers Identification Record Book (SIRB) or Seamanas Book issued by the Maritime Industry Authority (MARINA).
Income earned abroad by OCWs or OFWs is exempt from Philippine income tax provided they meet the specified conditions.
Yes, income earnings from business activities or properties within the Philippines by OCWs or OFWs are subject to Philippine income tax under Sections 24 (A) and 24 (B) of the National Internal Revenue Code.
Regular income is subject to a tax rate ranging from 5% to 32% based on the taxable income as per Section 24 (A).
Interest income from currency bank deposits is taxed at 20%, royalties at 20%, book-related royalties at 10%, prizes and winnings at 20%, cash or property dividends at 10%, capital gains on stocks at 5-10%, and capital gains on real property at 6%, among others as specified in Section 3(A) of the regulations.
An OCW or OFW is subject to 12% VAT if they sell, barter, exchange, lease goods or properties, render services in the Philippines, or import goods into the Philippines with gross annual sales exceeding P1,500,000. Otherwise, they may pay a 3% percentage tax if they opt not to register as VAT taxpayers.
All migrant workers, including OCWs or OFWs, are exempt from payment of travel tax and airport fees upon presentation of proper proof of entitlement such as a valid Overseas Employment Certificate (OEC).
Remittances made by OCWs or OFWs are exempt from documentary stamp tax provided the remitter or beneficiary shows valid proof of entitlement like an OEC or Overseas Workers Welfare Administration (OWWA) Membership Certificate.
OCWs or OFWs must present valid proof of entitlement at the time of making remittance arrangements through the banking system to qualify for exemption from documentary stamp tax. If the beneficiary withdraws funds via ATM, the OCW is responsible for showing valid proof.