Connect with us

Hi, what are you looking for?


Away and taxed

When the Philippines was placed under Enhanced Community Quarantine (ECQ) on March 17, outbound passengers intending to depart the Philippines from any of the international airports in Luzon were only allowed to do so within 72 hours from the effectiveness of the ECQ. A few foreign nationals living and working in the Philippines decided to leave the country within this window period. Some were only able to leave the country as soon as rescue flights organized by foreign embassies were made available, while others had to wait for the resumption of international commercial flights before returning to their home countries.

Between March 17 and Oct. 30, the entry of foreign nationals into the Philippines was limited, and the return of some foreign nationals was only made possible through a special travel exemption and an entry visa issued by Philippine embassies overseas.

On Oct. 22, the Inter-Agency Task Force (IATF) issued Resolution No. 80, stating that effective Nov. 1, the government allowed the return of the following foreign nationals under the following visa categories:

1. Those with visas issued by the Bureau of Immigration (BI) under Executive Order (EO) No. 226 or the Omnibus Investments Code, as amended, and Republic Act No. 8756;

2. Those with Special Non-Immigrant [47(a)(2)] visas issued by the Department of Justice; and

3. Those with visas issued by the Aurora Pacific Economic Zone and Freeport Authority, and Subic Bay Metropolitan Authority.

On Nov. 19, IATF Resolution No. 84 was issued, allowing foreign nationals who were issued Treaty Trader’s visas under Section 9(d) of the Philippine Immigration Act (PIA) entry. Foreign nationals from treaty trade agreement countries such as the US, Japan, and Germany are issued 9(d) visas.

To date, only Pre-arranged Employment visa holders under Section 9(g) of the PIA have not been allowed to return to the Philippines.

As taxpayers begin annualizing their income taxes for this calendar year, they should consider how this will impact the taxation of these foreign nationals who remain under Philippine employment but are unable to return to the Philippines.

Revenue Memorandum Circular 83-2020 issued by the Bureau of Internal Revenue (BIR) specifically addresses the tax implications of stranded individuals during the pandemic, who may be triggering taxation (or vice versa) in the country where they are inadvertently extending their stay due to travel restrictions. As illustrated in the RMC, the stranded days brought by the lockdown restrictions are to be disregarded, granting reprieve for the unintended stay. Nonetheless, one of the conditions provided in the RMC where the Philippines may tax the income of foreign nationals, is when their employer is a resident of the Philippines.

Applying this in the case of remote 9g visa workers, their physical absence in the country will not necessarily spare them from Philippine tax obligations. Their continuing assignment in the Philippines pre-COVID travel restrictions is proof that they remain employed in the country and therefore, subject to Philippine tax even if they are physically outside the Philippines performing their duties remotely.

A twist in this scenario can be seen if, due to the long term stay of the foreign national in his home country, his employer decided to temporarily assign him to his home office’s operations while holding a working visa in the Philippines. In this case, if his employment with the Philippine entity is actually terminated, the salary received by the foreign national from his home office will no longer be taxed in the Philippines, but by his home country. Given the impact on the foreign national’s tax obligation in his home country and the Philippines, the change in work assignment this calendar year should be properly documented. Note that the reassignment or temporary severance from the Philippine company also severs the tax obligation in the Philippines even if the foreign national’s 9(g) visa remains valid.

But how about those foreign nationals who were hired or should have been assigned to a Philippine company but remained in their home country while working for a Philippine company? Following the RMC, such an employee remains taxable in the Philippines commencing from his employment with a Philippine company, regardless of whether the employee is working remotely. The basis for this is that the service rendered by the foreign national is for the benefit of a Philippine entity’s operations and the salary cost is borne by the domestic company. This scenario consequently makes the employee’s income Philippine-sourced and therefore, subject to Philippine tax.

While tax and immigration rules may seem to go hand in hand, the two are independent of each other. A non-resident’s travel and working rights through the issuance of an appropriate visa or permit are not triggering points tax-wise. This situation is now supported by tax rules issued by various countries to clear out the impact of travel bans brought about by this pandemic. As more travel restrictions are lifted, the possible entry of 9(g) visa holders may be considered anytime soon. Thankfully with the issuance of clear guidelines, 9(g) visa workers who need to file their annual income taxes may be relieved from unnecessary liability arising from ambiguous policies.

The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.


Larissa C. Dalistan-Levosada is a Senior Manager at the Tax Services Department of Isla Lipana & Co., the Philippine member firm of the PwC network.

+63 (2) 8845-2728

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.
Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!



Unemployment rate steadied in June, while job quality improved to its best in over a year, the Philippine Statistics Authority reported on Monday. Preliminary...


Follow us on Spotify BusinessWorld B-Side By Patricia B. Mirasol, Reporter speaking to Bernardo M. Villegas WITH EVERY CHANGE of administration comes the question of...


In line with the national government’s thrust to transform the Philippines through PPPs and collaboration between LGUs and the private sector, Iloilo City Mayor...


Click to enlarge. Click to enlarge.   Spotlight is BusinessWorld’s sponsored section that allows advertisers to amplify their brand and connect with BusinessWorld’s audience...


As the Aboitiz Group embarks on a Great Transformation towards becoming the first “techglomerate” in the country by 2025, the company’s power arm is...


Security Bank Corporation (PSE: SECB), one of the Philippines’ leading universal banks, has been serving retail, corporate, institutional, and MSME clients since it opened...

You May Also Like


Having a good Instagram marketing agency to back up your Instagram account is an absolute must going into the new year. With competition stronger...


Ivermectin, an existing drug against parasites including head lice, has had a checkered history when it comes to treating COVID-19. The bulk of studies...


Insomnia is the most common sleep disorder in the global population. Therefore, it is a problem that many people suffer or have suffered throughout...


Instagram still holds the top spot for social media in terms of building brand reputation and expanding business potential. Every day, more and more...

Disclaimer:, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2021 SmartRetirementReport. All Rights Reserved.