by Armin Joyce M. De Chavez
The government is addressing the calls to implement stricter requirements and registration procedures for foreign nationals looking to work in the Philippines. The Department of Labor and Employment (DOLE), Department of Justice (DOJ), Bureau of Immigration (BI) and Bureau of Internal Revenue (BIR) have signed the joint guidelines on the issuance of work permits to foreign nationals. The joint guidelines aim to harmonize the registration rules of the aforementioned agencies for foreign nationals who intend to work or engage in certain activities in the Philippines.
Following this effort, the BIR was first to issue Revenue Memorandum Order No. 28-2019 prescribing the guidelines on registration requirements of foreign nationals. Under the memorandum order, a foreign national shall first secure a Taxpayer Identification Number (TIN) before they can apply for the following permits:
1. Special Working Permit (SWP) - This work permit is issued to foreign nationals who intend to work or engage in specific activities outside of an employment arrangement. The RMO has listed fourteen (14) jobs that will require SWP such as professional athletes, coaches, trainers, and assistants; international performers with exceptional activities; artists, performers and their staff; service supplies coming primarily to perform temporary services; treasure hunters; movie and television crews; foreign journalists; trainees; lecturers, researchers, trainers, and others pursuing academic work; religious missionaries and preachers; commercial models and talents; culinary specialists and chefs; professionals; and consultants and specialists.
2. Alien Employment Permit (AEP) – A permit issued to a foreign national who intend to engage in gainful employment with a Philippine-based company. It is a requirement in the application of a 9(g) pre-arranged employment visa.
3. Provisional Work Permit (PWP) – A temporary permit to work issued to a foreign national who would like to start working pending the issuance of an AEP or the approval of the 9(g) pre-arranged employment visa.
4. Special Temporary Permit (STP) - This refers to the permit issued by the Professional Regulatory Commission (PRC) to a foreign national who shall perform work or service which constitutes practice of a regulation profession in the Philippines.
5. Other Special Work Permit – This refers to work permits issued by other government agencies such as Department of Environment and Natural Resources (DENR) and DOJ for geoscience and mining industry, and for nationalized and partially nationalized industries, respectively.
The order also provides changes on TIN registration and update procedures. Under the new guidelines, foreign nationals applying for a PWP or an AEP are now required to submit the Application for Registration (BIR Form No. 1904) to the Revenue District Office (RDO) having the jurisdiction over the physical address of their employer. Whereas, those who intend to secure an SWP, STP or other special permit should submit their BIR Form No. 1904 to RDO 39 – South Quezon City.
Moreover, the BIR will issue the TIN under Executive Order No. 98 (E.O. 98) which can only be used for government transactions. TIN under E.O. 98 is not allowed for income tax filing purposes and so the Philippine employer of the foreign national must update the registration information of the employee upon availability of the AEP or 9(g) pre-arranged employment visa. This is also applicable to an alien under SWP status who later on has been issued a 9(g) visa.
The BIR also mentioned in the order that foreign nationals may still avail of the tax benefits under existing tax treaty agreements between the Philippines and their country of residence. Notwithstanding the tax treaty exemption, they are still required to secure a TIN for work permit application.
The government’s effort to protect the rights of the Filipino workers is a welcome initiative. However, we are yet to see the heights they are willing to climb to address the loopholes in our current immigration and labor laws for foreign nationals. We could only hope that this is only a first-move strategy against illegal aliens.
Armin Joyce M. De Chavez is an Assistant Manager from the Tax Group of KPMG R.G. Manabat & Co. (KPMG RGM&Co.), the Philippine member firm of KPMG International. KPMG RGM&Co. has been recognized as a Tier 1 tax practice and Tier 1 transfer pricing practice by the International Tax Review.
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