Taxation of international executives
Are there special residency considerations for short-term assignments?
Are there special payroll considerations for short-term assignments?
What income will be taxed during short-term assignments?
Technically, all compensation income received relative to the short-term assignment in the Philippines is taxable in the country/territory.
Are there any additional considerations that should be considered before initiating a short-term assignment in the Philippines?
Where there is a tax treaty between the home country/territory and the Philippines, and the employee spends less than 90 days or 183 days (depending on the tax treaty wording) in the Philippines in a given tax year, the criteria for tax exemption may be met and such that the income attributable to the Philippines will not be taxed.
Treaty article conditions on exemption from tax must be satisfied and a tax treaty relief application process should be complied with.
For expatriates who are residents of non-treaty countries/territories or treaty countries/territories who does not satisfy conditions of treaty, and who stay in the Philippines for 180 days or less in the calendar year concerned, the tax rate is 25 percent of gross income.
Income of taxpayers may be excluded from taxation if it is attributable to services performed in countries/territories other than the Philippines except for resident citizens.
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