BIR to collect income tax on foreign workers starting July

The Philippine government will start collecting taxes from foreign workers who have previously failed to pay their obligations, the Department of Finance (DOF) said Monday.

On the sidelines of the pre-State of the Nation (SONA) press conference, Finance Secretary Carlos Dominguez III said the Bureau of Internal Revenue (BIR) will enforce stricter measures to collect proper taxes from foreigners working in the Philippines.

“Implementation ng law lang ‘yan. And I asked them specifically to track how much they are collecting. They said they will start making collections … in July,” Dominguez told reporters in Pasay City.

“I think, going forward, they will already start implementing in July,” he said.

The government has formed a task force that consists of the Department of Labor and Employment (DOLE), Bureau of Immigration (BI), the Philippine Amusement and Gaming Corp. (PAGCOR), and BIR to impose stricter measures and collect taxes from foreign workers.

“It’s everybody … Foreigners who work here, they should be paying taxes just like Filipinos who work abroad, who pay taxes,” said Dominguez.

“This is a matter of their citizens, Chinese citizens, of Ethiopians, or British who work here who are subject to our tax laws,” he said.

The DOF in April said it wanted to collect an estimated P32 billion in annual income tax from foreign nationals working for Philippine online gaming operators (POGOs).

Citing data from the DOLE and the BI, the DOF said there are some 138,000 foreign nationals working for POGOs.

Working on the assumption that each foreign national earns an average of $1,500 a month and taxed at 25% of gross income, the DOF came up with a rough calculation of P32 a billion a year in income tax collections.

The number, however, does not include data from the Philippine Economic Zone Authority and the special economic zones in Bataan and in Aurora.

“We cannot believe some of the claims that their salary is only $500 a month,” Dominguez said Monday, adding that advertisements in China entice workers to work in the Philippines for thousands of dollars. —VDS, GMA News