Taxwise Or Otherwise
By Larissa C. Dalistan-Levosada
The Department of Tourism (DoT) reported a 7.59% increase in tourist arrivals to the Philippines in the first quarter. This increase translates to around 2,204,564 foreign visitors from January to March 2019.
However, not all foreign visitors travel around the country strictly for leisure. A segment of the tourist market also visits the country for business or employment.
For instance, non-visa required nationals (such as Americans, Australians, Japanese, etc.) enjoy a 30-day visa waiver. Apart from tourism, they are allowed entry into the country for business-related activity or for the eventual assumption of duties related to work activities.
With the influx of foreign workers, the government is seeking to tighten its rules on issuance of work permits. Setting stringent regulations in place, the Department of Labor and Employment (DoLE), the Bureau of Internal Revenue (BIR), the Department of Justice (DoJ), and the Bureau of Immigration (BI) circularized the Joint Guidelines on the issuance of employment permits to foreign nationals on May 1.
TIN REQUIREMENT FOR WORK PERMIT AND WORKING VISA
Previously, only those applying with the BI for a visa to work for over six months, or those applying for an Alien Employment Permit (AEP) with DoLE were obliged to secure a Taxpayer Identification Number (TIN). Subsequently, the TIN requirement for AEP was removed when Provisional Work Permit (PWP) applications, processed while the work visas are still pending, were likewise required to be supported with a TIN. A PWP allows foreign nationals to commence working in local establishments, usually within the validity period of three months or until the work visa has been approved.
These days, with the issuance of the Joint Guidelines, all applications for work permits and working visas must be supported by a TIN. Regardless of the duration of the assignment, foreign workers are required to apply for a TIN.
Thus for the guidance of applicants, the BIR issued Memorandum Order No. 28-2019 that outlined the procedures and registration requirements to secure a TIN for foreign workers. It provides clarity on what, how, and where applications for issuance of a TIN may be filed.
Issuance of a TIN is without prejudice to the option of availing applicable tax treaty benefits based on existing treaties.
IMPLEMENTING RULES ON SWP AND PWP APPLICATIONS
Under BI Operations Order No. JHM-2019-008, foreign nationals, who will be working in the Philippines for six months or less, must apply for a Special Work Permit (SWP) with the BI. An SWP is issued only to those who intend to work, engage in specific activities, or render services outside of an employment arrangement, such as: 1. Professional athletes, coaches, trainers, and assistants; 2. International performers with exceptional abilities; 3. Artists, performers, and their staff, who perform before an audience for a fee, subject to compliance with the requirements of the concerned agency, office or body; 4. Service suppliers coming primarily to perform temporary services and who do not receive a salary or other remuneration from a Philippine source other than expenses incidental to their temporary stay; 5. Treasure hunters authorized to search for hidden treasure with a permit from the concerned government agencies and instrumentalities; 6. Movie and television crews authorized to film in the country by the relevant regulatory office, body or agency; 7. Foreign journalists practicing their profession or covering a specific event in the country; 8. Trainee/s assignees assigned in government instrumentalities, government-owned and controlled corporations (GOCC), and private entities; 9. Lecturers, researchers, trainers, and others pursuing academic work, assigned in schools, universities, educational and research institutions, government agencies, and other entities (with or without compensation); 10. Religious missionaries and preachers; 11. Commercial models and talents; 12. Culinary specialists/Chefs; 13. Professionals; and 14. Consultants or specialists.
While the current list appears comprehensive and inclusive of all work activities that may qualify for an SWP, it must be read as merely suggestive in nature. As long as the application can show that the intended pursuit is within the ambit of qualified activities and merits the approval of the Bureau, an SWP can be granted to foreign nationals.
The new Operations Order also raised the need for a PWP issued by the DoLE for foreign workers who have pending applications for a working visa with the BI. The PWP serves as an authorization for the foreign national to work pending the approval of the working visa.
Although to some extent, the guidelines merely reiterate previous policies, the harmonizing of inter-agency regulations, hopefully, addresses the overlap of responsibilities, ensures efficient processing of applications, and reinforces compliance with work permits and visas. More significantly, a clear policy direction should allay the growing apprehension among Filipinos of losing employment opportunities to their foreign counterparts, weed out illegal foreign workers, and regulate tax evasion among undocumented workers.
With the increase in visitor receipts due to growth in tourist arrivals and the boom enjoyed by the real estate industry thanks to demand for leased spaces, the current influx of foreign workers should be seen as a welcome development, rather than a threat, to our economy.
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 PwC global network.
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