INFLATION may have quickened slightly in February due to higher food prices, which was likely offset by lower utility and oil prices amid the coronavirus disease 2019 (COVID-19) outbreak and subsiding risks from the Taal Volcano eruption. Read the full story.
Foreign nationals working in the Philippines are governed by at least three sets of rules — those of taxation, immigration and labor. Only by fully complying with each set of rules can foreign nationals ensure a fruitful and worry-free stay in the Philippines. This article focuses on taxation.
For regular Filipino employees, taxes due on salaries are withheld by their employers and remitted to the tax authorities during the year. Foreign nationals, however, may be covered by Philippine tax rules but are unaware that they have tax reporting obligations. Certain tax obligations pertain to foreign nationals on home payment arrangements, whether partially or in full, and to those who come to the Philippines as short-term business travelers.
There are foreign nationals who work in the Philippines under a split-payroll arrangement, i.e., their salaries are paid both from their home countries and from their Philippine employers. Some foreigners come to the Philippines for a specific business purpose within a short time period with wages usually paid from their home payrolls. Under both circumstances, there are fewer issues to consider if the home country payments are recharged to a Philippine entity as these will eventually be subject to withholding tax. However, in instances when the payroll costs remain with the home country, it is more difficult for the Philippine government to tax the foreign national. This is because no local entity or agency is privy to the amount that they receive from abroad. This is further complicated by existing tax rules governing foreign nationals that relate more to their presence and privilege to work in the country, but not to their tax obligations.
The question arises: Are these foreign nationals really subject to Philippine income tax on offshore wage payments?
The answer may seem to be a straightforward “no” since the income or part of it is not paid by a Philippine company. However, the reality is not that simple. We will need to take into account the basic principles on situs (or place) of taxation.
FOREIGN-SOURCED INCOME
As a general rule, the basis for taxation of foreign nationals is on Philippine-sourced income only. The issue may lie in what constitutes foreign-sourced income. Employment income is considered Philippine-sourced if it pertains to services performed in the country. This is regardless of where the income was paid, where the contract was perfected, or where the payor resided. Thus, in determining the extent to which foreign nationals are subject to tax, the basic consideration is where the work for which the income is earned was performed.
The paying entity need not be a Philippine company; there does not even have to be a performance agreement between the foreign national and the local office. As long as the work is rendered in the country, the income derived from such work is generally subject to Philippine income tax. We say “generally” as there may be income tax exemptions for foreign nationals who are tax residents of countries with which the Philippines has bilateral agreements on double taxation.
TAX ISSUANCES FOCUSING ON FOREIGN NATIONALS
Adding to the ambiguity is the absence of other government rules on how foreign nationals are to be taxed. However, in 2019, following the sudden and steady influx of foreign nationals working in the Philippines (not to mention the lost revenue from this working group) the government released four issuances directed towards subjecting foreign nationals to tax.
At the forefront is the Joint Memorandum Circular (JMC) No. 001, series of 2019, Rules and Procedures Governing Foreign Nationals Intending to Work in the Philippines. Drafted by nine government agencies, the JMC aims to harmonize the regulations and policy guidelines on the issuance of work permits and work visas to foreign nationals as well as the authority to hire and employ foreign nationals. Such permits are usually issued by various government agencies, including the Department of Labor and Employment (DoLE), Professional Regulation Commission, Bureau of Immigration (BI), and others. The JMC requires foreign nationals and/or the employer/withholding agent to secure a Tax Identification Number (TIN) from the Bureau of Internal Revenue (BIR) as a precondition for permits and visas. A special task force (composed of the DoLE, the BI and the BIR) was also created to conduct joint inspection of establishments employing foreign nationals. Moreover, a database will be created to record all issued work permits and authority to employ and hire foreign nationals.
Aside from the JMC, the BIR also issued Revenue Memorandum Order (RMO) 28-2019, which prescribed the registration requirements for foreign individuals not engaged and/or engaged in trade or business or gainful employment in the country. The BI then issued two Operations Orders, both dealing with the TIN as a requirement for work permits and non-immigrant visa applications.
CONSIDERATIONS FOR TAX COMPLIANCE
To allow strict monitoring of the presence of and tax compliance among foreign nationals, it would be helpful for the government to clarify the definition of “taxable work or services” for foreign nationals. To illustrate, there are short-term business travelers who stay in the Philippines for only a few days or months under a 9a visa and perform activities even without a Special Work Permit (SWP). Securing a 9a business visa does not require a TIN, and these individuals may assume that they do not have tax obligations (either to report any income and pay tax, or to file any applications for tax treaty relief), even if their activities in the country qualify as work or performance of a service.
Furthermore, compliance with TIN registration of foreign nationals may be difficult, especially if additional documents are required. For example, foreign nationals married to Filipinos and who apply for a TIN used to be required to submit English-translated and authenticated/consularized marriage certificates with their application.
REVISITING TAX OBLIGATIONS FOR FOREIGN NATIONALS
Policies should be reviewed to consider the changes that come with the fast-evolving world of workforce mobility, such as with the Emigration Clearance Certificate (ECC). An ECC is required from foreign nationals departing from the Philippines (either temporarily or for good) to ensure they have no pending obligation with the government. Current BI rules on ECC issuance, however, do not mention any need for the foreign national to submit documentary clearance of unfulfilled responsibilities from other government agencies.
There appears to be no solid coordination process among government institutions. There is also no database to provide the information necessary to support an ECC application. With the JMC mentioned previously, it may help all concerned agencies to look into the ECC process and develop a method to cover the tax compliance obligations of departing foreign nationals. It would also be worth looking into the best practices of tax jurisdictions like Singapore, the US and Canada on their exit permits and non-residency status upon departure of foreign nationals.
While the government is undoubtedly concerned about regulating the activities and rightful tax obligations of foreign nationals, there is much that can be done in terms of efficient implementation. We can hope that, given the number of government agencies involved in legalizing the affairs of foreign nationals, forthcoming guidelines will facilitate compliance. Moreover, with a TIN now a pre-requisite for work permit application, it may be advisable for foreign nationals and their employers to revisit their actual tax obligations arising from locally-sourced income. This is an opportune time to do so, as the April 15 tax filing deadline quickly approaches. Surely, no one wants the additional burden of stiff penalties, a BIR examination, or reputational peril that may be brought about by failure to comply with tax obligations.
This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the author and do not necessarily represent the views of SGV & Co.
Marlynda I. Masangcay is a lawyer and Tax Senior Director from the People Advisory Service Line of SGV & Co.
By Charmaine A. Tadalan and Gillian M. Cortez
Reporters
ANOTHER Filipino has tested positive for the novel coronavirus strain in Singapore, bringing the number of infections involving Filipinos to two, according to its Ministry of Health (MoH).
The new case is a 41-year old Filipino woman with a work pass holder. She had no history of traveling to China, Daegu and Cheongdo in South Korea, the agency said.
“She was confirmed to have the coronavirus disease 2019 (COVID-19) infection on Feb. 29,” the ministry said on its website at the weekend.
The Filipina is being monitored at an isolated room at the Ng Teng Fong General Hospital.
Her employer, a 61-year-old Singaporean who also had no history of traveling to China and South Korea, was also among the new confirmed cases.
As of Feb. 29, Singapore has recorded 102 confirmed cases. Seventy-two patients have been discharged and the remaining 30 were still in the hospital.
“Of the 30 confirmed cases who are still in hospital, most are stable or improving,” the ministry said. “Seven are in critical condition in the intensive care unit.”
While it conducts contact tracing and monitoring, the agency advised the public to defer travel to Hubei Province and all nonessential travel to mainland China, Daegu and Cheongdo.
In Hong Kong, two Filipinos who had tested positive remained under monitoring by the Hong Kong government despite being in a stable condition.
Consul General Raly L. Tejada said at a briefing streamed on Facebook that the first Filipino was supposed to have been discharged last week but the Hong Kong government wanted to be cautious.
“They try to test and test and test again to make sure they will not relapse,” he said, adding that the second Filipino was also in stable condition.
Mr. Tejada said six others who had been quarantined tested negative and have been discharged.
Meanwhile, the Philippines must upgrade its response to the novel coronavirus and gear for a potential outbreak in poor areas, a health expert said last week.
Local health authorities should prepare for local transmission of the deadly disease instead of limiting its focus to screening of travelers from overseas, former World Health Organization program officer Wayne Antkowiak said in a lecture in Manila.
Poor people who live in cramped areas are likely to be most at risk of getting infected with the coronavirus disease 2019, he said.
“It’s possible,” Mr. Antkowiak said of local human transmission.
“Any time we have people living in close proximity and high population density areas, you’re certainly more at risk and in the depressed areas, people are living close together and sanitation is not good. Access to health care is not always optimal,” he added.
“COVID-19 can spread quite rapidly and it’s quite infectious,” he pointed out.
The Philippines has confirmed three novel coronavirus cases, all involving Chinese nationals from Wuhan City in China where the virus was first detected. Two of the patients have recovered and one has died, according to the local Health department.
There were 85,403 confirmed global cases of the deadly disease as of Feb. 29, according to WHO data.
More than 79,000 of those cases were from China, followed by South Korea with 3,150 cases and Italy with 888.
“We’re going to have an outbreak soon,” Mr. Antkowiak said. “The possibility of major consequences from visitors is not all that great. We need to be focusing on preparation.”
He said preventing an outbreak is a “community effort.” “It’s going to be a matter of the government mobilizing quarantine,” he added.
The health expert said the virus could be controlled “if you have a strong and coordinated government.”
THE government should boost local economies to cushion the effects of a deadly coronavirus outbreak on industries, a Finance official said.
No one knows for sure which stage the world is now on as far as the virus is concerned, Finance Assistant Secretary Antonio Joselito G. Lambino II told a briefing in Davao City on Friday. “What we do know is that tourism and trade are already suffering.”
While the Finance department is taking stock of the health crisis, the government is also rolling out programs to boost domestic consumption and tourism, Mr. Lambino said.
The Tourism department is working with hotels, restaurants and airlines to lower air fares and boost local tourism, he said.
“Tourist hotspots where there were a lot of foreigners are feeling the pinch right now,” the official said.
He added that tourism would take a hit with the travel ban on China and South Korea.
Mr. Lambino said the government was keeping its 4% growth target for the farming industry as the Agriculture department boosts links between local producers and consumers.
The agency also has a long-term program for strengthening farmers’ entrepreneurship capacity, he said.
“The bottom line is we would like our farmers to be agripreneurs, not just producers of a crop,” he added.
John Carlo B. Tria, president of the Davao City Chamber of Commerce, said the business sector was encouraging consumers to buy local farm products, while pushing more value-added goods.
The chamber has asked the Trade department to help set up a Regional Inclusive Innovation Center that will focus on research for processing fruits into health and wellness products. — Maya M. Padillo
CONSTRUCTION FOR a new road to Lucap Boulevard, the jump-off point to the Hundred Islands National Park, and the Mangrove Park in Alaminos, the Department of Public Works and Highways (DPWH) announced Friday. DPWH said road opening works is underway for the P79.8-million project, which includes reclamation at the Lucap Wharf to Mangrove Park shore, a 2.15-kilometer two-lane road, a 40-lineal meter bridge, and slope and shore protection works. “The road and bridge will be raised above the maximum recorded tidal range to ensure that it is still accessible during high tide even in the occurrence of typhoons,” DPWH Secretary Mark A. Villar said in a statement. The reclaimed land with the slope protection will also serve as a breakwater to protect the coastal area from destructive waves. “Upon its completion in 2023, this project will spur local employment, open for more livelihood opportunities, and boost tourism in the province by serving as a safer and direct route to declared tourist destinations,” Mr. Villar said.
SEVEN KOREAN tourists who are considered persons under monitoring (PUMs) for COVID-19 have been declared “missing” by the provincial interagency task force after they were not found at the hotels they indicated in their health declaration cards upon arrival at the Mactan Cebu International Airport. They were among the 26 South Koreans who arrived from Daegu City in North Gyeongsang on February 25, a day before the government declared the official travel ban from the area. The 19 other tourists who were in the same flight are now under quarantine in their respective hotel rooms. In a press conference Saturday, members of the provincial task force on COVID-19 said they are now coordinating with the Korean Consulate and the Philippine National Police to locate the seven, composed of four males and three females, who need to be placed under a 14-day mandatory quarantine. “We have their identities, the airport authorities have the telephone numbers and the DoH (Department of Health) is also coordinating with the Vice Consul of Korea in order to locate the seven,” Governor Gwendolyn F. Garcia said. “They should be located… so that if they will have symptoms, we could immediately send them to the hospitals and we could also identify where they have been going,” said DoH-Central Visayas Director Jaime S. Bernadas. The task force also announced that there will be stricter implementation of Provincial Ordinance No. 2020-02, which penalizes false information on health declaration cards. Violators will be fined P5,000 or one year imprisonment.
DIPOLOG CITY
In Dipolog, capital of Zamboanga del Norte, the City Health Office (CHO) said the 15 locals who recently returned after a few days in Seoul, South Korea have been checked and showed “negative signs nor symptons” of the coronavirus disease. “This statement is being issued to assure the public that Dipolog City is safe from COVID-19 and that measures are in place following established protocols issued by the Department of Health, other government agencies and concerned authorities. This is in light of messages/posts circulating on social media claiming otherwise,” Mayor Darel Dexter T. Uy said on Saturday. The 15 travelers, eight of whom are school teachers, visited Seoul from February 22 — 25, and returned to the Philippines on the 26th via the Mactan Cebu International Airport. Mr. Uy said although Seoul is not included in the latest travel restriction, the eight school teachers will have to undergo a mandatory 14-day self-quarantine as prescribed under a series of Department of Education (DepEd) directives. Under the DepEd directive, “All personnel and learners who decide to proceed with their personal travels for the month of February to countries identified to have confirmed cases of COVID-19 shall be subject to mandatory self-quarantine for 14 days from the date of arrival in the Philippines.” — The Freeman and BW Mindanao Bureau
JUSTICE SECRETARY Menardo I. Guevarra will order the department’s task force on extra-judicial killings (EJK) to investigate the murder of a lawyer in Nueva Ecija if his death is related to his advocacies. The 73-year old Bayani P. Dalangin was killed by unidentified gunmen in his office in Talavera, Nueva Ecija last Friday. “If there are any indications that the murder of Atty. Dalangin had anything to do with any of his advocacies, I will direct the inter-agency Administrative Order 35 task force on EJK to conduct its own investigation,” Mr. Guevarra told reporters in a mobile-phone message. The Commission on Human Rights (CHR) has denounced the killing of Mr. Dalangin, saying the increasing number of attacks against lawyers “demand serious attention.” In a statement over the weekend, the CHR said, “These grave threats and attacks impair the ability of lawyers and other members of the justice sector to provide effective legal representation and hamper them to freely exercise their profession.” The commission also appealed to the Philippine National Police and other enforcement agencies for the swift and full investigation of the cases, and asked the government to provide protection to lawyers. — Vann Marlo M. Villegas
THIS YEAR’S Mt. Apo Boulder Face Challenge and the Mt. Apo Sky and Vertical Race in Sta. Cruz, Davao del Sur are pushing through in April, banking on the participation of local extreme sports enthusiasts and other domestic guests. “Hindi na kami nag-expect ng foreigners na mag-participate ngayon (We are no longer expecting foreigners this year) because of the travel bans,” Julius R. Paner, senior municipal tourism officer of Sta. Cruz, said in an interview last week. The Mt. Apo Boulder Face Challenge, set April 18, is a 24-hour extreme adventure race that involves four activities — mountain climbing, trekking, water tubing and road running — leading up to the peak of the country’s highest mountain. The Sky and Vertical Race on April 25 to 26 covers various tourism sites of the town. Mr. Paner said they are still hoping to have around 100 participants to the races this year. He added that health safety measures will be observed based on the directives of the Department of Health. “Okay na ang aming preparations sa (Our preparations are okay for the) races. As of now, we are awaiting for the final list of the participants,” he said. — Maya M. Padillo
THE POLICE and agents of the National Bureau of Investigation (NBI) are now hunting for Dante Tabosares, the alleged mastermind in the killing of Kidapawan City radio journalist Eduardo Dizon in July last year. A warrant for his arrest has been issued by Judge Henelinda Molina-Diaz of the Kidapawan Regional Trial Court Branch 61, according to the Presidential Task Force on Media Security (PTFoMS). “Tabosares tried to further delay the issuance of a warrant for his arrest with his pleadings before the court. Delays are expected but, ultimately, justice will prevail,” Presidential Communications Operations Office Secretary Martin M. Andanar, co-chair of PTFoMS, said in a statement on Sunday. One of two other suspects, Sotero Jacolbe Jr., surrendered to authorities last year after an arrest warrant was issued on Sept. 30. The third suspect, Junell Poten, alias Junell Gerozaga, remains at-large. Mr. Dizon was killed in an ambush on July 10, 2019. He was a news anchor of Brigada News-Kidapawan City until 2018 and ran for councilor in the municipality of Makilala, North Cotabato in 2019 but lost.
News stories from across the nation. Visit www.bworldonline.com (section: The Nation) to read more national and regional news from the Philippines.
By Michael Angelo S. Murillo
Senior Reporter
PRIOR to the opening of the new season of the Philippine Basketball Association on March 8, the league will complete some unfinished business from last season with the awarding of the top individual awards, including the coveted most valuable player award.
Happening before the formal kickoff of Season 45 of the PBA, the Annual Leo Awards take place to honor players who stood out with their performance on the court in various categories.
Bannering the awarding ceremonies is that for league MVP, which is now down to a race of four among San Miguel’s June Mar Fajardo, Northport’s Christian Standhardinger, TNT’s Jayson Castro and Columbian’s CJ Perez as per the list released by the PBA.
Mr. Fajardo is gunning for a sixth straight league MVP award and put himself in solid position to do so by helping the Beermen to the titles in the Philippine Cup and the Commissioner’s Cup, and winning the best player of the conference award in the former.
San Miguel missed out on the opportunity to win a rare PBA grand slam after being eliminated in the quarterfinals of the season-ending Governors’ Cup by eventual champion Barangay Ginebra.
It was an ouster that stung for the team, it being the second time it was deprived of such chance following that of 2017.
Mr. Fajardo said it was a motivation for them heading into the new PBA season.
Unfortunately, the “Kraken” is set to miss considerable time on the sidelines in the about-to-start season after injuring his leg in practice and undergoing surgery.
Mr. Standhardinger started last year with San Miguel before being traded to Northport midway in the Governors’ Cup.
The Filipino-German did not waste time showing his true value with the Batang Pier, helping them to a spirited late charge in the tournament that saw them make their way to the semifinals when many thought they would not even make it to the playoffs.
For his efforts on both ends of the court, Mr. Standhardinger was awarded the BPC award in the tournament.
Veteran Castro, meanwhile, was steady throughout last year, punctuated by another BPC award in the Commissioner’s Cup where the KaTropa played in the finals before losing to San Miguel, 4-2.
Mr. Perez, for his part, had one of the best rookie seasons in league history, leading the league in scoring throughout with an average of 20.8 points, making the Dyip more competitive.
The former National Collegiate Athletic Association MVP said he hopes that the great rookie season he had will continue in the coming years as he builds his career in the local pro league.
“The work continues for me. The goal in the coming season is not only to get better but also make my teammates better and the team more competitive and make it to the playoffs,” said Mr. Perez during Media Day for the new season on Thursday.
OTHER AWARDEES
Apart from the short list of MVP candidates, the league also released the names of those who qualified for the mythical selections, rookie of the year award, all-defensive teams and most improved player award.
Those in the running for mythical first and second team selections — a list 12 backcourt and eight frontline players — are Messrs. Castro and Perez, Robert Bolick (Northport), Alex Cabagnot and Chris Ross (San Miguel), Paul Lee (Magnolia), Rashawn McCarthy (Columbian), Chris Newsome (Meralco), Roger Pogoy (TNT), Stanley Pringle and Scottie Thompson (Barangay Ginebra) and Matthew Wright (Phoenix).
Frontliners are Messrs. Fajardo and Standhardinger, Japeth Aguilar (Barangay Ginebra), Troy Rosario (TNT), Ian Sangalang (Magnolia), Sean Anthony (Northport), Mo Tautuaa (San Miguel) and Jeron Teng (Alaska).
In the running for rookie of the year are Messrs. Perez and Bolick, Javee Mocon (Rain or Shine), Bobby Ray Parks, Jr. (TNT) and Abu Tratter (Alaska).
For the defensive teams are Mark Barroca, Rome Dela Rosa, Rafi Reavis and Jio Jalalon (Magnolia), Messrs. Ross, Thompson, Fajardo, Aguilar, Sangalang, Rosario, Standhardinger and Newsome, Jericho Cruz (NLEX), Mr. Anthony and Paolo Taha (Northport), JP Erram (TNT), Raymond Almazan (Meralco), Gabe Norwood (Rain or Shine) and LA Tenorio (Barangay Ginebra).
Most improved player, meanwhile, is a battle among by Messrs. Tautuaa and Wright, Jackson Corpuz (Magnolia), Bong Galanza and Philip Paniamogan (NLEX), Rey Nambatac (Rain or Shine) and Don Trollano (Blackwater).
PALAYAN CITY, NUEVA ECIJA — Jan Paul Morales of Standard Insurance-Navy claimed his second straight stage victory even as teammate George Oconer has firmed his hold of the solo lead after Stage Seven of the LBC Ronda Pilipinas 10th anniversary race on Sunday.
The 34-year-old Morales, the 2016 and 2017 champion, outsprinted Dominic Perez of Bicycology-Army and Rustom Lim of 7Eleven Cliqq-Air21 by Roadbike Philippines in a frantic mass finish in two hours, 35 minutes and 20 seconds to snare the 110.6-km lap that started in Tarlac and ended here.
By doing so, Morales has also firmed up his grip of the CCN sprint race in this 10-stage race presented by LBC and supported by the Manny V. Pangilinan Sports Foundation.
Mr. Morales and the rest of the Ronda cavalcade were met warmly by a big group of local riders as well as local folk headed by host Mayor Adrianne Mae Cuevas, who have joined Ronda as one of its sponsors while giving P100,000 to Team Nueva Ecija’s campaign.
It was the second stage triumph for the Calumpang, Marikina native after he also reigned supreme in the Tarlac-Tarlac Stage Six the day before.
Mr. Oconer was in that same group to keep his stranglehold of the individual general classification lead with an aggregate clocking of 23:04:31.
The 28-year-old Oconer will thus wear the LBC red jersey for the third straight day in the 170-km Stage Eight where they will tackle the dreaded Baguio accent.
“We will know tomorrow (today) after the Baguio stage if we will keep the lead or not because the climb is really long and stiff,” said Mr. Oconer, the 2015 runner-up who is seeking his first title, in Filipino.
Mr. Morales later admitted he went for the lap victory after seeing a 7Eleven rider up front.
“We were just told there was a 7Eleven rider there so I just went for it, good thing I won,” said Mr. Morales, who sacrificed his title chances by helping Mr. Oconer and five other teammates — Ronald Oranza, Ronald Lomotos, John Mark Camingao, Junrey Navarra and El Joshua Carino — zoom to the top after Stage Five in Antipolo on Thursday.
Mr. Morales’s triumph handed Standard its fourth straight lap triumph with the first two delivered by Mr. Lomotos in Stage Four in Lucena Wednesday and Mr. Camingao in Stage Five.
Mr. Oranza, the 2018 Ronda king, was at second in 23:05:46, Mr. Lomotos at No. 3 in 23:05:49, Mr. Camingao at No. 4 in 23:06:24, Mr. Navarra at No. 5 in 23:06:48 and Mr. Carino at No. 6 in 23:08:22.
Rounding up the top 10 were Mark Julius Bordeos of Bicycology (23:09:45), Rustom Lim of 7Eleven (23:09:47) and Go for Gold’s Jonel Carcueva (23:09:59) and Ismael Grospe, Jr. (23:10:19).
Standard has also virtually clinched the team race as it leads in 92:18:09 ahead of Go for Gold (92:41:49) and Bicycology (92:43:28) in this event backed by Palayan, Nueva Ecija, Versa, 8A Performance, Print2Go, Petron, Green Planet, Bike Xtreme, Standard Insurance, Spyder, CCN, Lightwater, Prolite, Guerciotti, Black Mamba, Boy Kanin, Vitamin Boost, NLEX-SCTEX, Maynilad, 3Q Sports Event Management Inc., LBC Foundation and PhilCycling.
