Taxes in the Philippines for Expats

So, you’re planning the big move to the Philippines—maybe for a fresh start, a spicy business venture, or that dreamy island lifestyle. Whatever your reason, let’s talk about something not-so-sunny: taxes.

Yeah, we know. Not the most exciting part of expat life, but we promise to make it as painless as possible.

Before you panic-Google “Philippines tax escape route,” breathe. We’re breaking it all down for you—short, sweet, and sprinkled with helpful tips.

Who Has to Pay Income Tax in the Philippines?

First things first: are you living here full-time, part-time, or just dipping your toes in?

• If you live and work in the Philippines, you're likely a resident alien. You’ll be taxed on income earned in the Philippines.
• If you're living elsewhere but earning here, you're a non-resident alien or a non-resident citizen—still taxed, but only on your Philippine-sourced income.
• Citizens working abroad (OFWs) only pay tax on earnings within the country.
• Foreign businesses? You’re taxed only on your Philippine earnings—unless you're based here, in which case, it’s a global party for your tax bill.

Tax Rates in the Philippines

Let’s cut to the chase. Here’s the rough breakdown for individuals:

• 0%–5% for low earners
• Scaling up to 32% for high rollers
• Final tax on passive income (think: dividends, interest, royalties) is around 20%
• If you’re a non-resident alien not doing business here? Expect a flat 25% on gross income

Oh, and for folks working in multinational HQs or offshore banks, there’s a neat little 15% flat rate.

Self-Employed, Freelancers & Business Owners—Listen Up!

If you're setting up shop or practicing a profession, you’ll either:

• Pay graduated tax rates like everyone else, or
• Choose a flat 8% tax on your gross income (above PHP 250,000)

Plus, there’s the business tax (either 12% VAT or 3% percentage tax, depending on your revenue and setup).

Small corporations (earning under PHP 5M with less than PHP 100M in assets) get a break with a 20% tax rate. Everyone else? Standard is 25%.

And yes, there’s paperwork. You’ll need SEC documents, articles of incorporation, proof of funding, and maybe a coffee to survive the bureaucracy.

Value-Added Tax (VAT)—It’s Everywhere

The dreaded VAT in the Philippines is 12%, slapped onto most goods and services. If you’re selling something or offering services, chances are, you’re dealing with it.

Property Taxes—Because Real Estate Dreams Come With Fees

Buying that dream beach house in Palawan? Don't forget:

• Property tax: up to 3%
• Capital gains tax: 6%
• Documentary stamp tax: 1.5%

Yep, even sunsets have a price.

Social Security Contributions—Welcome to the Club

If you’re working here, you're contributing to the Social Security System (SSS).

• You: 4.5% of your salary
• Employer: 9.5%

These contributions help fund benefits like pensions, sickness, and maternity leave. It’s like adulting insurance—everyone does it (well, should do it).

Doing Tax Isn’t Fun, But It’s Essential

Living in the Philippines is a rewarding experience—just make sure you don’t ignore the taxman. Whether you’re employed, running a business, or building a beachfront life, knowing how the system works will save you stress and possibly money.

And don’t forget—Health Insurance in the Philippines is just as vital. Protect your health while you protect your income. Let Pacific Cross help keep you covered every step of the way.