RemittancesGateway.org

BIR issues taxation policy on OFW earnings, remittances

Tuesday, 15 March 2011 17:19

Source: Sun.Star Bacolod

OVERSEAS Filipino workers (OFWs) who derive earnings from business activities or properties in the country will be subject to taxation as per the latest regulations from the Bureau of Internal Revenue (BIR).

BIR Revenue Regulations (RR) 1-2011 stated that an OFW may be subjected to the 12 percent value added tax if in the course of his trade or business, he sells, barters, exchanges or leases goods or properties or imports goods into the Philippines.

“However, if gross annual sales and/or receipts do not exceed P1.5-million and he opted not to register as a VAT taxpayer, he shall be liable to pay instead three percent tax of his gross quarterly sales or receipts," it said.

Section 3 of the RR added that while an OFW is exempt from the 7.5% final tax on interest income from a depository bank under the expanded foreign currency deposit system upon presentation of proof of non-residency like a valid overseas employment certificate (OEC) or a seaman's book, “if the account is jointly in the name of an OFW and a spouse or dependent living in the Philippines, 50% of the interest income from such bank deposit will be treated as exempt while the other 50% shall be subject to the final withholding tax of 7.5%.”

The BIR will also collect a 10% final tax on cash or property dividends; 5-10% final tax on net capital gains realized on the sale, barter, exchange or other disposition of shares of stocks in a domestic corporation except those shares sold or disposed of through the stock exchange; 6% tax on capital gains from the sale or disposition of real property in the Philippines classified as capital assets based on gross selling price or current fair market value; and final tax on interest income from long-term deposits or investments in the form of savings, common or individual trust funds, deposit substitutes, investment management accounts and other investments.

The remittances of all OFWs, upon showing of the OEC or valid Overseas Workers Welfare Administration (OWWA) membership certificate by the OFW beneficiary or recipient, shall be exempted from the payment of the documentary stamp tax (DST).

But in addition to the original copy, "a duplicate or a certified true copy of the valid proof of entitlement shall be secured, which shall be held and used by the beneficiary in the availment of the DST exemption.”

The BIR, meanwhile, has launched its tax campaign to jumpstart an all-out drive to collect the bulk of the P940-billion goal this taxable year, with focus on the Large Taxpayers Service (LTS), which is considered as the Bureau’s prime revenue-raising office.

LTS is tasked to collect at least 60% or P457.32-B of the entire tax agency’s collection goal. “The goal allocation for the LTS may look gargantuan but it is doable,” BIR said as it urged the support of partner stakeholders to flush out unreported taxes.

“With taxpayers slowly realizing the need for them to pay the right amount of taxes and the improved enforcement capability of our field auditors, the LTS will play a very significant part in the BIR’s attainment of its collection target for taxable year 2011,” it added. (CGC)