Registration requirements for foreign nationals
With the current administration ramping up efforts to encourage foreign nationals to invest in the Philippines, it is expected that there will be an increase in the number of foreign individuals who will either work in or visit the Philippines. As a result, foreign nationals are mandated to register with different government agencies such as, but not limited to, the Department of Labor and Employment (DOLE), the Bureau of Immigration (BI), and the Bureau of Internal Revenue (BIR) to secure necessary permits and other documents.
Recently, the BIR issued Revenue Memorandum Order (RMO) No. 28-2019, which prescribes the new policies and guidelines on the registration requirements for foreign nationals. Under the said RMO, foreign nationals who will engage in work outside of an employment arrangement are required to procure a Special Working Permit (SWP) with the BI. Those who will perform work or service that constitutes the practice of a regulated profession are further required to secure a Special Temporary Permit (STP) with the Professional Regulatory Commission (PRC).
An SWP allows a foreign national to work under a Tourist Visa (9g), as long as the validity of the contract is for only up to three months, which may be extended for another three months.
Meanwhile, foreign nationals who intend to engage in gainful employment shall apply for an Alien Employment Permit (AEP) with DOLE. In the event that the issuance of their AEP is still pending or they have a valid AEP but pending approval of Commonwealth Act (CA) No. 613, Sec. 9(g) work visa, they shall secure a Provisional Work Permit (PWP) from the BI. Foreign nationals who are exempted from obtaining an AEP are still required to secure a Certificate of Exclusions from DOLE.
It is important for foreign nationals to acquire these working permits so they can legally engage in gainful employment in the country. Likewise, they are required to secure their Taxpayer Identification Number (TIN) with the BIR following the existing related revenue issuances.
A non-resident alien not engaged in trade or business shall be issued a TIN for withholding taxes on their income from sources within the Philippines. It is the obligation of the withholding agent to apply the TIN on their behalf under Executive Order (E.O.) No. 98 to the respective Revenue District Offices (RDO) prior to or at the time of the filing of their monthly withholding tax return.
The RMO further provides that foreign nationals engaged in employment shall be registered with the RDO having jurisdiction over the physical address of the employer. The employer or withholding agent shall secure the TIN of these individuals manually from the RDO and shall not use the eREG system. Foreign nationals who intend to work, engage in specific activities, or render services outside of an employment arrangement shall secure their TINs with RDO No. 39 – Quezon City.
Based on the abovementioned provision, foreign nationals who have been issued or hold an AEP or working visa upon arrival shall be registered by their employer with the RDO having jurisdiction over the physical address of the said employer under the taxpayer type category of employee. Also, foreign nationals who intend to work or engage in trade or business and have been issued a working visa upon arrival shall be registered with the RDO having jurisdiction over the place of business or the place of local residence in the case of practice of regulated profession under the applicable taxpayer type.
Registered foreign nationals can avail of preferential tax rates under effective Philippine tax treaties. They may opt to file a Tax Treaty Relief Application with the International Tax Affairs Division (ITAD) following the requirements set forth under RMO No. 72-2010 to avail of the benefits under the tax treaty. The entitlement to tax treaty relief is approached on a case-to-case basis depending on the facts as presented by the foreign national applicant.
The newly issued guidelines help clear the confusion on where to obtain the TINs of foreign nationals. As such, employers of foreign nationals or withholding agents will have to revisit the registration of their foreign national employees with the BIR and update the said registration if necessary as soon as possible.
It is important to ensure that every taxpayer, whether Filipino or foreign, is properly registered with the correct RDO since this will determine whether the related income taxes to be withheld and remitted to the BIR will be filed and paid at the appropriate place or venue. It is also one way for taxpayers to avoid future penalties.