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TAX! Do you pay any to RP?


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poby

I'm seriously considering moving to Cebu especially as I would no longer have to pay tax in Australia on my dividends, capital gains and fund distributions which are my sole sources of income. Now in theory I believe if I lived in the philippines more than 6 months of the year then I am supposed to pay tax to the philippines government on the income I get from Australia even though I'm only in ph on a tourist visa. In practice however, are they going to notice me and my foreign income? Is anyone living in Cebu on a tourist visa, earning money from overseas and paying tax/not paying tax?

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my gut on this is that you have pretty much no chance of getting a tax demand from the rp ......now if you want to give them some is another matter.....but are you talking about untaxed profits?? ...because they can only be taxed once.

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poby
my gut on this is that you have pretty much no chance of getting a tax demand from the rp ......now if you want to give them some is another matter.....but are you talking about untaxed profits?? ...because they can only be taxed once.

 

In Australia, non-residents do not pay:

 

capital gains tax

 

tax on fully franked dividends

 

tax on distributions from funds derived from the above

 

So were I to move my residence to another country my effective tax rate in Australia is zero. The question is, would RP try to tax me on my australian income if I lived there more than 180 days and thus were considered a resident alien? If not, then maybe the old adage about "death and taxes" is only half true in which case I'm definitely leaving Australia for good and will live in Cebu indefinitely on a tourist visa (with the occasional brief sojourn outside the country)

 

I'm assuming eventually they would insist on my having an "ACR" card and would thusly be well aware of my resident alien status. Would this set the wheels in motion for them to chase me for tax on my foreign income?

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my gut on this is that you have pretty much no chance of getting a tax demand from the rp ......now if you want to give them some is another matter.....but are you talking about untaxed profits?? ...because they can only be taxed once.

 

In Australia, non-residents do not pay:

 

capital gains tax

 

tax on fully franked dividends

 

tax on distributions from funds derived from the above

 

So were I to move my residence to another country my effective tax rate in Australia is zero. The question is, would RP try to tax me on my australian income if I lived there more than 180 days and thus were considered a resident alien? If not, then maybe the old adage about "death and taxes" is only half true in which case I'm definitely leaving Australia for good and will live in Cebu indefinitely on a tourist visa (with the occasional brief sojourn outside the country)

 

I'm assuming eventually they would insist on my having an "ACR" card and would thusly be well aware of my resident alien status. Would this set the wheels in motion for them to chase me for tax on my foreign income?

 

i just dont think they are that together....just hold it in reserve if you think that you do owe something and just accrue the intrest.

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Alan S

Whilst the chances of you being "discovered" by the RP tax people is slim, there may be advantages in registering with them and paying tax.

 

Firstly, it only applies to income derived in the Philippines, and if you cant arrange for that to be a minimal sum, well, no comment.

 

Secondly, the Philippines has dual taxation agreements with most countries, and if you pay tax in RP, that is PROOF to your home countries tax people that you really are living elsewhere. If ever they (the Oz tax people) decide to try to tax you, that could be useful, and even if they did tax you, what you pay in RP would be deducted from it.

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poby
Whilst the chances of you being "discovered" by the RP tax people is slim, there may be advantages in registering with them and paying tax.

 

Firstly, it only applies to income derived in the Philippines, and if you cant arrange for that to be a minimal sum, well, no comment.

 

Secondly, the Philippines has dual taxation agreements with most countries, and if you pay tax in RP, that is PROOF to your home countries tax people that you really are living elsewhere. If ever they (the Oz tax people) decide to try to tax you, that could be useful, and even if they did tax you, what you pay in RP would be deducted from it.

 

IF it's true that RP can only tax me on domestic sources of income then I am effectively tax free!!! This is the crux of the matter I'm trying to determine. My googling has so far been inconclusive in this matter. It seems if I am in RP for more than 180 days a year then I am classed as a "non-resident alien engaged in trade or business" irrespective of if I am actually engaged in such. Some of what I have read suggests I dont pay tax on foreign income based on that status. I'm just finding it a little hard to believe that life without tax can exist:)

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Daisy

I particularly asked a friend, only last month who is working in the BIR office if my husband's income/money coming from the US will be included in my tax/income computation and she answered NO. However, if we are operating a business here, that's another story!

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poby
I particularly asked a friend, only last month who is working in the BIR office if my husband's income/money coming from the US will be included in my tax/income computation and she answered NO. However, if we are operating a business here, that's another story!

 

RP has tax treaties with a number of countries including the USA so if your income from USA was taxed in USA it wouldn't be taxed in RP. My question is that as a non resident of Australia, most of my income derived from there is not taxed so I'm wondering if RP can get their hands on it.

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Lee
I particularly asked a friend, only last month who is working in the BIR office if my husband's income/money coming from the US will be included in my tax/income computation and she answered NO. However, if we are operating a business here, that's another story!

 

RP has tax treaties with a number of countries including the USA so if your income from USA was taxed in USA it wouldn't be taxed in RP. My question is that as a non resident of Australia, most of my income derived from there is not taxed so I'm wondering if RP can get their hands on it.

 

 

The long and short of it is supposed to be, income earned in the Philippines is and will be taxed in the Philippines and income earned in another country should fall under that countries tax rules since you file taxes in that other country and if that country does not tax that income, then it is non taxable income.

 

Such as people who live here and are on social security from the USA, which is non taxable as long as their other income does not bring them over a certain income number and the Philippines does not tax them on that Social Security, but we all pay VAT on most things we buy and eat here, so we are actually being taxed anyway and the banks deduct tax from the interest we earn here as well, so yes you will be taxed but if you do not earn income in the Philippines, you will not have to file taxes and pay additional taxes but that Vat will get you anyway.

VAT, Value Added Tax

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JohninCebu

Interesting stuff. The UK tax authority has a dual tax arrangement with the PI but I was told my income, a pension, would be taxable in the PI and they (the UK) is under a duty to tell the RP tax office.

 

I've just looked at the tax returns form and it says:-

 

Who Shall File

This return shall be filed, in triplicate copies, by every resident citizen deriving compensation

income from all sources, or resident alien and non-resident citizen with respect to compensation

income from within the Philippines, except the following:

 

My highlight.

 

So yippee! I've just increased my pension by 20%. All I need to do is convince the UK HMC&E.

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JohninCebu

I've just checked the UK Inland Revenue site - and no way Hozey. Our treaty only allows for not being double taxed. They only give relief as long as the country confirms:-

 

4. Certification of the form by the taxation authorities of your country of residence

A requirement for relief under a DT treaty is that the taxation authorities of your country of residence regard you as

resident there for the purpose of that country

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Alan S
Do you think there is a way around this?

 

If there is, it would be foolish for anyone to post it in a public message board.

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Mr. Lee gave a very good reply to the tax question. I live full time in the Philippines. I have foreign income: my US pension is direct deposited to my US bank account. I file a US federal tax return and pay very little to no US tax on my pension. There is no way the Philippines will get their hands on any part of it. How is the Philippines going to tax foreign income? How are they even going to find out about it? If I was Poby, I would continue to file Australian tax returns even though no tax is due and forget about filing with the Philippines.

 

Mike in Cebu

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poby
Mr. Lee gave a very good reply to the tax question. I live full time in the Philippines. I have foreign income: my US pension is direct deposited to my US bank account. I file a US federal tax return and pay very little to no US tax on my pension. There is no way the Philippines will get their hands on any part of it. How is the Philippines going to tax foreign income? How are they even going to find out about it? If I was Poby, I would continue to file Australian tax returns even though no tax is due and forget about filing with the Philippines.

 

Mike in Cebu

 

Indeed I have no intention of telling RP anything. I most likely won't be required to file an Australian tax return either under the rules here (in oz) as they apply to non residents and the sources of my income.

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smokey
my gut on this is that you have pretty much no chance of getting a tax demand from the rp ......now if you want to give them some is another matter.....but are you talking about untaxed profits?? ...because they can only be taxed once.

 

 

 

 

 

well i think they will get the tax... 12% VAT and on bank accts 20% but besides that i dont think so

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