BIR planning to tax OFWs

  1. fellow filipinos,

    this news article is an election press release by the ahon pinoy party-list group, but there could be a grain of truth in it.

    forewarned is forearmed.

    http://www.manilatimes.net/national/...70414top6.html

    saturday, april 14, 2007

    ofw tax breaks defended

    the ahon pinoy party-list group on friday vehemently opposed plans by the bureau of internal revenue to remove the income tax privileges currently enjoyed by overseas filipino workers (ofws), the group's primary constituency.

    dante francis ang ii, ahon pinoy's lead nominee, said that although revenue commissioner mario c. bunag had been quoted as saying there has been no "definite decision" on whether to push for the removal of ofws more income tax exemptions or not, "the plan itself sends chilling signals to the millions of our workers abroad."

    ang said removing the ofws tax privileges is not the solution to the government's fiscal problems.

    . . .

    some 8 million filipinos are currently working abroad, remitting a record $12.76 billion back to the philippines in 2006. they remitted $10.69 billion in 2005.

    although commissioner bunag said the contemplated levy would be meted only on professionals such as bank employees and doctors "who make so much money." ang said that those people the bir is targeting are already paying income taxes in the places where they are employed.

    taxing ofws will require an amendment of the national internal revenue code of 1997, which provides that "an individual citizen of the philippines who is working and deriving income from abroad as an overseas contract worker is taxable only on income from sources within the philippines."
    btw, professionals include nurses.

    i don't agree with the "who make so much money" part--straight conversion from gross income to philippine pesos might seem like a lot, but taxes take up a large part of us income, and the cost of living is much higher in the us.

    i hope this plan does not push through, or ofws coming back to manila might be welcomed with...charges by the bir for tax evasion.
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  2. 33 Comments

  3. by   lawrence01
    It's counter-productive in my opinion. First and foremost is that these foreign-workers are already being taxed on the host country they are working in just like any citizens from that host country. Second, these foreign workers do not have to make remittances back to the Philippines but as w/ Filipino culture and we share this w/ the Mexicans we remit money to help relatives left behind and the annual remittances are keeping the Philippines afloat financially.

    It is counter-productive in all accounts. I don't see any good coming of it. This will erase the current Govt's thrust on encouraging all remittances to go through legal channels (through Banks). Everything will be via unconventional ways again. They are already having trouble tracking remittances since majority still use unconventional ways to remit money as it is. What more if such law is passed. Back to stone-age.

    Third, there maybe some limitations as far as nurses for the US is concern. If the nurse is working via green card (US immigrant) then why would the former country tax them ?? No sense at all. To be honest about it and to go further... why would the POEA (this is one vehicle where they will know who left the Philippines) have a say to deployment of nurses to USA if these nurses were filed for green cards (US immigrant). They are US immigrants already. If there are any trouble by Filipino nurses w/ their US employers, does POEA have the right to intervene? Legal, financial or any support at all? None, right? Perfect example would be what happens to the Nurses in the Sentosa Case. Any thing that happens in the US is solved in the US and by using the US legal system or immigration system, if needed. No outside force can intervene or intercede. This would also scare nurses that plans to keep their Filipino Citizenship through the relatively new Dual-Citizenship Law that the current Administration has passed as well. This will render that Law moot or useless as well. No one will apply for Dual-Citizenship (for those that previously relinquished it) and no one will keep their Filipino Citizenship for those on their way to being US Citizens. So, goodbye to that idea and the plans for the Philippines to be the retirement haven of successful foreign workers. There are retirement havens being put up in Asia like Thailand, Malaysia and Indonesia and I won't be surprised if Vietnam and Cambodia joins in after a couple of years to welcome foreign retirees and expats. Those are nice countries to retire to.

    I'm pretty sure that nurses in the US legally (US immigrants/green card holders) would not be part of this for the simple argument of being immigrants already. Hardest hit would be, in my opinion, are the those on just temporary working permits/visas, whether it be blue-collar jobs or a 'high-end' job. They are just temporarily in their host country as long as they keep their job so if any such thing will pass it would affect those temporary workers w/ just work permits or working visas and do not hold a green card (not US legal Permanent Residents).
    Last edit by lawrence01 on Apr 14, '07
  4. by   pinoy_guy
    is this plausible/possible?
    yes.

    the government had been milking the citizens for every cent it can--

    --> to the extent of assigning a bir agent per store in some areas of manila, inspecting the receipts of the buyers.

    --> to the extent of setting up a "raffle" using receipts. a news article last week said the bir netted a lot of tax evaders using this method. (i wonder where the other winners of the "raffle" are though--i recall only 1 winner publicized last year.)

    --> to the extent of putting out a full page ad in the inquirer 2 years ago, calling doctors "pigs" and tax evaders. (if doctors are making a lot of money, why are the doctors turning to nursing??? and the government doesn't want the doctors to leave the country.)



    the government had not been transparent in its dealings. railroading a change in the tax code is possible, with the citizens knowing about it when it is finally implemented. this party list "leak" may have been done with aims of personal gain, but it is good that people know about this before it is implemented.

    it is curious that we call ourselves a "democratic" country, yet the government is threatening to sue the 2 tv networks if they air political ads referring to the corruption studies by international organizations. so yes, the government can ban the news about the proposed tax until after it is implemented.



    what are the repercussions?
    i think every filipino--including immigrants--will be included.

    immigrants are still citizens of the philippines, so would have to pay the proposed tax. the only way out would be to renounce philippine citizenship and to assume citizenship of another country.

    so it would be possible for ofws to be welcomed as "heroes" by the government, and as "tax evaders" by the bir.

    remittances could play a role--by putting the remitter in a "watch list." so yes, the underground remittance centers would make a big comeback.


    the proposed tax would dampen interest in the dual citizenship program. how can anybody survive financially with double taxation?

    make that triple taxation--the expanded value-added tax is another tax on top of the income tax, so that's at least triple taxation.


    a columnist noted that the previous ofws were the construction workers...the shift today is to professionals--well educated professionals, who integrate well with the host country.

    remember transcultural nursing? that subject is a big help in learning, understanding, and integrating into another culture.

    when filipinos realize that there is nothing to go back to, they will not go back.

    they will not remit money, and instead invest their money for their future in their adopted country.

    sigh.
  5. by   RNHawaii34
    i thought ofws, or shall i say nurses who works in ksa, and other countries are not taxed? so, if taxes are deducted from their gross pay, so what's left after taxes? and these people i am sure will not have enough for themselves? so, if bir will make kaltas, ( deduct), where is these money will go? for ofw services? and i thought i was the only one complaining about taxes...i think life is not fair...we just have to make the best of it. i still don't agree with ofws being taxed though.
  6. by   lawrence01
    what are the repercussions?
    i think every filipino--including immigrants--will be included.

    immigrants are still citizens of the philippines, so would have to pay the proposed tax. the only way out would be to renounce philippine citizenship and to assume citizenship of another country.

    so it would be possible for ofws to be welcomed as "heroes" by the government, and as "tax evaders" by the bir.

    remittances could play a role--by putting the remitter in a "watch list." so yes, the underground remittance centers would make a big comeback.

    the proposed tax would dampen interest in the dual citizenship program. how can anybody survive financially with double taxation?

    make that triple taxation--the expanded value-added tax is another tax on top of the income tax, so that's at least triple taxation.

    a columnist noted that the previous ofws were the construction workers...the shift today is to professionals--well educated professionals, who integrate well with the host country.

    remember transcultural nursing? that subject is a big help in learning, understanding, and integrating into another culture.

    when filipinos realize that there is nothing to go back to, they will not go back.

    they will not remit money, and instead invest their money for their future in their adopted country.

    sigh.
    that's exactly what i'm saying as well. the affected worker will relinquish his filipino citizenship in a heart beat and would not think twice about it either. and if i'm not mistaken, if someone who is a us immigrant and is applying for us citizenship only has to be domicile in the us for 30 straight months or 2 1/2 years. some, green card holders (not working) that were petitioned via family-based usually takes 5 years since they do the 6 mos in the us and 6 mos in the philippines scheme but for working professionals, it won't be hard for them to be domicile in the us for 30 straight months to get their us citizenship the soonest possible time and finally renounce their filipino citizenship.

    and yes, remittances will be sent underground again. it is still done up to this day and there's no legal way to stop it.

    no money in the form of monthly remittances will be coming in (that the gov't will know of) and no 'balikbayans' or ex pats going back to retire and spend their savings in the philippines. might as well say goodbye to the resurgent real-estate boom that is being fueled by foreign workers in abroad. what a disastrous domino-effect that this double-taxation will do.

    it would be nice to track on how this will turn out but whether it passes or not, there is no good coming out of it.
  7. by   lawrence01
    Quote from rnhawaii34
    i thought ofws, or shall i say nurses who works in ksa, and other countries are not taxed? so, if taxes are deducted from their gross pay, so what's left after taxes? and these people i am sure will not have enough for themselves? so, if bir will make kaltas, ( deduct), where is these money will go? for ofw services? and i thought i was the only one complaining about taxes...i think life is not fair...we just have to make the best of it. i still don't agree with ofws being taxed though.
    no, they are not currently taxed by the philippine gov't but the philippine's bir has plans to tax so-called 'high-earning' foreign workers such as bank employees and doctors. there were no mention of nurses in the article but we just assume that they will be included.

    you mentioned ofw services - this is where i am scratching my head. through out the decades it is generally agreed upon by many that there aren't such animal. there is always news about blue-collar or white-collar foreign workers that were maltreated but there were very minimal or no support at all. latest example is what happened to the domestic helps in lebanon. very minimal money came in. but the best example, i think, relevant to nurses working in the us is the case of what happened to nurses in sentosa. there is no support, that i know of, and on whatever form that is being given other than being observers and reporting on what is happening.
    it has always been that when you need these so-called services that nothing follows through but they are fast in imposing extravagant fees and now taxation for services and protection that decades of foreign workers know that the gov't always fails to render if the need comes.
  8. by   rookieq
    Quote from lawrence01
    And if I'm not mistaken, if someone who is a US immigrant and is applying for US citizenship only has to be domicile in the US for 30 straight months or 2 1/2 years. Some, green card holders (not working) that were petitioned via family-based usually takes 5 years since they do the 6 mos in the US and 6 mos in the Philippines scheme but for working professionals, it won't be hard for them to be domicile in the US for 30 straight months to get their US Citizenship the soonest possible time and finally renounce their Filipino Citizenship.
    it only takes 2.5 years of straight US residency for an immigrant to get US Citizenship??

    can someone confirm this? I thought it was 5 years?
  9. by   lawrence01
    Quote from rookieq
    it only takes 2.5 years of straight US residency for an immigrant to get US Citizenship??

    can someone confirm this? I thought it was 5 years?
    For what I know, It takes 5 years if it's 6 mos off and 6 mos on as most non-working green card holders do because time is only counted for actual time that a person is domicile in US soils so if one will be in the US for only 6 mos and spends the latter 6 mos in the Philippines then that just counts for 6 mos rather than 1 year so it takes 5 years if done that way in comparison to if one stays in the US for 30 straight months. This is what I know and heard from a lawyer. Someone can correct me if I'm wrong from what I heard. I heard this from an American Immigration Lawyer that previously had a weekly TV show shown in The Filipino Channel and their local counterpart at ANC.
  10. by   pinoy_guy
    came across these links:

    http://www.immihelp.com/citizenship/...igibility.html

    http://www.expertlaw.com/library/imm...alization.html
    be a permanent resident for not less than five years. (if a person obtained permanent residence through marriage to a u.s. citizen, they may be eligible for naturalization in three years if the couple has been married for 3 years, if the spouse was a citizen during that entire period, and if the couple are still living in marital unity);
    hope this helps.
  11. by   lawrence01
    thanks for the links. :spin: the 1st link w/ the chart was esp. good. so, it's confirmed that it only takes 30 months of continuous physical presence in the us but will take 5 years if he gets in and out (but nothing more than 6 mos. outside the u.s.). i think any thing more than 6 mos outside the us would constitute abandonment and would have to apply for a re-entry permit w/ valid reasons.
  12. by   lawrence01
    I reckon the reason for the sudden interest of when it is the soonest possible time to apply for citizenship is the aforementioned scenario of double-taxation, which is the reaction expected.
  13. by   rookieq
    Quote from lawrence01
    Thanks for the links. :spin: The 1st link w/ the chart was esp. good. So, it's confirmed that it only takes 30 months of continuous physical presence in the US but will take 5 years if he gets in and out (but nothing more than 6 mos. outside the U.S.). I think any thing more than 6 mos outside the US would constitute abandonment and would have to apply for a re-entry permit w/ valid reasons.
    hehe, still confusing for me...

    does this mean that assuming you were granted your Green card, permanent residency on...

    Jan 2008

    and you never leave the US at all for the next 30 months straight.

    does that mean that by August 2010.....you can now apply for US citizenship?
  14. by   lawrence01
    Quote from rookieq
    hehe, still confusing for me...

    does this mean that assuming you were granted your Green card, permanent residency on...

    Jan 2008

    and you never leave the US at all for the next 30 months straight.

    does that mean that by August 2010.....you can now apply for US citizenship?
    Yes, that's what I've understood by the chart (in the very 1st row) in the 1st link that pinoy_guy gave and this is also how the lawyer I had watched not so long ago has explained it. It is 30 months continuous physical presence or in domicile. It becomes 5 years if the green card holder gets in and out of the US as some do but should be not more than 6 mos outside US if he chooses to do it this way as that is tantamount to abandonment of green card status for reasons as to why would a green card holder who is presumed to want to become a US citizen spend more time outside the US than being domicile in US soils. A tourist visa will do if he wants to spend more time in a given year outside the US and the green card status better left to those who intends to stay in the US for more than 6 mos and plans to be a US citizen.

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