Bureau of Internal Revenue

Arcita 03:43 PM, Sep 29, 2022

September 29, 2022

Madam:,

Greetings!

Thank you for your request dated Sep 27, 2022 05:18:47 PM under Executive Order No. 2 (s. 2016) on Freedom of Information in the Executive Branch.

Your Request

You asked for Tax Exemption for Overseas Filipino Workers (OFWs).

Response to Request

 In reply, we invite you to Section 23 of the Tax Code as follows:

SEC. 23. General Principles of Income Taxation in the Philippines. - Except when otherwise provided in this Code: 
xxxx

An individual citizen of the Philippines who is working and deriving income from abroad as an overseas contract worker (OCW) is taxable only on income derived from sources within the Philippines: Provided, That a seaman who is a citizen of the Philippines and who receives compensation for services rendered abroad as a member of the complement of a vessel engaged exclusively in international trade shall be treated as an overseas contract worker; 

Based on the foregoing, unless the OCW is deriving income from sources within the Philippines, then that will be the only time he/she will be required to file the income tax return and pay any income tax.  Otherwise, the provisions in RR 5-2001 shall be applicable. If the said income is derived from sources within the Philippines, the income tax return to be filed will depend on the nature of income generated e.g. as part time employee (Form 1700) or self-employed individual (Form 1701).

Revenue Regulations No (RR) 5-2001 provides that Overseas Contract Worker (OCW)’s are no longer required file their Income Tax Return (ITR) for income earned overseas.”

Thank you.

Respectfully yours,

FOI Officer
Public Information and Education Division