Moving to Philippines and Freelance contractor

[TomG77]

Hi Everyone,

last year I posted about relocating to Philippines and looking to retire on savings......well that is not possible yet, but I have convinced the company I work for in Australia to change my role that will enable me to work for them but in the Philippines. It is a administrative role.

I thought I would simply change job titles, and everything remains the same, with the company withholding my tax and paying superannuation etc etc.

I have been told by the CEO that I would need to become a contractor to the business. They pay my salary on the invoice I issue them each month, but I am responsible for paying tax and my superannuation.

My questions.......

do I pay tax to Philippine government or Australian Government? 

What type of Visa do I need? I thought just a tourist visa and keep extending. I am about to turn 47yrs old

Do I need to advise Philippine government that I am working as a Freelancer / contractor for an Australian business. I am not starting a business in Philippines or hiring staff.

My proposed relocation date is next March / April (flexible) so I am wanting to get the necessary paperwork in order.

Has anyone on this forum done what I am doing and can assist with information or websites that I can read up on?

 

Appreciate any advise.

Thanks 

[hk blues]

28 minutes ago, TomG77 said:

Hi Everyone,

last year I posted about relocating to Philippines and looking to retire on savings......well that is not possible yet, but I have convinced the company I work for in Australia to change my role that will enable me to work for them but in the Philippines. It is a administrative role.

I thought I would simply change job titles, and everything remains the same, with the company withholding my tax and paying superannuation etc etc.

I have been told by the CEO that I would need to become a contractor to the business. They pay my salary on the invoice I issue them each month, but I am responsible for paying tax and my superannuation.

My questions.......

do I pay tax to Philippine government or Australian Government? 

What type of Visa do I need? I thought just a tourist visa and keep extending. I am about to turn 47yrs old

Do I need to advise Philippine government that I am working as a Freelancer / contractor for an Australian business. I am not starting a business in Philippines or hiring staff.

My proposed relocation date is next March / April (flexible) so I am wanting to get the necessary paperwork in order.

Has anyone on this forum done what I am doing and can assist with information or websites that I can read up on?

 

Appreciate any advise.

Thanks 

This topic has come up from time-to-time and the advice given has, at times, made me raise my eyebrows.  Not necessarily deliberately but often based on out of date info or personal experience which may not be totally in line with the law.  Also, the Philippines' government initiated a crackdown on foreigners living here and working here but not paying tax here - particularly social media types.

Regardless, take a look at the attached info which may be of help.

Good Luck! 

https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2023/01/TIES-Philippines.pdf

[Kingpin]

1 hour ago, TomG77 said:

do I pay tax to Philippine government or Australian Government?

Depends on how much you make: https://www.sas-ph.com/web_documents/Tax-Treaties-philippines-and-Australia.pdf

1 hour ago, TomG77 said:

What type of Visa do I need? I thought just a tourist visa

You can't work on a tourist Visa, these are all good questions...to ask your employer.

[Jollygoodfellow]

29 minutes ago, Kingpin said:

You can't work on a tourist Visa, these are all good questions...to ask your employer.

The OP said he will become a contractor so he will be working for himself, his employer will have no role in this relocation.

[Joey G]

1 hour ago, TomG77 said:

I have been told by the CEO that I would need to become a contractor to the business. They pay my salary on the invoice I issue them each month, but I am responsible for paying tax and my superannuation.

So the company you work for now,  and going to contract with is washing their hands of you as an employee... as in... they aren't going to care where you work and want nothing to do with the legal and tax implications. Yes, you told them you're planning to go the Philippines, but I'll bet your contract says nothing about the country you will work in. I would contact a lawyer versed in foreign work abroad and get your advice there.  

For sure a tourist visa won't legally allow you to work in the Philippines. In fact few if any countries allow tourists to work on a strictly tourist visa. 

[JJReyes]

Technically you are not working in the Philippines.  It sounds similar to being a Digital Nomad.  Some countries are openly promoting the concept because this is the equivalent of having a 365-day tourist.  Money is spent in-country and the source for the money is offshore.  No loss of job to nationals which is the reason for the strict labor laws.  Check if the Philippines has or will offer this type of visa.

[fillipino_wannabe]

To do it completely legit you'd need a marriage visa and then you'd be able to work and pay taxes here. I doubt you'll be able to get any sort of working visa.

From the KPMG link above:

'A non-resident alien is deemed engaged in trade or business if, in any calendar year, they stay in the Philippines for an aggregate period of more than 180 days. If the non-resident alien individual’s stay for an aggregate period of 180 days or less during any calendar year, then they are deemed not to be engaged in trade or business.'

[Hestecrefter]

 

On P. 7 of the KPMG link we see this:  

A resident citizen is taxable on all income derived from worldwide sources. For the other categories, the individual is taxable only on income derived from sources within the Philippines. For employment income, the source of income is the place where the services are rendered, regardless of the place or manner of payment, the place where contract was negotiated, or the payer’s place of residence.

I'll admit to having spent only a few minutes on this, but it seem to me that the passage reproduced above provides the simple answer to the OP's question.  He is not a citizen.  His income source is not "within the Philippines" - it's Australia.  His income is not "employment income".  He will be a freelancer, an independent contractor, or, as suggested by JJReyes, a "digital nomad".  

My sense of it is he will have no need to file or pay taxes in the Phils.  

 

[Mike J]

5 hours ago, Hestecrefter said:

My sense of it is he will have no need to file or pay taxes in the Phils.

I would be agreement with that if he works remotely via computer.  If they have him in some kind of management role, supervising Filipino workers it could well be a different kettle of fish.

[TomG77]

Thanks everyone for your advice and input its much appreciated.

I am confirming from the Australian office the following which I believe is true

So as a non-resident, do I need to lodge a tax return or a ‘return not necessary’ form?

Whether you need to complete an Australian tax return or lodge a ‘return not necessary’ form will depend on the type of income (if any) that you earn from Australian sources. Generally speaking, you will only be taxed on your Australian-sourced income and will only need to complete a tax return if you earn the following types of income:

• Income from Australian employment (where those activities are carried out in Australia)

 When in the Philippines I will be working from home on a laptop only. I am not associated with any business in the Philippines or speaking with any local businesses. All my work relates back to the Australia construction industry. 

 

I will look into this comment from JJReyes......Technically you are not working in the Philippines.  It sounds similar to being a Digital Nomad.  Some countries are openly promoting the concept because this is the equivalent of having a 365-day tourist.  Money is spent in-country and the source for the money is offshore.  No loss of job to nationals which is the reason for the strict labor laws.  Check if the Philippines has or will offer this type of visa.

 

To be clear I am open to paying tax to the Philippines Government if I am required to, but If I don't then that is even better. 

I was going to enter only on a 30 day visa, get an extension for 60 days then apply for a 12-36mth visa. I believe they have brought this in after liftingteh retirement visa to 50yrs old.