OFWs in the UAE: How Philippine expats calculate taxes on income earned overseas and back home

OFWs in the UAE: How Philippine expats calculate taxes on income earned overseas and back home

Dubai: Overseas Filipino Workers (OFWs), a term often used to refer to Filipino migrant workers, are people with citizenship of Philippines, who reside in another country for a fixed period of employment. For the purpose of taxation, an OFW is considered as a non-resident citizen as per the National Internal Revenue Code (NIRC) of Philippines. The country’s tax norms provides a wide range of tax incentives for OFWs. As per the NIRC, OFWs are only liable to pay taxes on their income earned within the Philippines, and not their overseas income. This means that the income derived by these individuals from working abroad is not subject to income tax in the Philippines. The government’s revenue regulation outlines important guidelines about the tax treatment of income earnings and remittances sent by Overseas Contract Workers (OCWs) or OFWs. Although the income an OFW earns overseas is exempt from income tax within the Philippines, if an OFW realises income from business activities, investments or properties within the country, such earnings are subject to income taxes in the Philippines. While regular income is taxed at a tax rate from 5 per cent to 32 per cent, passive income – which is applicable to most