Govt taxes dual citizens with income in the Philippines


Dear PAO,
I am an American citizen, receiving pension from the US for being a veteran. I was a former Filipino citizen. I want to apply for dual citizenship. But I am worried of the Philippine taxes that may be imposed against me for being Filipino again. Please enlighten me on this matter.
Lola Sering

Dear Lola Sering,
A former Philippine citizen who has been naturalized as citizen of a foreign country may re-acquire his Philippine citizenship though application of dual citizenship under Republic Act (R.A.) No. 9225 otherwise known as “Philippine Retention or Re-acquisition Act of 2004”. This process restores one’s Filipino citizenship and all civil and political rights and obligations concomitant therewith (Teodora Sobrejana-Condon v. Comelec, G.R. 198742, August 10, 2012).

Thus, an applicant who was granted a dual citizenship shall be entitled, among others, the right to stay in the Philippines without paying for fees imposed to foreign nationals, the right to vote, except the right to run to any elective positions (Teodora Sobrejana-Condon v. COMELEC, G.R. 198742, August 10, 2012) and the right to buy real estate properties.

As to taxes to be paid, he shall be subject to the rules of income tax under Section 23 of the National Internal Revenue Code (NIRC) which provides that “except when otherwise provided in this Code (NIRC): (a) a citizen of the Philippines residing therein is taxable on all income derived from sources within and without the Philippines; (b) a nonresident citizen is taxable only on income derived from sources within the Philippines; xxx. Accordingly, the Philippine government shall only tax you if you have income in the Philippines. Income under the NIRC means all income derived from whatever source. However, you don’t have to worry about the pension you are receiving from the US government being a veteran because this pension is expressly exempted by the NIRC from taxation. It is stated under Section 32 (B)(6) of the NIRC that “the following items shall not be included in gross income and shall be exempt from taxation under this title: Xxx (d) payments of benefits due or to become due to any person residing in the Philippines under the laws of the United States administered by the United States Veterans Administration xxx ”.

Please be reminded that the above legal opinion is solely based on our appreciation of the problem that you have stated. The opinion may vary when other facts are elaborated therein.


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1 Comment

  1. How about those who are NOT veteran? Do I have to pay taxes to the Phil. Govt. the momment I move to the Philippine? I want to go back to the Phil. and spend my last years of my life but I am not knowledgeable of tax consequences. Thank you.