I am Jane from Bacoor, Cavite. 25 years old. My father, Enrique, is an immigrant and a green card holder in the United States for four years now. On the other hand, my mother, Concepcion, a Filipina, is residing here in Bacoor but stays with my father abroad for three to four months a year. In the U.S., my father is working as a waiter at a restaurant and earns income of around $4,500.00 When my mother visits the US on a tourist visa, my father’s employer allows my mother to work in the same restaurant on a part-time and temporary basis, and she gets paid around $2,500 per month for the work. I was advised by a friend that I have to check my parents’ income tax liability to the Bureau of Internal Reveue to avoid any problems in the future. Are my parents required to pay income tax in the Philippines, even though they receive their income abroad? Thank you.
Based on the details you have mentioned, your father is not liable to remit income tax but your mother is liable to remit income tax annually to our Bureau of Internal Revenue (BIR). In order to explain our answer, it is necessary to determine the status of your parents based on the definitions provided in our National Internal Revenue Code of 1997 (NIRC).
Under Section 22 of the NIRC, your father is considered as a non-resident citizen of the Philippines as he is still only an immigrant of the US establishing his residency therein while pending the grant of his US citizenship. On the other hand, your mother is a resident citizen of the Philippines, as she is residing in the Philippines, and a non-immigrant in the US who only visits occasionally on a tourist visa.
Section 23 of the NIRC expressly provides that income tax liability depends upon the status of the taxpayer and the source of the income, to wit:
“SEC. 23. General Principles of Income Taxation in the Philippines. – Except when otherwise provided in this Code:
A citizen of the Philippines residing therein is taxable on all income derived from sources within and without the Philippines;
A non-resident citizen is taxable only on income derived from sources within the Philippines;
x x x”
Based on the foregoing, it appears that the salary or income received by your father and mother, sourced from a restaurant in the United States, is income without the Philippines (or outside the Philippines) considering that the service is rendered abroad. Thus, such income or salary falls within the category of “income derived from sources without the Philippines.”
Clearly then, following Section 23 (a) of the NIRC for your mother and Section 23 (b) of the NIRC for your father, it would appear that your mother is the only one required to remit income tax to our BIR based on the income she has received from the restaurant in the US. Your father will only be liable for income tax if and only if he received income the source of which is within the Philippines.
Again, we find it necessary to mention that this opinion is solely based on the facts you have narrated and our appreciation of the same. The opinion may vary when the facts are changed or elaborated.
We hope that we were able to enlighten you on the matter.
Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to firstname.lastname@example.org.