Philippine Income Tax Question

[JJReyes]

Americans pay federal taxes on their global income. Florida, Texas, Nevada, etc. have no state taxes on income, while others like Hawaii and Oregon, it could be as high as 11%. If you are a foreign national with no personal income derived from the Philippines, are you subject to their income tax? If I live in the Philippines six months plus one day; obtain a driver's license; buy or rent a condo; etc., I could change my state tax residency. Some may argue there is no benefit in the Philippines because of the Value Added Tax. We pay in Hawaii 4.715% in General Excise Tax at the retail level and .5% at the wholesale level. This is for everything except prescription medication. The pyramiding effect is equal to a 15% to 20% sales tax. Many Hawaii residents think VAT & GET are one and the same. It isn't. If you have a 13a spousal visa, Balikbayan privileges or renew your visa for an additional 59 days, are you subject to Philippine income tax? In other words, is your retirement income from the United States taxable in the Philippines?

[Art2ro]

Americans pay federal taxes on their global income. Florida, Texas, Nevada, etc. have no state taxes on income, while others like Hawaii and Oregon, it could be as high as 11%. If you are a foreign national with no personal income derived from the Philippines, are you subject to their income tax? If I live in the Philippines six months plus one day; obtain a driver's license; buy or rent a condo; etc., I could change my state tax residency. Some may argue there is no benefit in the Philippines because of the Value Added Tax. We pay in Hawaii 4.715% in General Excise Tax at the retail level and .5% at the wholesale level. This is for everything except prescription medication. The pyramiding effect is equal to a 15% to 20% sales tax. Many Hawaii residents think VAT & GET are one and the same. It isn't. If you have a 13a spousal visa, Balikbayan privileges or renew your visa for an additional 59 days, are you subject to Philippine income tax? In other words, is your retirement income from the United States taxable in the Philippines?

As far as I know it from what I've read, "NO" is the answer to all of your questions and we've lived in the Philippines for 13 years now mostly the entire year off and on every other 2 - 3 years, but once I get my dual citizenship I won't have to leave the country once every 3 years! I believe you can only change you Hawaii State residency if you relocated to another State in the U.S. temporarily and show proof by way of their state's I.D. system like a driver's license and better yet relocate to a State that have no State tax! I'm a California resident and don't pay State tax when residing in the Philippines, but once I step foot in California IRS counts the days I stayed in California via the dates in my U.S. passport and have to pay state tax for those days, weeks or months the next following income tax filing! Since we've been out of the U.S. the entire year, We don't have to pay any State Tax! And if you're a dual citizen, age 60 and over, you can apply for a Philippine Senior Citizen 20% discount card, which helps a little!

[JJReyes]

Hi Art2ro,Thank you for the information. My first idea was to relocate to Las Vegas because Nevada does not have a state income tax. My wife does not like Las Vegas and she is suggesting La Jolla, California where our oldest son, his wife and our granddaughter reside. Unfortunately, California's state taxation is nearly as bad as Hawaii. I can apply for dual citizenship and do own property in the Philippines through inheritance. Friends have previously suggested using the address to already apply for the Philippine Senior Citizen discount card. I have not done so because this would be dishonest since I am not really a resident.Our game plan is to relocate to the Philippines in the event either one of us requires assisted living. The cost for caregiver services are very reasonable compared to custodial care prices in the United States.

[Art2ro]

When you mentioned custodial care in the Philippines, you reminded me of a Fil/Am lady which she is our friend and neighbor, she has been hiring maids for her personal domestic employment and even puts they through care giver or nursing school and plans to sponsor them to the U.S. also making them care givers or nurses in their home care establishment in the U.S. which she has members of her family running at the present. It's her tentative plans in the near future as soon as she has enough care givers recruited and qualified to sponsor to the U.S.., as you well know it's an expensive proposition for recruiting, training and sponsoring Filipino nationals into the U.S. for gainful employment. I guess she being the recruiter and sponsor, she may monetarily benefit with what she's doing, because she seems to be a business minded old lady doing this to supplement their retirement income in the Philippines while benefiting from the people they hire as domestic helpers and turning them into care givers and nurses! Even her only daughter she put through nursing school here in the Philippines and since graduated and is now working in a home care establishment in the U.S.! You have the same ideas as I do in acquiring a hired personal care giver or nurse here in the Philippines when the time comes when one can no longer fend for ourselves and will require assisted home care living til the end of our days as to not burden our immediate family member(s) with the ordeal of taking care of us! That's why I also have plans in renovating our home to provide a downstairs living quarters for myself and our perspective live-in or stay out care giver or nurse when the time comes! So, my plans maybe in the works after a few more years while I'm still fit and able at age 63, for now that is! We'll just never know when it's our time, but I'm not going to worry about for now except for when "I get the feeling" when it's time! Last year, my wife's grandmother made requests to all her immediate family to call her so that she can hear their voices for the last time before she passed on! She knew it was her time to go! She died in her sleep a few days later of natural causes at age 99, may she RIP! I can only be so lucky to live that long, but I doubt it seriously!

[JJReyes]

Hi Art2ro,Interesting that you are also considering the Philippines for custodial care services.Canada has 10,000 caregiver visas a year available for families who need nannies for children, assistance for the elderly, and the disabled. Israel also has 10,000 work permits for their elder population. 90% of caregivers in Israel are Filipinas. The United Kingdom has an estimated 150,000 caregivers and nurses from the Philippines. The latest country recruiting in the Philippines is Turkey.For the United States, caregivers would have to apply for an H1/H2 or the J-1 visa. There are also visas through the Au Pair program, but I am not sure if they can recruit from the Philippines. An American friend married to Thai is involved in this business from Bangkok. Unless the anti-immigration sentiment changes, I doubt if the US Congress will grant visas. If we hired a live-in in the United States at minimum wage with benefits, the cost would be between $2,000 to $4,000 a month. The demand is so strong that agencies are offering to train Americans who do not have a high school diploma. I would rather go to the Philippines and pay a highly skilled person P20,000 to P25,000 ($500) for caregiver services.Now, as a potential business, my thinking is the United States government won't permit the entry of Philippine caregivers. Perhaps we can create a system where Americans relocate to the Philippines as the alternative. I have been working on this idea for the past eight months.

[Art2ro]

I saw a documentary on TV once, showing where most of the elderly Japanese, Korean couples and or other nationalities who have decided to permanently retire here in the Philippines are doing so under the SRRV program with the Philippines Retirement Authority (PRA) offices in the Philippines http://www.pra.gov.p...in/srrv_program who caters to their every needs and have their own home care facilities and or subdivision communities with Filipino staff of administrators, doctors, nurses, care givers and foreign language interrupters, but I forgot where the facilities are at!Since we're going off the main topic, we can just continue this subject under the appropriate category.

Edited February 4, 2012 by Art2ro

[Bruce]

Hi Art2ro,Interesting that you are also considering the Philippines for custodial care services.Canada has 10,000 caregiver visas a year available for families who need nannies for children, assistance for the elderly, and the disabled. Israel also has 10,000 work permits for their elder population. 90% of caregivers in Israel are Filipinas. The United Kingdom has an estimated 150,000 caregivers and nurses from the Philippines. The latest country recruiting in the Philippines is Turkey.For the United States, caregivers would have to apply for an H1/H2 or the J-1 visa. There are also visas through the Au Pair program, but I am not sure if they can recruit from the Philippines. An American friend married to Thai is involved in this business from Bangkok. Unless the anti-immigration sentiment changes, I doubt if the US Congress will grant visas.If we hired a live-in in the United States at minimum wage with benefits, the cost would be between $2,000 to $4,000 a month. The demand is so strong that agencies are offering to train Americans who do not have a high school diploma. I would rather go to the Philippines and pay a highly skilled person P20,000 to P25,000 ($500) for caregiver services.Now, as a potential business, my thinking is the United States government won't permit the entry of Philippine caregivers. Perhaps we can create a system where Americans relocate to the Philippines as the alternative. I have been working on this idea for the past eight months.

Out on Samar, at the local Health Department in Jiabong where I had my workers fixing the toilet last week, I talked to 4 nurses there. paid 8,000p a month IF and I do mean IF the government has the money to pay them!

[Art2ro]

If we hired a live-in in the United States at minimum wage with benefits, the cost would be between $2,000 to $4,000 a month. The demand is so strong that agencies are offering to train Americans who do not have a high school diploma. I would rather go to the Philippines and pay a highly skilled person P20,000 to P25,000 ($500) for caregiver services.

Out on Samar, at the local Health Department in Jiabong where I had my workers fixing the toilet last week, I talked to 4 nurses there. paid 8,000p a month IF and I do mean IF the government has the money to pay them! Like This Bruce

So Bruce on that note, if the Philippine Government can not pay P8,000 a month to their care givers at their local Health Departments, then direct them my way when the time comes and I'll pay them the P8,000 a month for them to take care of me, when I can no longer fend for myself, free room and board and you mentioned they were nurses and not your run of the mill plain care givers which would be a few more pesos cheaper most likely! It beats paying the $2,000 to $4,000 a month for a care giver (not a nurse) anywhere in the U.S.! :attention: Edited February 4, 2012 by Art2ro

[JJReyes]

Yesterday, I had a Fil-Am visitor at the office. He had stopped in Honolulu on his return trip to San Francisco after attending a wedding in Borocay. His family at one time ran a 15 beds private home care facility in the Bay Area. They shut down because the regulatory requirements, paperwork, and the state reimbursement system for Medicaid patients were too much. He is very intrigued about the possibility of Americans going to the Philippines for custodial care.Two weeks ago, my wife had a real estate client. She and another 80 Canadian-Filipinos also went to Borocay to attend a wedding. It must have been a lavish affair because the guest count was over 300 and the festivities lasted 3 days. She was also very intrigued about the possibility of Canadians going to the Philippines for assisted living. Philippine Airlines has a direct flight from Vancouver to Manila. The Philippine caregivers to Israel, Canada, etc. are paid minimum wage. A Filipina live-in caregiver in Israel receives between $1,000 to $1,500 plus board and lodging. My understanding is she has to pay a hefty fee and a percentage of her salary to recruiter agencies. The money needed for training and other expenses come from loan sharks. The caregiver is lucky if she can net $500, which is still a large amount by Philippine standards. If they were paid P20,000 to P25,000 a month to care for an American or Canadian in the Philippines, that would be considered good wages. Even if a recruiter agency charged 40% as their fee, the net would be P12,000 to P15,000 a month plus board and lodging. Bruce can confirm this, but my understanding is a Philippine caregiver is trained as a midwife or nurse aide, 2 years college, while a registered nurse is 4 years college plus medical bar exam. In Hawaii (I need to confirm this) a high school diploma or GED (high school equivalency exam) is no longer a requirement. The training course is six to eight weeks. With a course completion certificate in hand, they can charge $10 to $15 an hour.