Taxability of a Filipino Married to an American Earning Income and Paying Taxes to the U.S.A.

September 22, 1966 BIR RULING NO. 035-66 Dr. Pedro P. Changco, Jr. 1631 J. Zamora St., Paco M a n i l a S i r : This refers to your request for legal opinion on a query stated as follows: cdtech "I have a physician daughter who is married to an American doctor. Her status in the U. S. A. is permanent resident status and when she completes 5 years of this status she will become a U. S. citizen. Is she subject to our local income tax even if all her income including that of her American husband are all earned in the U. S. A. She is already paying her income tax in the U. S. A. together with that of her American husband. If she still subject to our local income tax, is she subject only to her income not including the income of her American husband? Kindly elucidate me on this matter so I can send her by mail your written answer. "Are Filipino doctors or exchange visitors program in the USA earning in the USA subject to our local income tax even if they already pay income tax in USA? If they are still subject to our local income tax, where do they have to file them in the U.S.A. or do they have to file them in the Philippines. How much tax will they have to pay when they already paid the U.S. income tax." In reply, I have the honor to inform you as follows: Your daughter is subject to Philippine income tax on all income earned (excluding that of her husband) in the United States even if she earns no income from sources in the Philippines pursuant to Section 21 of the Tax Code. However, the income tax she pays in the United States may be claimed as deduction or credited against her Philippine income tax if she signifies in her return her desire to avail of such credit (Sec. 30(c)(1) and (3), Tax Code). The foregoing rule is equally applicable to Filipino doctors who are in the United States under the exchange visitors program and who earn income in said country. In this connection, it may be stated, that in general, citizens of the Philippines are subject to Philippine income tax on all income received by them from all sources, be they derived from within or without the Philippines, or both, regardless of the place of their residence. In all cases, however, Filipinos residing abroad may claim as credit against the Philippines income tax any income, war-profits, and excess-profits taxes paid or accrued during the taxable year to any foreign country. Filipinos residing abroad deriving a gross income of P1800 or over for the taxable year must file an income tax return (Sec. 45(a), Tax Code. They may secure and file the return with any Philippine Consulate or internal revenue attache, if any, in their place of residence. If there is no consulate or attache, or if no form is available in the offices of said consulates or attaches, they should request the Commissioner of Internal Revenue, Manila, for said forms. The return may be filed with any consulate or internal revenue attache or direct with the Commissioner of Internal Revenue by mail. In any case, as the income tax is now payable upon filing of the return, they should accompany their returns with the corresponding draft covering the amount of the tax, if any tax is due as indicated in their return. aisadc Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue