Special Deductions Allowable to Filipino Citizens Working and Residing Abroad

December 20, 1971 REVENUE MEMORANDUM CIRCULAR NO. 40-71 SUBJECT : Special Deductions Allowable to Filipino Citizens Working and Residing Abroad TO : All Internal Revenue Officers and others concerned In order to alleviate the hardships encountered by Filipino citizens residing abroad and earning income therefrom, this Office has decided to allow the following items as deductions in their Philippine income tax returns filed or to be filed for all the years beginning calendar year 1970. l. All allowable deductions contained in the income tax returns filed in the country where they earn their income. Such deductions will be allowed in the Philippine income tax returns, in addition to the deductions allowed under the Income Tax Law of the Republic of the Philippines. 2. Transportation expenses in going to the country where they will work, that is from the Philippines to the United States or Canada or any other foreign country, will be allowed as deductions in the year incurred, or in case of transfer of work from one foreign country to another, then the transportation expenses from the former country to the latter country will be allowed. As an example, in case of transfer of work from the United States to Canada, the transportation expenses incurred from moving himself and his family from the United States to Canada will be allowed in the year incurred. 3. Rentals of apartments, or in case the Filipino citizen residing abroad owns his house, then the fair rental value of such house, shall be allowed as deductions in the year incurred. In addition to these deductions, Filipino citizens earning income abroad will be allowed as additional tax credit, such income taxes as are levied and paid in the State, County or City where they earn their income. Thus, if a Filipino citizen is residing and working in the City of New York, and the State of New York, New York City or the County imposes income taxes in addition to the Federal income tax, all said income taxes will be allowed as a tax credit or deduction against the tax due for Philippine income tax purposes. In accordance with the foregoing, you are hereby instructed to be guided accordingly in the processing of income tax returns of Filipino citizens earning income abroad. This supplements any ruling or memorandum issued by this Office. aisa dc MISAEL P. VERA Commissioner of Internal Revenue APPROVED: CESAR VIRATA Secretary of Finance