Non-resident staff management for Filippino company

Non-resident staff management for Filippino company

Non-resident staff management for Filippino company

Preamble

A fintech company based in the Philippines employs a significant number of foreign employees. Some of them are in the Philippines, but still hold tax residency of their home country, the other part is abroad. Recently the Philippine tax authorities have made changes to the country’s tax policy, extending the same tax rules to non-resident workers and thereby significantly increasing contributions.

Problem

The increase in Philippines income taxes for non-residents has worsened the economics of the company’s IT development team:

  • Income Tax from 15% to 35%;
  • Social Insurance 12%.

The problem is compounded by the fact that a significant number of highly paid highly qualified IT specialists and managers are among the non-residents, whose services the company cannot refuse.

Solution

We agreed to transfer non-resident employees to a contract with SPH in the UAE. The company benefits from low personal income taxes in the UAE:

  • Personal Income Tax 0%;
  • Social contributions 0%.

As a bonus to the tax savings Philippine company received reduced costs for administration of its contracts with employees and a better balance sheet structure.

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