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INDIVIDUALS
INDIVIDUAL TAXPAYERS are natural persons with
income derived from within the territorial jurisdiction
of taxing authority. They are classified as:
1. Resident Citizens (RC)
2. Nonresident Citizens (NRC)
3. Resident Aliens (RA)
4. Nonresident Aliens (NRA)
● Engaged in trade/business (NRA-ETB)
● Non-resident alien not engaged in trade or business (NRA-NETB
Importance of classification:
They differ as to:
● Situs of income
● Manner of computing tax
● Treatment of certain passive incomes
● Allowable deductions
● References in the tax choice
CITIZENS OF THE PHILIPPINES (Art. IV,
Sec. 1 of the 1987 Constitution)
1. Those who are citizens of the Philippines at the time of the adoption of the
Constitution
2. Born with father and/or mother as Filipino citizens
3. Born before Jan. 17,1973 of Filipino mother who elects Philippine
citizenship upon reaching the age of maturity
4. Acquired Philippine citizenship after birth (naturalized) in accordance with
Philippine Laws
NON-RESIDENT CITIZEN OF THE
PHILIPPINES (Sec. 22(E) of the Tax Code)
1. Establishes to the satisfaction of the Commissioner of Internal Revenue, the
fact of his physical presence abroad with a definite intention to reside therein
2. Leaves the Philippines during the taxable year to reside abroad:
● As an immigrant
● For employment on a permanent basis
● For work and derives income that requires him to be physically abroad
most of the time during the taxable year
3. A citizen of the Philippines who shall have stayed outside the Philippines for
one hundred eighty-three days (183) or more by the end of the year.
A non-resident citizen who arrives in the Philippines at any time during the
taxable year to reside permanently in the Philippines shall be considered a non-
resident citizen for the taxable year in which he arrives in the Philippines with
respect to income derived from sources abroad until the date of his arrival in
the Philippines.
ILLUSTRATION:
Pedro, an OFW, returned in the Philippines for good on May 2021. He shall be
classified for 2021 taxable year as follows:
January to April 2021 – nonresident citizen
From May 2021 onwards – resident citizen
The same rule shall apply to a resident citizen who leaves the Philippines
anytime during the yea for the following reasons:
• As an immigrant abroad or
• For employment abroad on a permanent basis
ILLUSTRATION:
Ana, a resident citizen, left for the Philippines on July 1, 2021 to reside
permanently in US together with her family. She shall be classified for 2021
taxable year as follows:
January to June 2021 – resident citizen
From July 2021 onwards – nonresident citizen
OVERSEAS CONTRACT WORKER (OCW)/
OVERSEAS FILIPINO WORKER (OFW)
• Revenue regulation 1-2011 defines OCWs as Filipino citizens employed in
foreign countries commonly referred to as OFWs, who are physically present
in a foreign country as a consequence of their employment. Their salaries
and wages are paid by an employer abroad and are not borne by entities or
persons in the Philippines. Hence, OFWs are classified as non-residents
citizens for tax purposes.
• A seaman who is a citizen of the Philippines and who receives compensation
for services rendered abroad as a member of the complement of a vessel
engaged exclusively in international trade shall be treated as an overseas
contract worker.
RESIDENT ALIEN (Sec. 22(F) of the Tax
Code)
• An individual whose residence is within the Philippines and who is not a
citizen thereof. He is one who is actually present in the Philippines and who
is not a mere transient or sojourner.
• An alien who lives in the Philippines with no definite intention as to his stay is
also a resident alien.
• An alien who comes to the Philippines for the purpose that requires extended
stay for its accomplishment, so he makes his home temporarily in the
Philippines, is a resident, regardless of his intention to return to his residence
abroad.
NON-RESIDENT ALIEN (Sec. 22(G) of
the Tax Code)
• An individual whose residence is not within the Philippines and who is
not a citizen thereof.
• Aliens who come to the Philippines for a definite purpose, which in tis
nature may be promptly accomplished.
• Alien who are mere transients or non-residents
• Non-resident alien engaged in trade or business (NRA-ETB) – an alien who
stayed in the Philippines for an aggregate period of more than 180 days during
the taxable year and/or alien who has business income in the Philippines
Under Section 22(S) of the Tax Code, “trade or business” include performance
of the functions of a public office or performance of personal services in the
Philippines (except performance of services by the taxpayer as an employee).