Philippines Financial Issues

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FINANCIAL ISSUES
		Currency Converter

The unit of currency in the Philippines is the peso (P), which consists of 100 centavos. Peso notes are produced in denominations of 5, 10, 20, 50, 100, 500 and 1,000, with a peso coin for P1 and P5. Centavo coins are in denominations of 1, 5, 10 and 25. At this time, the peso is fully convertible with foreign currency, but no more than P10,000 may be taken out of the country without approval from the Bangko Sentral ng Pilipinas.

Banking Services
Bangko Sentral ng Pilipinas (BSP), the central bank of the Philippines, has authority and control over all banking institutions. Recently, the banking industry has expanded to allow foreign banks to establish competitive branches throughout the country. At this time there are several foreign banks in operation in Manila, including ANZ Bank, Bank of America, Citibank, Deutsche Bank, Hong Kong Bank and Standard Chartered Bank.

Most of these institutions offer traditional private banking services such as checking and savings accounts. It is probably wise to open a checking and savings account in one of the available banks in Manila for the duration of your stay. You should find out whether or not your specific bank in Manila is able to accept foreign-currency wire transfers. This will allow you to wire money into your local account if necessary, which is a good idea if your salary is in a foreign currency.

You should check with your bank to see if there are any special services provided to foreign nationals. It may be possible to have a direct-debit card issued and perhaps, an ATM card. You may want to affiliate yourself with a home-country bank that has a branch office in Manila. This may facilitate the opening of an account and the transfer of money.

Opening an Account
Both non-residents and residents are able to open an account in the Philippines. Peso accounts are available, and do not require that an individual obtain approval from the central bank prior to opening. In addition to local currency accounts, individuals may have a foreign currency account to allow the transference of currency abroad. To open an account, you may be required to supply identification and proof of residence in Manila. In addition, it may be required that you submit a letter of employment from your company.

Credit Cards
Credit card use is more common amongst the citizens of large cities and towns in the Philippines. With such a large foreign-national population residing in Metro Manila, the use of credit cards has become more widespread than in the outer provinces and municipalities. Most of the major credit cards are accepted in the larger stores, restaurants and hotels in Manila. The most popular cards used include American Express® Card, Diner's Club, MasterCard and VISA.

Cash is still preferred for purchases, however, and although Manila is rather international in nature, some local merchants may prefer that you pay in cash rather than use a credit card. It is also advisable to use credit cards only at the most reputable establishments and to never allow the card out of your sight. Make sure all amounts printed on your credit slip are clear, and never arrange for bank statements from abroad (or credit card statements) to be mailed to the Philippines. Airmail syndicates can clean out your accounts and you will not know about it for months. Also, note that a five percent surcharge may be added to your bill if you use a credit card.

Banking Hours
The traditional banking hours in Manila are from Monday to Friday between the hours of 9:00 a.m. and 3:00 p.m. Some banks have extended hours until 4:30 p.m. and stay open until 6:00 p.m. one night a week.

Banks
American Express
3rd Floor, Corinthian Plaza
121 Paseo de Roxas Legaspi Village, Makati
Tel: [63](2) 818-6731

Banque Nationale de Paris
Ground Floor, PCIB Tower II
Makati Avenue, Makati
Tel: [63](2) 815-8821

Central Bank of the Philippines
A Mabini, Corner of Vito Cruz Malate
Tel: [63](2) 507-051
Fax: [63](2) 522-3987

Citibank N.A.
Citibank Centre
8741 Paseo de Roxas Makati
Tel: [63](2) 810-4411

Hong Kong and Shanghai Bank
6780 Ayala Avenue, Makati
Tel: [63](2) 810-1661

LOCAL TAXATION

All foreign nationals residing in the Philippines are subject to taxation on income derived from employment in the country, regardless of place of payment. The level of taxation of each individual is based upon his/her resident or non-resident status.

Tax Requirements for Living in the Philippines
Generally speaking, taxation status is determined by by an individual’s residency situation. Non-residents are foreign nationals who are not residents of the Philippines and whose primary residence is outside of the Philippines. Most non-residents are deemed as such if their primary purpose in coming to the Philippines is for a definitive reason, such as employment. In addition, all individuals residing in the country for less than 180 days, are considered to be non-residents. If the individual's primary purpose of residence in the Philippines is something that requires an extended temporary stay, the individual is considered to be a resident of the Philippines.

Sources of Taxable Income
Non-residents are taxed on all Philippine-source income at a graduated rate not exceeding 35 percent. This can include all benefits, gains, profits, salaries and wages. Residents are taxed on their world-wide income, including benefits packages, compensation, salaries and wages at a graduated rate, also not to exceed 35 percent.

Tax Treaties
Currently, the Philippines has tax treaties with Australia, Canada, France, Indonesia, Japan, Korea, Malaysia, the Netherlands, New Zealand, Singapore, Thailand, the United Kingdom and the United States.

Other Taxes
In addition to taxes applied to an individual's income, foreign nationals may be subject to additional taxation. These taxes can include:

•Capital gains tax
•Excise tax
•Motor vehicle registration
•Real estate tax
•Residence tax
•Stamp tax
•Traffic tax

In addition, an individual may be subject to additional taxes imposed by the local government. A Value Added Tax (VAT) is imposed on certain goods, such as cigarettes and luxury items. The VAT amounts to ten percent of the gross-selling price of an item.

Social Security
The Philippine Government requires that all individuals contribute to the Home Development Funds, Medical Care and Social Security System, as long as their place of employment conducts business or trade in the country.

The Social Security System (SSS) provides certain exemptions for individuals under the following circumstances:

•Foreign national remains in the country for a short time
•Individual has no intentions of becoming a resident of the Philippines
•The reason for employment is a one-time specific endeavour.

Payment of Taxes
Individuals are required to file a tax return at the end of each year. The tax return for the preceding year must be submitted by 15 April.