Complete tax guide for OFWs (Overseas Workers)
Are OFWs tax-exempt in the Philippines? Yes on overseas income, but Philippine-source income (rentals, business) is still taxed. 2026 guide to rules, ITR, travel tax, and documents.
Updated June 19, 2026
Reviewed by Cherry De Vega, Bookkeeping and Compliance ReviewerBookkeeping and BIR filings for small businesses since 2018The short answer
Yes. As a non-resident citizen under Section 23(C) of the Tax Code, a registered OFW is taxed only on Philippine-source income. Salary earned abroad is exempt, but rental, business, or interest income inside the Philippines is still taxable. Estimate any PH-source tax with our free <a href="/">income tax calculator</a>.
Open the Annual Income Tax CalculatorKey takeaways
- OFW overseas salary is exempt from Philippine income tax under Section 23(C) of the NIRC; you are taxed only on Philippine-source income.
- Philippine rental, business, professional, and asset-sale income remains fully taxable even while you work abroad.
- A residential rental of ₱15,000/month or less is VAT- and percentage-tax-exempt; above that, expect 3% percentage tax (or 12% VAT if gross exceeds ₱3,000,000).
- 2026 income tax keeps the TRAIN rates: ₱0 to ₱250,000 exempt, then 15% to 35%; an 8% flat option exists for PH businesses under ₱3M.
- OFWs are exempt from the ₱1,620 (economy) / ₱2,700 (first class) travel tax and the international terminal fee with a valid OEC.
- Remittances sent to family are not taxable income; only money you earn inside the Philippines is.
Tax obligations
- Income Tax on Philippine-Source Income Only
- As a non-resident citizen, you are taxed only on income earned in the Philippines. Salary or wages earned abroad as an OFW are exempt from Philippine income tax.
Deadline: Applies year-round
Form: 1701 (if with PH-source income)
- Annual Income Tax Return (if applicable)
- File Form 1701 only if you have Philippine-source taxable income such as rental, business, or professional income. If your only income is foreign employment, no Philippine return is required.
Deadline: April 15 of the following year
Form: 1701
- Keep Proof of OFW Status
- Retain your Overseas Employment Certificate (OEC), contract, and proof of overseas employment to support your tax-exempt status and your travel-tax and terminal-fee exemptions.
Deadline: Keep on file
Form: OEC
Registration process
Step 1: Confirm your tax residency status
Establish that you qualify as a non-resident citizen (an OFW with an overseas contract, or a citizen abroad most of the year). This status limits your Philippine tax to PH-source income only.
Documents to bring
- Overseas employment contract
- OEC
Step 2: Keep your OFW documentation
Maintain your Overseas Employment Certificate (OEC), passport stamps, and employer contract as proof of OFW status for exemptions.
Documents to bring
- OEC
- Passport
Step 3: Register any Philippine-source income
If you earn rental, business, or professional income in the Philippines, register that activity with the BIR (Form 1901/1903) and file returns on that income only.
Documents to bring
- BIR Form 1901 or 1903
- Valid ID
Calculators for OFWs (Overseas Workers)
- Annual Income Tax Calculator
Compute your 2026 Philippine income tax on salary or business income under the TRAIN graduated rates, with a step-by-step breakdown of every bracket.
Taxes that apply
- Income Tax
Income tax in the Philippines is a progressive annual tax on individual and corporate income, with individual rates from 0% to 35% under the TRAIN Law and a 25% corporate rate under CREATE. Individuals file BIR Form 1700, 1701, or 1701A; corporations file Form 1702.
Common questions
Are OFWs exempt from income tax in the Philippines?
Yes, on overseas income. Under Section 23(C) of the Tax Code, a registered OFW is a non-resident citizen taxed only on Philippine-source income. Your salary earned abroad is exempt, but any income you earn inside the Philippines, like rent or business profit, is still taxable.
Do OFWs need to file an ITR?
Only if they have taxable Philippine-source income. An OFW whose sole income is exempt overseas salary does not need to file a Philippine Income Tax Return. An OFW with PH rental, business, or professional income must still file and pay tax on that portion.
Is rental income from my Philippine property taxable if I'm an OFW?
Yes. Rental income from property inside the Philippines is Philippine-source income and remains taxable. Units renting at ₱15,000/month or less are VAT-exempt; above that you generally owe 3% percentage tax, or 12% VAT if annual gross rent exceeds ₱3,000,000.
Are remittances sent home by OFWs taxed?
No. Money you remit to your family is a transfer of your already-exempt overseas income, not new income to the recipient, so it is not subject to income tax. See our dedicated guide on whether remittances are taxable in the Philippines.
Are OFWs exempt from the travel tax?
Yes. Under RA 8042 as amended by RA 10022, registered OFWs are exempt from the ₱1,620 (economy) or ₱2,700 (first class) travel tax. Present your OEC or secure a TIEZA travel-tax exemption endorsement online before departure.
What documents prove OFW tax status?
Your Overseas Employment Certificate (OEC) or DMW Balik-Manggagawa form, a valid passport with work visa or permit, your employment contract, and your OWWA membership certificate. Keep your TIN and BIR records for any Philippine-source income.
Do OFWs pay the airport terminal fee?
No. OFWs are exempt from the international Passenger Service Charge (terminal fee). If it is bundled into your ticket, the airline refunds or waives it once you present your OEC at check-in.
What if I freelance online while living abroad?
If you are a documented OFW, your foreign earnings stay exempt. If you freelance abroad without a documented overseas contract, you may still be a non-resident citizen taxed only on PH-source income, but you lose OFW-specific perks like the travel-tax exemption. Check our freelancer tax guidance.