DUAL CITIZENSHIP: What are the benefits? Do we have to pay taxes to the Philippine Government?

Embassy Corner
The Philippines has come a long way in renewing its ties with overseas Filipino communities. Way back in 1973, it proclaimed the balikbayan and gave legal status to them as “returnees” or “people coming back home” to the country. This recognition was followed by progressive steps to restore and promote the rights of former Filipino citizens and Filipinos who live or work abroad, as well as to give them benefits and privileges not available to the ordinary traveler to the Philippines.
Three decades after the balikbayan was proclaimed, the landmark Citizenship Retention and Reacquisition Act was passed on 29 August 2003, bringing to a full circle the restoration of the rights of many of our nationals abroad.
Filipinos who re-acquire Filipino citizenship under Republic Act No. 9225, or the Citizenship Retention and Reacquisition Act of 2003, even more popularly known as the Dual Citizenship Law, may once again enjoy full civil, economic and political rights enjoyed by all Filipino citizens. Among these are:
Right to own real property in the Philippines;
Right to engage in business or commerce as a Filipino;
Right to practice one’s profession in accordance with law;
Right to acquire a Philippine passport; and
Right to vote in Philippine elections.
Let us discuss these privileges one by one.
Right to own real property: The Philippine Constitution prohibits foreigners from owning real property in the Philippines. This is why before the Dual Citizenship Act, former Filipinos had to settle with the Land Title being in the name of a dummy, like a family member or friend. It is true that there are some privileges granted to former Filipinos as far as property ownership is concerned, but these privileges are limited and far more restricted than the rights that current Filipino citizens enjoy.
Owning real property is an important economic and social milestone for Filipinos. Thus, many former Filipinos, having found the economic wherewithal while working abroad, want to buy real property in the Philippines, either as a form of investment or for use upon retirement. Understandably, they want the title to be in their own name.
Anybody who has seen an OTC, or Original Certificate of Title, or a TCT, or Transfer Certificate of Title, will note that the land owner is always described as a “Filipino citizen.” It is a very rare person who has seen an OTC or a TCT in the name of a “foreign citizen.” This is because laws pertaining to ownership by foreigners, even former Filipinos, are so complicated that it is much more simple and straightforward to register land as a Filipino citizen.
This is a clear benefit for Dual Citizens who want to buy real property in the Philippines. Before, former Filipinos had to settle with the title being in the name of a family member or friend. Now, as Dual Citizens, they can have property titled in their own name.
The right to engage in business or profession. Many businesses and professions in the Philippines are reserved only for Filipinos. For example, the retail business and almost all professions that require a license to practice (doctor, nurse, lawyer, etc.) are reserved for Filipino citizens. Many former Filipinos who want to retire in the Philippines envision themselves as having a small business, or a small office, to keep a means of being busy in retirement, not to mention the additional income that comes with it.
Dual citizenship is thus a must for former Filipinos who wish to retire in the Philippines and have a small business or exercise a profession. Retirement in the Philippines does not mean the end of a productive economic or professional life. A business or profession is a means of keeping social status and keeping in touch with one’s community. Through Dual Citizenship, retirement in the Philippines can be the start of a brand new avenue in life as a businessman or professional.
The right to a Philippine passport. Many former Filipinos take pride in their possession of the passport of their new country of citizenship, and this is true for Filipinos who have become Canadians. This is rightfully so, because Canada is a great country that has become a hospitable new home for many of our kababayans. And many Filipino-Canadians want to travel using their Canadian passport, since that makes coming back to Canada much easier. Of what use then is a Philippine passport for a Dual Citizen?
A Dual Citizen traveling to the Philippines can use his new Passport, a Canadian passport, for example. Upon entering the Philippines, the traveler shows the Philippine immigration officer both his Canadian and Philippine passports. The former Filipino uses his Canadian passport for all documentation (immigration form, entry stamps, etc.), but by also showing the Philippine passport, the Philippine immigration officer will know that he is also a Filipino, and therefore will treat him as a Filipino. This means no restrictions on how long the person can stay in the Philippines, no restrictions on employment or education – no restrictions at all in so far as foreigners are concerned, for after all, the holder is a Filipino citizen.
In the second part next issue, we will discuss the very important privilege of participation in Philippine elections, and the tax effects of dual citizenship.
By reacquiring or retaining Filipino citizenship, a former Filipino may once again enjoy full civil, economic and political rights enjoyed by all Filipino citizens, among which are (1) the right to own real property in the Philippines, (2) the right to engage in business or commerce as a Filipino, (3) the right to practice one’s profession in accordance with law; (4) the right to acquire a Philippine passport; and (5) the right to vote in Philippine elections.
In this Second of Two Parts, we will discuss the important privilege of participation in Philippine elections, and the tax effects of dual citizenship. First off, we will discuss tax effects, to rid the reader’s mind of this cobweb.
There are those who say that while they recognize the huge benefits of dual citizenship, they are hesitant to do so, because they would have to pay taxes to both the Philippine and the Canadian governments. Is it true that dual citizenship will have tax effects in the Philippines?
The short, and complete, answer is: No. Dual citizenship has no tax effects in the Philippines. This is because Philippine taxation is based on where income is earned or where property is located, regardless of citizenship.
Under Republic Act 8424, only incomes derived from the Philippines are subject to taxation by the Philippine government. Thus, a person need not pay income tax to the Philippine government for income earned abroad, whether or not he is a Filipino. Conversely, if a person earns income in the Philippines, he will have to pay income tax in the Philippines, whether or not he is a Filipino.
The same is true with property taxes, and other taxes for that matter. If a person owns real property in the Philippines, he will have to pay real property taxes in the Philippines, regardless of his citizenship. Conversely, if a person does not have real property in the Philippines, he does not have to pay real property taxes in the Philippines, regardless of his citizenship.
There is, then, everything to gain and nothing to lose by reacquiring or retaining Philippine citizenship. And of all that there is to gain, there is perhaps none more important for our country than participation in the political process.
The right to suffrage is guaranteed by the Philippine Constitution to all Filipino citizens. Section 1 of Article V of the Philippine Constitution of 1987 establishes for all Filipinos the right to vote, and Section 2 of the same Article directs Congress to provide a system for absentee voting by qualified Filipinos abroad. February 2003 saw the birth of the Overseas Absentee Voting Law, which finally breathed life into the Constitutional mandate.
Why is the Government giving the vote of Overseas Filipinos so much importance? Three reasons leap out:
Firstly, Overseas Filipinos constitute an educated voting bloc. Filipinos have to possess a minimum of skill, literacy and education in order to obtain jobs abroad. Moreover, in countries like Canada, not only do Filipinos satisfy the said minimum, an overwhelming majority exceed the standard by a wide margin, being highly educated and highly skilled, with technical, college, university, and post-graduate degrees. Such a bloc ensures votes that are studied, choices that are made after careful scrutiny of who the candidates are, what they stand for, and what they can do for the country and the Filipino people.
Secondly, Overseas Filipinos are relatively financially well-off. Jobs overseas mean good salaries, and in developed countries such as Canada, even a minimum legal wage converts to a substantial amount back home. This translates to financial independence, which in turn guarantees a vote that is free of financial considerations. Allegations of vote buying have become endemic to the electoral system, but the financial independence of Filipinos overseas virtually eliminates them as targets for vote buying. Indeed, it would be very unusual, even improbable, for an income-earning Overseas Filipino to trade his vote for money.
Thirdly, Overseas Filipinos have a strong influence on how decisions are made back home. There are now an estimated 10 million Filipinos overseas. H.E. the Philippine Ambassador to Canada, Jose S. Brillantes, who was recently elected Vice Chairman of the UN Commission on the Protection of Migrant Workers and their Families, estimates that Overseas Filipinos remit approximately US$12 billion to the Philippines annually through official channels (i.e. banks and legit remittance companies). Include unofficial channels (i.e. padala system and questionable remittance businesses), the Ambassador says, and the estimate almost doubles to US$20 billion, or a whopping 1 trillion pesos, which is roughly the annual budget of the entire Government of the Philippines.
Remittances answer for expenditures such as tuition fees and other educational costs, health and hospital bills, marketing and groceries, home improvements and amortizations, clothing needs, as well as luxuries such as cars and surplus purchasing power. As provider of these funds, Overseas Filipinos strongly influence decision-making back home, and the active participation of Overseas Filipinos in the political process would definitely be reflected on the decisions made by the recipients of their bounty. In other words, if they make known and actively campaign for their political choices to the recipients of their endowments, their beneficiaries are likely to follow suit, or at the very least, listen to them and consider their choices.
The vote of Overseas Filipinos thus has enormous potential, especially when the multiplier effect on the votes of their beneficiaries in the Philippines is factored into the equation.
The next elections are in 2010, when, in addition to Senators and party-list representatives, we will choose no less than the next President of the Philippines. The stakes are high; on the line is the very future of our country.
We are Filipinos at heart. Let us give it flesh by becoming dual citizens, restoring to us our right to choose our leaders and our right to have our voices heard and be acted upon. Remember the saying: “All that is needed for evil to triumph is for good men to do nothing.” We should not let this come to pass.