Philippines: Tax-free income, 24-month visa for ‘digital nomads'?

Manila: The Philippines is ironing out a legisltion granting 12-month visas, extendable for another 12 months, to so-called “digital nomads”, or people on “workation” – with sweeteners such as exemption from paying local income taxes.

The move, once approved, could have knock-on effects on the economy and potential cross-cultural knowledge and people-to-people exchange. Filipino lawmakers are considering the new bill, known as House Bill 8165, outlining conditions for a digital nomad visa:

Growing trend

Under the proposed legislation, digital nomad visa applicants are mandated to present a valid health insurance cover and evidence of a clear criminal record.

The move is in response to the growing trend of remote work. The Philippines is positioning itself as a competitive destination. The proposed Digital Nomad Visa aims to attract remote workers who wish to live in the Philippines while serving clients or employers abroad.

The visa, initially valid for 12 months, offers the flexibility of a one-year extension, provided applicants continue to meet the criteria. A significant incentive for digital nomads under this visa: exemption from local income tax.

Game changer

This could be a game-changer. Expats on nomad visa won't be taxed in the Philippines, and are only obligated to pay taxes on their income in their home country, thus providing a favourable tax advantage.

The Philippines is in competition with neighbours for tourism dollars.

This legislative move reflects the Philippines' recognition of the benefits of remote work, promoting productivity, cost savings, work-life balance, talent retention, reduced carbon emissions, and a healthier workforce.

Broadband internet

The country has a robust and regulated fintech ecosystem, and most of its towns and cities are wired up with high-speed fibre-broadband internet. Starlink service is also now "live" across its 7,641 islands.

As the digital nomad lifestyle continues to gain popularity globally, the visa programme positions the Philippines as an attractive destination for those seeking a remote work-friendly environment.

It also aligns with the global trend seen in 54 countries, and help boost local tourism, a major job generator, and the overall economy.

Documentation, security

There are concerns about the broad definition of “digital nomads”, prompting calls for stricter documentation and security considerations.

The Justice Committee of the Philippine House of Representatives proposed making provisions specifically prohibiting visa holders from working for local online gaming companies.

Experts in security agencies are being consulted as the bill's details are being ironed out by a technical working group.

Tourism booster

The Philippine welcomed more than 5 million visitors in 2023, a number it hopes to exceed this year (2024), with an ambitious target of 7.7 million tourist arrivals.

Francisco José Matugas II, the bill's author, emphasises the potential benefits for the country's tourism and economy.

He observes a global rise in the digital nomad population post-pandemic lockdowns. Matugas highlights how digital nomads contribute positively by spending more than tourists, relieving public services, creating jobs, and even starting local businesses.

Who are the 'digital nomads'?

However, concerns are voiced by other legislators and foreign affairs officials regarding the broad definition of “digital nomads”, as they raised questions potential misuse, especially for online gambling company employees.

Some pointed out the bill's ambiguity and lack of specificity, expressing the need for a more refined definition.

They also underscored the importance of addressing security risks arising from misuse of the digital nomad visa, suggesting a robust verification system, and ensuring adherence to standards.