Tag Archives: taxes

Thoughts on PERA in comparison to US retirement accounts

I have just started to read about PERA retirement accounts that have been recently made available to Filipino workers, including those working abroad. There have already been many articles written about PERA all over the web so I won’t bother with all the nitty-gritty details. You can read a good introduction on PERA from Katie Scarlett Needs Money.

PERA stands for Personal Equity and Retirement Account. They are often described as the Philippine version of American retirement accounts like 401(k) and traditional IRA accounts. I still have my own 401(k) and traditional IRA accounts from my time working in the U.S. so I find these comparisons interesting. In this post, I’d like to explore these comparisons in more detail.

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How are foreign capital gains taxed in the Philippines?

I previously discussed how the US taxes dividends and interest income of non-resident aliens investing in the US stock market. In summary, 15% tax is withheld from interest income, 25% tax is withheld from dividend income, while no taxes are withheld from capital gains.

(NOTE: Check out the post – More questions on Philippine taxation of foreign capital gains and dividends – for my most recent thoughts on this topic.)

But how does the Bureau of Internal Revenue (BIR) in the Philippines tax these types of income? The short answer is: It’s not clear. The long answer is as follows:

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Investing in the US from the Philippines as non-resident alien: IRS tax issues

When you open an online trading account in a U.S. brokerage account like Charles Schwab or TD Ameritrade, and you’re not an American citizen, you don’t have a green card, and you don’t live in the U.S., you’re generally classified as a non-resident alien by the Internal Revenue Service (IRS) of the U.S. Even as a non-resident alien, some or all of your income from your trading account may still be subject to taxes by the U.S.

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