Tax obligations for Airbnb hosts in the Philippines

[David1747]

My wife and I have been hosting through Airbnb since the beginning of the year and we have been trying to find out what our tax obligations are. We have been getting conflicting information. Barangay officials and City Hall officials have no idea what Airbnb is, so they've not been helpful. They just refer us to the BIR, but the officials in our local BIR office have never heard of Airbnb either, so the only advice we've got is that "maybe" we should be paying the 3% percentage tax that applies to small businesses who are not big enough to apply for VAT registration. But we don't consider ourselves to be running a business. We are just retirees looking to meet people and earn some supplementary income to help pay our bills. And we can't register with BIR unless we have a business name.

So I've been doing some research online and all I have been able to find out so far is that if you are renting out an apartment or house in which you don't live, then it should be registered as a business (either sole trader or corporate) and you need to apply for business name registration, barangay permit, mayor's permit and BIR registration and then pay income tax (personal or corporate) based on your income less allowable deductions. So that part is clear.

What is not clear is the tax obligations of people like ourselves who are living in a house or condo and just renting out one or two rooms. Back in 2015, the 

Philippine Hotel Owners Association (PHOA) lobbied the Department of Tourism (DOT) to apply an occupancy tax on Airbnb hosts because they felt Airbnb places were unfair competition for hotels. The DOT has acknowledged the PHOA's concerns and has said that their present thinking is leaning towards regulating listed host establishments on Airbnb, but it does not appear that any decision has been taken on this yet. Specifically, Maria Rica C. Bueno, Director, Office of Tourism Standards & Regulations, Department of Tourism said: “At this point in time we don’t have a policy or a program yet, on how to address Airbnb. While we are in the process of processing and developing accommodation standards, we will get insights from the industry and our consultants on how we will address this issue."

Does anyone have any other updates on this, because that quote was from 2015, and I can't find any references to any decisions that may have been taken in relation to the tax obligations of Airbnb hosts in the Philippines in the past three years?

[Lea131]

David, have you found anything else on this? I hosted before in the US but now my mom’s beachfront land in PH is currently being developed. Thinking of adding “nipa huts” to host for Airbnb and we will be living in the same property (separate main house).

[Gina1259]

Hi Lea,

My name is Gina & I am responding to you because I have a similar situation. My husband & I are from the US and have a US LLC and are wondering if as we start to rent properties in Manila & air bnb them what is the process for this in terms of legalities considering we are not residences of the Philippines. Any new ideas?

Thanks!

Gina

[Brendo1]

Just carry on until the authorities will ask or inquire about your business so far they don't have any ideas about airbnb at all.  Similar thing on mine I just carry on if they say I need to secure a permit then I have to.  Now my renting property is more than 3 yrs. and no body bothers.

[Tyler336]

Did you ever follower through with this? I love the country and have been seriously thinking about investing in condos out here to airbnb, unfortunately I have no way of owning property because I am not single and can't marry into it. 

[Joy-May0]

Hi @Tyler336 , did you know that you can still own a condo unit here in the philippines even if you are a foreigner? We have a lot of foreigners who invested in condo units here in Bohol, Philippines. You CAN own a condo, but you cannot own a LAND. If you want to know more, you can send me a message or an email: joymay.maduro.cevi@gmail.com

Or visit my facebook page and send me a message. 

https://www.facebook.com/joymaymaduro87/

[Kelly1386]

Hi Tyler, 

I think foreigners can purchase property as long as it is a building/condo/tower. The only thing you cannot purchase is a land/lot or house and lot property. 

[Rose1781]

Hi Tyler, 

I am reading some some forum and got to your msg... I can guide you how to invest in owning a condo in philippines... You can buy a condo, if your are still interested you can email me, rbasampang @gmail com

[Lou84]

Airbnb Hosting for short term rental is a grey area in the Philippines, there is probably no legislation or law for it (that would regulate the industry) at the moment. My advice, if BIR do not even know about it, just let it be and chill. Our laws has not kept up with the times and it will be a while before us host will be regulated and ask us to pay taxes. 

[Glen-D0]

I agree with Lou. If concerned gov't offices doesn't even know airbnb, or don't have a regulation or have not come up with any standard decisions, let it be.Just continue to earn a living till time comes we  as a host will be asked to comply to our obligation.

[David1747]

An update for hosts in the Philippines who may be concerned about this issue:

We took legal advice on this matter because we also had an issue with our sub-division administrator who was claiming that Airbnb was a commercial activity and therefore breached the sub-division's Deed of Restrictions (which our lawyers said didn't under Philippines property law - I have commented on that in a separate thread). The lawyers anonymously checked on our behalf with BIR and confirmed that they knew nothing about Airbnb and had no idea if and when regulations would be introduced to determine whether Airbnb income would be taxable.

Therefore our lawyers examined existing leasing laws and regulations to give an opinion on whether Airbnb would be considered a commercial acitivity, and their opinion was that if you are only renting out a couple of rooms, but still living in the house, then it's not a commercial activity, but if you are renting out the whole house (or apartment) and not living there yourself, then it would be regarded as a commercial activity. In the former case there would be no requirement to declare the income to BIR, but in the latter case you would have to declare the income to BIR.

That legal opinion may be of value to other AIrbnb hosts in the Philippines, so that's why I'm sharing it here.

I stress that only applies to the Philippines (although it seems to be a similar situation in many other countries) and that may change in the future if legislation is introduced to specifically regulate Airbnb activity.

They also emphasised that all of this was a grey area, and could be open to challenge through the courts, but at the moment there is no specific requirement for Airbnb income to be declared to BIR if you are living in the house and only renting out a couple of rooms. They said the only clear cut regulation was that if your Airbnb income exceeds 3 million pesos a year, then you have to register for VAT, but you would have to have a very high end property to be exceeding that amount.

[Helena570]

Hi David,

Thank you so much for this update. It's very helpful to me since I'm a newbie. Godbless.

Helena

[Fred226]

Hello,

Thanks for your information. 

I plan to buy a condo unit in the Philippines, I am a foreigner who will live most of the year in Europe.

Some people say I can rent my condo and just pay the property tax but won't have to pay anything on the rental income revenues .

That seems strange to me as any revenues normally must be declared and thus are taxable .

I am really confused as I hear contradictory info.

In my case, whether I rent my condo through AirBnB or directly, do I have to declare anything ? Will I have to pay tax, and how much?

Any link to official website that explains that would be of great help.

Thank you in advance for your help.

[David1747]

Hi Fred.

Based on the legal advice we received, it would be apparent that you would be liable for both propoerty tax and income tax. Sorry I can't give you any link for the latter, because we didn't investigate that any further once we got our legal advice that we would not have to pay income tax on our Airbnb revenue (because we live in the house). 

In your case though, there is also the issue of whether you would have to pay income tax if you are not living in the country. That's something we did not explore, so I can't offer any opinion on that, sorry.

Regards . . . David

[David1747]

Hi Fred,

I susbsequently found out that non-residents deriving income from within the Philippines still have to file an income tax return. Here's the link on the BIR website: https://www.bir.gov.ph/index.php/tax-information/income-tax.html

Regards . . . David