There are many hidden costs that you may have overlooked
When employing in Philippines, it is highly like that you may fail to factor in some costs involved while estimating a budget for the assignment. Usually, these costs occur during the course of employment and tend to be country-specific. They are often unpredictable and unavoidable resulting in the assignment being far more expensive than the business intended it to be. Hiring just one employee in Philippines doesn’t justify the effort and cost it takes for a company to learn everything from scratch about employing in Philippines.
Outsourcing services is the most preferred way for global mobility professionals to contain costs with 71% stating that they have already made outsourcing changes in an effort to maximise cost savings. Unsurprisingly, outsourcing is preferred over reducing the number of assignments/transfers or improving in-house administrative processes as a method to save costs.
These considerations are common when hiring an employee in any new country. In our years of experience employing in Philippines we have helped our clients with several other problems specific to Philippines. Here’re a few examples:
Other Issues Our Clients Have Encountered When Employing in Philippines
Philippines Department of Labor and Employment (DOLE) Regulations
DOLE is the agency in the Philippines that oversees all employment-related rules and regulations. There are some unique restrictions on outsourcing due to the widespread and controversial use of ‘seconded’ or sub-contracted workers in Filipino businesses. The bottom line is that contracting firms must be certified by DOLE as compliant with labor laws, or they cant outsource employment of any type.
The issue for multi-nationals that want to outsource employment in the Philippines is that they have to confirm that the contracting firm has DO-174 certification and is not engaged in illegal seconding. The certification has to be renewed every two years, so the contracting firm can show they are in current compliance.
Shield GEO’s local employer of record in Philippines is fully DO-174 certified and compliant.
Philippines Tax Residency and Tax Rates
There are several classifications of expat workers in Philippines, depending on the length of stay. For aggregate stays of less than 180 days in a calendar year, a 25% tax withholding will apply, and for longer stays the regular tax rates of 5-32% will apply. The special 15% tax rate only applies to managerial and technical employees of multinationals, offshore banking units and petroleum services.
Work Permits and Visas
To work in the Philippines, an expat will need both an Alien Employment Permit (issued by DOLE) and a 9G Employee Visa (obtained from the Bureau of Immigration). To be issued a 9G visa, there must be Philippines corporate employer to sponsor and validate the type of employment. A provisional work visa is available while the 9G visa is being approved.