The Special Resident Retiree’s Visa (SRRV) is a non-immigrant visa issued by the Philippine Retirement Authority (PRA) to foreign nationals and former Filipinos. One of the primary incentives for obtaining an SRRV is the perceived tax-friendly environment regarding foreign-sourced income.

The following analysis outlines the legal framework governing the taxation of pensions for SRRV holders under Philippine law.

1. The Principle of Territoriality

Under the National Internal Revenue Code (NIRC) of 1997, as amended by the TRAIN Law (RA 10963), the Philippines follows a territorial system of taxation for most individuals who are not Filipino citizens.

Resident Aliens: SRRV holders are legally classified as Resident Aliens.
Tax Liability: Section 23 of the NIRC explicitly states that a resident alien is taxable only on income derived from sources within the Philippines.

Consequently, any income—including pensions, annuities, or retirement benefits—earned from sources outside the Philippines is generally exempt from Philippine income tax.

2. Specific Exemptions for Pensions

The exemption of foreign pensions for SRRV holders is further reinforced by specific provisions within the NIRC and international tax treaties.

Section 32(B)(6) of the NIRC

This section enumerates "Exclusions from Gross Income," which are not subject to income tax. Specifically:

Foreign Government Pensions: Retirement benefits, pensions, or gratuities received by resident or non-resident citizens, or resident aliens, from foreign government agencies and other institutions, private or public, are excluded from Philippine gross income.
US VA Benefits: Payments which are made to or on account of any beneficiary under the laws, regulations, and administrative issuances administered by the US Veterans Administration are likewise exempt.

International Tax Treaties

The Philippines is a signatory to numerous Double Taxation Agreements (DTAs) (e.g., with the US, UK, Australia, and Canada). These treaties typically dictate that:

Pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State (the country of origin) or only in the country of residence, depending on the specific treaty language.
In almost all cases involving SRRV holders, the Philippines waives its right to tax the foreign pension if the treaty grants sole taxing rights to the source country.

3. Income Derived from Within the Philippines

While the pension itself remains exempt, an SRRV holder is still liable for taxes on any income generated inside the Philippines. This includes:

Passive Income: Interest from Philippine bank accounts (subject to 20% final withholding tax), dividends from Philippine corporations, or royalties.
Rental Income: If the retiree owns and leases out real estate located in the Philippines.
Business Income: If the retiree engages in trade or business within the country.

4. Customs Duties and Taxes on Personal Effects

Beyond income tax, the RA 10863 (Customs Modernization and Tariff Act) and the PRA guidelines provide a one-time exemption for SRRV holders.

Incentive: SRRV holders are entitled to a one-time tax-free importation of household goods and personal effects worth up to $7,000, provided the items are not in commercial quantities and are imported within 90 days of the visa issuance.

5. Compliance and Documentation

While foreign pensions are exempt, SRRV holders may still be required to deal with the Bureau of Internal Revenue (BIR) in certain scenarios:

Tax Identification Number (TIN): Required if the retiree intends to open a local bank account, purchase property, or register a vehicle.
Annual Information Return: Generally, if the only source of income is an exempt foreign pension, the retiree is not required to file an Annual Income Tax Return (ITR). However, if they earn any taxable Philippine-sourced income, filing becomes mandatory.

Summary Table: Tax Liability for SRRV Holders

Category	Source	Tax Status
Foreign Pension	Outside Philippines	Exempt
Foreign Dividends/Interest	Outside Philippines	Exempt
Philippine Bank Interest	Inside Philippines	20% Final Tax
Philippine Rental Income	Inside Philippines	Subject to Income Tax
Household Goods (One-time)	Importation	Exempt (up to $7,000)

Legal Conclusion: The Philippine tax regime for SRRV holders is designed to be highly attractive. By law, the Philippine government does not tax the retirement funds or pensions of foreign residents, provided those funds are generated from work performed or capital invested outside the Philippine jurisdiction.