Which statement about taxation on income in the Philippines is not legitimate?

• A. None of the above
• B. Non-resident citizens are taxable only on income derived from sources within the country.
• C. Resident aliens are taxable only on income derived from sources within the country.
• D. Resident Filipino citizens are taxable on all income sources within and outside of the country.

Answer: (D)

Tax treatment in the Philippines depends on where the income comes from (the source) and the taxpayer’s residence. Non-resident citizens are taxed only on income from Philippine sources, and resident aliens follow the same Philippine-source rule. The idea that a resident Filipino citizen is taxed on all income from both inside and outside the country would imply worldwide taxation for residents, which is not how the system is structured in general practice. Foreign-sourced income of a resident Filipino citizen is not automatically taxed as part of the resident’s Philippine tax base; the tax treatment of foreign income often involves remittance, credits, or specific rules, rather than an unconditional worldwide taxation. Therefore, stating that resident Filipino citizens are taxed on all income, regardless of source, is not an accurate description of the rule.