Lief Simon and Kathleen Peddicord took a few minutes yesterday to record their vision and plans for development at their Los Islotes property on Panama’s Azuero Sunset Coast.
“Kathleen, I love your website and all you are doing for expats. I hope you can help me.
“I am a U.S. citizen thinking of obtaining residency abroad, most likely in the Philippines. I will be living off dividends and capital gains from my U.S. investments as well doing some work in the United States via Internet. Hence, all my income (passive and active) will be from the United States. I will access the incomes through U.S. accounts. My questions are:
“First, will the Philippines tax my U.S. dividends and capital gains once I have an SRRV visa?
“Second, will the Philippines tax my active income from Internet based work once I have an SRVV visa?
“Third, are there expat-friendly (nondeveloped) countries that don’t tax either as long as both incomes are derived from the United States?”
–Dany G., United States
The Philippines taxes residents on worldwide income, meaning that, were you to become a resident, both your passive and active income would be taxed in that country—though you would get U.S. tax credits for tax paid in the Philippines.
Active income you earned, even though paid from the United States, would qualify for the Foreign Earned Income Exclusion (FEIE) as long as the work were done outside the United States and you qualified for the FEIE.
The best choice in Asia from a tax point of view is Malaysia, which taxes income earned in Malaysia only. Singapore taxes in the same way but is a more expensive place to spend time.
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