Other BriefingsHiring Foreign Employees in the Philippines: Work Permits, Restricted Roles, and Employer Obligations
Companies in the Philippines can hire foreign nationals, but the proposed role may be subject to nationality or professional restrictions, an Alien Employment Permit (AEP), and immigration authorization. Once employed, the foreign national may also fall within Philippine payroll, tax, and social security requirements.
When can a company hire a foreign national in the Philippines?
Both Philippine-owned and foreign-owned companies can employ foreign nationals. Foreign ownership of the employer does not give a company an unrestricted right to fill positions with foreign employees. Where the AEP regime applies, the availability of qualified Filipino workers can affect whether the proposed foreign hire is approved.
Which positions can foreign nationals hold?
The Philippines does not maintain a single list of positions that foreign nationals are permitted to hold. Restrictions instead arise from rules governing specific professions, industries, and activities.
This is particularly important for regulated professions. A foreign national may meet an employer’s qualification requirements but still require separate authorization before performing work that constitutes the practice of a regulated profession in the Philippines.
The Professional Regulation Commission (PRC) requires foreign nationals intending to practice a regulated profession to obtain the appropriate authorization. This may require a Special Temporary Permit (STP), depending on the profession and circumstances. An overseas professional qualification or license does not by itself authorize the individual to practice the profession in the Philippines.
Employers need to consider the employee’s actual functions rather than relying solely on the job title. A managerial position, for example, can be treated differently from a role involving the practice of engineering, architecture, accountancy, or another regulated profession.
Obtaining an Alien Employment Permit
The AEP is the principal employment authorization for foreign nationals who fall within the permit system.
Under the current framework, the AEP application is generally filed within 15 calendar days from the signing of the employment contract or issuance of the foreign national’s appointment.
The labor-market test forms part of the process. Vacancies subject to the requirement must be published through prescribed channels so qualified Filipino candidates have an opportunity to apply. The availability of a competent, able, and willing Filipino worker can affect whether an AEP is issued to the foreign national.
The Economic Needs Test can consider the functions of the position, required specialization and technological knowledge, industry requirements, and the availability of Filipino workers. The revised framework also requires skills-transfer measures in applicable cases.
Certain categories of foreign nationals are exempt from or excluded from the AEP requirement. Employers should determine whether an exemption or exclusion applies before proceeding with a standard AEP application.
An AEP is linked to the employment for which it was granted. A change of employer or material change in the approved position can require additional action under the AEP framework.
AEP administration changed in June 2026. Under Department Order No. 248-B, Series of 2026, the Department of Labor and Employment (DOLE) centralized the filing, processing, evaluation, approval, issuance, release, adjudication, and enforcement functions relating to AEPs. The transition took effect on June 9, 2026, ending regional processing and evaluation of AEP applications.
From AEP to legal work status in the Philippines
An AEP authorizes employment but does not replace the foreign national’s immigration authorization.
For many foreign employees, the relevant immigration route is the Section 9(g) pre-arranged employment visa. The Bureau of Immigration provides this visa for foreign nationals coming to the Philippines to engage in a lawful occupation for wages, salary, or other compensation.
A foreign national whose pre-arranged employment visa application is pending can obtain a Provisional Work Permit (PWP), allowing the individual to work while the application is being processed. The PWP is separate from the eventual 9(g) visa.
How should foreign employees be put on Philippine payroll?
Compensation for employment exercised in the Philippines can be subject to Philippine individual income tax and employer withholding requirements. The treatment depends on factors including the employee’s residence status and the source and nature of the income.
Expatriate compensation can be split between the Philippine employer and an overseas group company, with salary paid locally and bonuses, allowances, equity-based compensation, or other benefits paid offshore. Payment outside the Philippines does not by itself remove compensation from Philippine taxation where the income is attributable to services performed in the country.
Do foreign employees pay SSS, PhilHealth, and Pag-IBIG?
Foreign employees can fall within Philippine social benefit contribution requirements.
For employees covered by the Social Security System (SSS), the contribution rate is currently 15 percent of the applicable Monthly Salary Credit (MSC), with a maximum MSC of PHP 35,000. For employed members, the contribution is divided between the employer at 10 percent and the employee at 5 percent.
PhilHealth coverage must be considered separately under the rules applicable to the foreign employee. Employers should establish whether coverage and premium obligations apply based on the employee’s status rather than assuming that foreign nationality creates an exemption.
Pag-IBIG can also apply to foreign employees. An expatriate aged 60 or below who is compulsorily covered by SSS is generally also compulsorily covered by Pag-IBIG, regardless of citizenship, duration of employment, or how compensation is paid. An explicit exemption from SSS coverage can alter this treatment.
How an overseas assignment affects tax and social security
Consider a Japanese technical manager working for a Philippine subsidiary who receives a local salary while the Japanese parent continues to pay part of the employee’s bonuses and allowances. Payment of the overseas portion in Japan does not by itself exclude that income from Philippine taxation. The tax treatment depends on the employee’s circumstances and the income attributable to services performed in the Philippines.
Social security requires a separate assessment. The Philippines and Japan have a bilateral Social Security Agreement that can determine which country’s social security system applies to qualifying workers, reducing the risk of overlapping coverage and contributions.
Managing the employment relationship
An expatriate contract prepared by an overseas parent does not displace mandatory Philippine employment requirements that apply to the local employment relationship.
Changes during the assignment can also affect the employee’s authorization. A promotion or material change in duties may alter the position covered by the AEP, while moving an employee between Philippine subsidiaries can constitute a change of employer even where both entities have the same overseas parent.
When the employment ends, resignation, termination, an overseas transfer, or departure from the Philippines can require action concerning the employee’s AEP and immigration status, alongside final payroll and tax obligations.
Contact Dezan Shira & Associates for hiring foreign employees in the Philippines
Dezan Shira & Associates assists foreign investors with employment permits, immigration, payroll, tax, and social security compliance when hiring or assigning foreign personnel to the Philippines. Contact our professionals in the Philippines for support with structuring and managing foreign employee assignments.
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