DAVAO 2007

My Parents’ Music

Education will never be expensive as ignorance. A great many children face the difficult task of learning good behavior without seeing any. Another philosophical behavior is: Youth is wasted on the young.

I remember the day my parents first lugged the heavy accordion up our front stoops, taxing the small frame. They gathered me in the living room and opened the case as if it were a treasure chest. And guys, it really was!

“Here it is,” my parents said. “Once you learn to play it, it will be with you for life!” Thanks God, it is. Really. Up to now, even here,in my private room in the Philippines. Anyway, if my thin smile didn’t match my parents’ full-fledged grin, it was because I had prayed for a piano.It was at the end of the 50s, and I was glued to my AM- and shortwave stations,playing classical music 24/7. Accordions were nowhere in my hit parade – even later during the 60s or 70s… .

As I looked at the shine white keys and cream-colored bellows, I could hear already hear my classmates and friends’ squeeze box jokes. For the next weeks the accordion was stored in the hall closet. Mmh! Yeah, really! Then, one night it was announced, that I should take music lessons. Spending an incredible amount for the accordion and the lessons, I really tried my very best to appreciate my parents’ effort – and music! I found out, that music carried away my parents from their world of tools and projects – so to say even me nowadays.

On a Sunday, one of my favorite days till now, I started taping the radio shows. I remember, I was 10 or so. It seemed that I hang on every note. Shortly after, my lessons began with our city church organist, who even allowed me to play on the cathedral organ – “if nobody is around!” I felt clumsy in every day. I was ordered to practice 2 hours or more daily. I tried to get out of it. But one day I was string notes together and coordinate my hands to play simple songs. Beethoven’s “For Elise” on an accordion… . I got the invitation to join the college band. I still remember my teacher’s comments: “Very nice, much better than before!” “You can bring people joy and you can touch their hearts whatever you play!” Whatever? Ok, I agreed, what my professor tried to hammer into my mind. I was just speechless. But finally I learned what it means to work hard and sacrifice for others. Now I understand my parents. Many times, If I just operate my compact disc player of if I join a great concert event, I remember “my parents’ music”. Once upon a time in the West…

I learned to coax sweet but maybe not so perfect sounds from instruments. I admire people, who can do so.By the way, I remember some events with the “Five Pianist Women from Davao” Not only I miss them back on stage.

A Lovely Dining Experience

Last night myself and my other English friend were invited out to dinner to Claude’s Le Café de Ville restaurant in
Davao city.. Neither of us had been before, although we had previous invitations to go there but for one reason or another we had never got round to doing it. However nothing stood in our way this time and we turned up at the restaurant at approx 7pm. I am writing this because it was a very pleasant dining experience indeed. The restaurant itself is nice and small, giving it a cosy and very friendly ambience. Our friend who invited us to dinner there had been several times before and he was hoping that we would enjoy the atmosphere and quality of food and service. Indeed he was not wrong, there was no fault to be found at all. The menu had a wide choice from seafoods through to beef, chicken, pork, pastas, salads etc. Everything was very reasonably priced and was presented wonderfully. Service was absolutely excellent, very professional and efficient but friendly still and that was great to experience. The food was of excellent quality and our host, Claude , was an extremely hospitable, friendly person who made us feel immediately welcome and comfortable and gave us that personal touch. All these things added up together made for an excellent evening. I am very pleased that we finally ended up going there and we will be going back for certain in the future.
Back in the United Kingdom you can pay a small fortune for service and quality like that so of course it added to the pleasure of the evening that a huge dent was not made in the wallet. Are there any other establishments within Davao city that are similar to this? If there are, we would surely like to pay them a visit too. In general we don’t usually dine in such a comfortable, “upmarket” environment, because both myself and my English companion love to dine simply in the various eateries found around the city that locals will frequent, you know, basic table and chairs, rice meals and karaoke in the corner, because we refuse to become “exclusive” and only patronising the posh hotels and other “white haunts”. But I have to admit, Claude’s was really great and did not offset that feeling of snobbery. There were a whole mixture of different people dining in Claude’s which was good to see, giving it a relaxed atmosphere, but having said that, Claude and his staff maintained a very high standard of service. Great that something so nice can be accessible to a lot of people. However I am always aware of and will never take for granted that I am lucky enough to be able to walk into a place like that and pay for decent food. There are so many people who cant, who are struggling to find something to eat just to keep alive. I can indulge myself in fine dining when I want to and therefore I still sometimes feel guilty that I can do this while others are barely surviving. Whether I am right or wrong, I made sure that the young man out on the street with one arm missing who very energetically flagged me down a taxi afterwards received a good tip.

Yes its wonderful to experience fine dining and to enjoy ourselves in such top class establishments like Claude’s, but let us never forget where any one of us could be if we were not so lucky to be born into the circumstances that we were.

I’m going out of town today

I am actually writing this about 12 hours ahead of when it will post on the site, sitting here at my desk making plans for tomorrow.  We are headed out of town for the day.  Remember yesterday, I posted about my mother-in-law?  Well, today we are taking my Mom to go and visit with Mama.

My Mom and Mama have met a number of times now, and they are actually quite close to each other.  Like me in my earlier days, My Mom can’t speak Bisaya, so her and Mama don’t have a great deal of talk between them, unless it is translated by somebody.  But, still, they are like Me and Mama, in that they have a common love for each other, and a common respect that leads to a relationship that transcends words.

So, today will be a nice day, giving Mom and Mama a chance to be together again, and whenever they get together it is always in the back of our minds that it might be their last time to see each other.  But, that makes each meeting just a little more special!  The meeting will be a surprise for Mama, and I know that it will make her feel good when she sees us early tomorrow morning!

UK Expats – Forward Planning – Tax – Pensions – Entitlements.

UK Residents living in the Philippines – State Pension entitlement – Double taxation Treaty – National Insurance Contributions.

Are you a UK based resident who is shortly planning his retirement in the Philippines, if so, then welcome on board, because thats exactly what I

am doing, firstly though, I wanted to find out about non-residency and the rules, secondly, if I was non resident in UK, I wanted to find out about state pension provision for oversees residents, and if the UK had a taxation treaty or pensions treaty with the Republic of Philippines.

Forward Planning

Many of you, and this applies to a mainly British audience, (sorry for those of you who are from U.S.A. Australia, Korea, Japan, and EEC Member states,) will be thinking of your retirement in the Philippines, perhaps if you are fortunate enough to have made a private provision for your retirement plan, via lump sums, time deposits, and a few local businesses that can turn over some cash, this is a good start, and you are thinking along the right lines.

But have you given thought to some other areas that can provide you with income, this will of course depend on when you wish to retire, and more importantly at what age you will be when you do finally retire and ship out to the Philippines permanently.

Firstly though Non Residency and part Time UK based work.

I alluded to this subject very briefly during a discussion of UK Taxation and your responsibilities in my last column, the HMCR (Her Majesties Customs and Revenue Service) insist that all those who make money in the UK even if it is part time only, must make a self assessment return for that tax year.

This is so that they can assess, or you can via your accountant or agent, whether you are liable to pay income tax on your UK based income, as all UK based income is taxable, failure to make a return, can incur a penalty, thats of course if you stay in UK at the same accomodation and subject to them actually being able to locate you, thats if they have the resources to carry accomodation checks, that is of course unlikely, however that is the law, and a return is required, if you did not make your return, there may be a problem at a later date when you request a pension from the pension service.

So back to non-residency, I spoke about this before, the rules state that over a 4 year period, you may not claim to be non-resident if you spend more than 360 days across a 4 year period in the UK, or and this seems to be ambiguous, 90 days in any 1 tax year, not including your date of entry to UK and your leaving day.

How to you Claim non-residency ?

Its simple by making a tax return for that tax year, and claiming non residency on the tax return, you would show all your income, if below a turnover of £15,000, you would show a shortened form of return, if over £15,000 you will have to fill in a proper return, this of course is more of interest to self employed, or consultancy type work, done in UK.

If your gross turnover is below a certain figure, around £4650.00 you may on the basis of this figure, apply for exemption to UK National Insurance contributions Class 2.

However for the year 2006-2007 your non taxable personal allowance is £5035.00 and £5225.00 in 2007-2008.

As many of you might know, the basic rate of 10p in the £1.00 for the first £2150.00 in tax year 2006/2007 is going to be abolished in favour of a low band of basic rate to 20p in the £1.00.

At present taxes are based on the first £2150.00 at 10p, which is £215.00
Then between 2151.00 and 33,300 taxed at 22p in the £1.00
Then beteween 33,301.00 and above will be taxed at the Higher rate of 40p in the £1.00.

These are the current taxes, should your stay go over the 90 days in any 1 tax year, you will not be able to claim non residency, and will pay tax on all of your UK Income for that tax year regardless of time spent, even if its 91 days.

National Insurance Contributions and the UK State pension Service

So you might be able to do some commuting back to UK, but what if you dont want to do that, what if you are a man or woman who has reached state retirement age, up to 2010, women would receive a state retirement pension, and the 2nd state pension if they were employed at age 60, however, after this date, the state retirement age for women and men has been aligned to age 65.

Types of National Insurance Contributions and their application to UK Pensions and benefits.

Class 1 National Insurance Contributions are paid by employees who pay their tax via the PAYE system, the employer also makes a contribution as well, but these contributions count for the basic state pension which is currently about £100.00 per week.

They also contribute towards the 2nd state pension scheme, which was the old SERPS (State Earnings Related Pension Scheme), the 2nd state pension top up is based on the number of contributions made throughout the life of the claimant, the number of qualifying years is set to drop to 30, rather than the current 40 out of 45 working years.

Class 2 – Contributions are paid by the self employed, the rate is much lower at £2.20 per week, they are mandatory and are normally paid monthly or quarterly.

These contributions qualify for the State basic pension but do not qualify for the 2nd state pension scheme, no entitlement accrues on this scheme.

Class 3 contributions are voluntary, these can be paid by those who do not have sufficient qualifying years, they are currently £7.80 per week, this can bump up the state entitlement, and applicants should consult the Pensions service in Newcastle about their future entitlement and pension forecast.

Class 4 contributions are in fact a stealth tax, these have nothing to do with pension benefits, it was introduced by the government to tax the self employed on thier profits, there is a lower limit and upper limit and which these are assessed, the tax is 8 per cent of your profit per tax year, they do not contribute towards the state basic pension scheme, again as I said, they are a back door tax.

Does UK Government have an agreement with the Philippines

The answer is yes they do ! there is a social security treaty between the two governments set up in 1978, and there is also a double taxation treaty with the Republic of Philippines.

If you wish to have your UK pensions paid overseas, you can do this by contacting:

The Pension Centre
Tyneview Park
Newcastle upon Tyne
NE98 1BA
Telephone: 0191 218 7777.

If I wish to retire early than the state retirement age, can I contribute to my basic state pension until age 65 ?

The answer is yes, you may continue to make Class 3 voluntary contributions into your pension National Insurance record, and the DWP has a very good boolet here online you can read its at Social Security Abroad

The beauty is, you can have your state retirement pension paid to you in the Philippines, and with the double taxation agreement treaty signed with the Philippines, there are lots of ways you can enjoy your retirement without being hit for tax in 2 countries, the taxation agreement simply stops you paying tax on your pensions and investments in 1 country whilst being liable in another.

The other factor to take into consideration, is that you can apply to HMRC and have your voluntary contributions paid aborad, i.e. into the Philippine system, this will still entitle you to certain benefits, the book is quite explanatory, its a pdf document.

Can I get a forecast of what my pension will likely to be when I retire to the Philippines ?

Yes you can !, the pension service here at Pensions Forecasts will be able to give you an updated forecast based on your age, and NI Record.

So there are many things to think about, at current pension rates, a couple claiming a state pension, in their own right as individual contributors, may find they get around P20,000 a week to live on, couple that with future index linked increases, they should be able to live fairly well in the Philippines, I hope you have enjoyed this article.

PINOY KIDS SMILING

Me & Mama

Zosima Bayoy, or “Osing” is Feyma’s Mom. I call her Mama, or “Ma” most of the time. Ma is nearly 80 years old now, and her health is not good, but over the 17 years of my marriage to Feyma, I have known Ma during many years of good health. Mama speaks virtually no English at all. Of course she knows a few words, but that’s about it, she’s certainly not able to make a sentence in English. Over most of our marriage, I have known virtually no Bisaya (OK, ok…. I knew most of the bad words!). This means that Mama and I have, over the years, not been able to communicate verbally with each other much at all.

But, there are other ways to communicate without words. Somehow, over the years, Mama and I have actually been pretty close to each other. We have a way of using body language, hand gestures, and a common respect for each other that allows us each to know that we are valued by the other. Even if words have not been exchanged much of the time, we knew what each other felt and wanted to say.

I can remember back in the early 90’s when Feyma and I had been married only a few years. Whenever we would travel to GenSan to visit the family there, Mama and I would always have a nice time together. Back in those days, Mama really enjoyed raising animals. There was a vacant field across the street from the family house, and Mama used that field to raise her animals. One of my most vivid memories during this time is when Mama and I would go over to that field, almost daily, and she would show me her pigs. She had some big pigs for breeding, and a lot of piglets that she would raise, fatten and sell for food. She was so proud of those pigs, and it showed. When Mama and I would go over and check out those pigs and her other animals, we would go alone. No interpreter to get in the way, we were able to communicate non-verbally anyway! And, I think we both enjoyed having some time alone together.

It’s funny, because in my family, Feyma has always been a favorite. They love Feyma so much. I often tease that if Feyma and I were to be divorced, I would be out of my family, and they would take in Feyma instead. I think there is some truth in that little joke too! Funny thing is, though, that Feyma’s family is like that with me. If has ever been a dispute between Feyma and I (as all marriages have over the years), Feyma’s family is always on my side (of course, my family is on her side!).

I never got to know Feyma’s father that well, because he died only a few years after we were married, and I only got to see him during our wedding time, and on one other trip. Even during those two visits, though, he was already quite sick, and obviously getting near death. In my short time of knowing Papa, though, I knew he was a good man.

Nowadays, Ma is getting old and frail. Sometimes she is even unable to walk. She has suffered many strokes. I like to have her stay here at our place in Davao, because she can get good care here, and eat a healthy diet. When she stays with us, she is always in a little better health because of it. But, Mama likes to be on the farm, in Patag, Sarangani. She longs for the place, and we can’t keep her away from there. Last time that she came here and stayed for a few months, she suddenly told us that she needed to get back to the farm. There was just something about the way that she said it, and her determination to get back there…. I asked her “Ma, are you going to be with Papa?” She replied, “Yes, I will see Papa soon.” No further words were needed, we both understood what that conversation meant. That’s been a few months ago, though, and she is still hanging in there. While you never wish death on anybody, I do feel that Mama is at the point where she is ready for that, and when it happens, I do wish her well. I hope it is just a new chapter in her life with Papa, and they will be happy for eternity.

UK Expats – HM Customs & Revenue Your Responsibilities.

What are the tax liabilities and responsibilities for UK Expats in the Philippines

Are you a British expat living and working, or retired in the Philippines, I often get asked in my inbox about tax liablities, very often I receive e mails from interested ones who come through my website British-Filipino.com they tend to be worried about their tax positions and their pensions.

The good news is, unlike in the United States where U.S. residents in the Philippines must pay tax on their worldwide income, UK residents are not duty bound to pay HM Customs & Revenue any tax on income made in the Philippines, this also applies to their private pensions if they hold such a pension, since they are not resident in the UK, they escape having to pay any tax.

Naturally any expat who works in the Philippines may be subject to paying local income tax to the BIR on any monies they receive as a working person, as Bob has often said, technically those on permanent residency visa’s can work, but being a consultant or adviser may not constitute any liablity for income tax to the Bureau of Internal revenue.

But what about those who migrate back to the United Kingdom to work occasionally, some do consultancy work, others come back to work for a short period and migrate back, others have income generated in the UK, but paid in the Philippines, what are the responsibilties for those ones, and what does HM Revenue & Customs say about it.

Firstly, the rules are simple, although of late, there have been one or two test cases, where the rules have been overturned by the Commissioners to the Inland Revenue.

The Rules state that : “if a person who is not resident in the UK enters the United Kingdom and carries on in any profession, trade, business or employment must complete a self assessment tax return for that year, however if they do not remain in the UK for more than 270 days in any 3 year period, they may claim “NON RESIDENCY”.

Non residency, means that they are not liable for any UK Income tax or Class 4 national insurance contributions on their Income tax, they may still pay Class 2 national insurance contributions, and if they wish to do so, they may pay Class 3 voluntary national insurance contributions to pay for any non qualifying years they have failed to complete.

To qualify for the UK pension for a man, you need 44 qualifying years in employment, or self employment, the employed pay Class 1 National Insurance contributions, and the employer also pays employers national insurance contributions which go towards the final state pension, and 2nd state pension of the employee.

If 44 qualifying years are not met, through illness, redundancy, etc, if that person is in receipt of job seekers allowance, or income support, the contributions are met by the state for the period the person is out of work, or in receipt of the above two means tested benefits.

Those expats who are resident in the Philippines, may have their state pension and 2nd state pension (the old SERPS) paid to them in their bank account by the overseas payment unit.

Back to those residents who are commuting or spending some time back in UK working, the rule state that to claim non residency, the person must not have spent more than 270 days in 3 years, or 90 days in 1 tax year, this does not include the day the person lands in UK, and the day they leave the UK, so in effect 92 days.

If the stay excedes the 90 day rule, then the person is liable for UK income tax and Class 4 national insurance contributions on their profit, for all the time they spend in the UK, and tax is payable at the standard rates of 22p in the pound up to 29,000 and 40p over that amount.

Some residents have attempted to get around the rules by keeping and maintaining a home in the UK, they have also retained their wife and children in the UK, and attempted to get around it, by stating to HM Revnue and Customs that they are not resident in the UK.

However as I mentioned earlier, the commissioners for taxes are taking these people to task, a recent ruling by the high court brought by the commssioners for tax had a favourable ruling in that a certain businessman, travelled back and forth to UK, he stated on his tax return that he was claiming non residency because he was not in the UK for more than 90 days in 1 year, in fact the judge ruled that although this was true, he had a life in the UK, a house, his children were at school, his wife lived in the house, the judge said that “This constituted an ongoing residency relationship with the UK, and therefore as he had assets in the UK, he should contribute and pay UK Income tax.

How does this ruling effect you if you are comteplating being one of those who are resident in the Philippines, well as far as the ruling is concerned, which will set a precedent for the future, it is up to you the individual to prove that you are non-resident and that you have no assets in the UK, i.e. property, or immediate family, so for example, if your home is in the Philippines, your dependant family live there, and you only visit to do some work for 90 days or less, its likely that you will qualify and not be a resident, you would then be legitamately entitled to claim non residency, you would of course be required to keep all boarding passes, tickets are not evidence of your movements.

But interestingly, boarding card stubs are evidence of your movements, since UK passport control does not register your exit from the UK, nor does it register your arrival by way of a landing stamp, there is no way for HM Revenue & Customs to validate your non residency.

The best tip is, :Keep all your boarding cards and tickets, and retain all your financial records, the rule of keeping all of your last 5 years records still stands, but you can voluntarily keep paying class 3 voluntary contributions on your state pension, if you leave before the age of 65.

I hope this article has been interesting for UK expats, living and working from the Philippines, the recent test cases in the High Court have certainly given me food for thought.

Passing along responsibility

How do Filipino families afford to send their kids to school? I think this is one of the questions thats pops up to the minds of some of the people that come here to visit and not live here and seeing how big many people we have here in every household. We all know that a typical family in the Philippines has 6 to a dozen kids. That’s just the normal families here. As you guys know Philippines is among the highest rank of the poor nation in the world. So some would wonder how a family of 6 or 8 send their kids to school, especially to college?

Well, as I can see in the place where I used to grow up some of our neighbors that has 8 kids or more they can afford sending all the kids through grade school and high school. After high school graduation some kids will continue on to college but some has go to the city like GenSan, Davao, Cebu or Manila to work. The parents just can’t afford to send them to college. Some of the siblings would even have to work as maid or in factory so that one of the other sibling can continue to college. Mostly it’s the oldest child would be sent first to college and the others will either help the parents in the farm or they go off to work.

Some also would go work as a working student in school or work in peoples house as maid during daytime and go to school during night time. Here in Davao we have school that offered school just during Sunday for high school. My nephew is one of the student there right now. One of my niece graduated there and starting to go to weekends classes too for college. Most of my niece and nephew’s classmates are working student. I think when they finish their degree they would really be proud of themselves because they really work hard to earn their degree. Now I was thinking I should have done this to my spoiled niece that just wasted her education. I should let her be a working student so that she would know the value of money and education.

One thing in our culture we will sent the oldest kid to school and hopefully finish it. As soon as he/she graduated from college and gets a job it would be his or her responsibility to send the younger one to school. If one of them graduated and had work its their responsibility to send the younger one again. It’s just like a pattern. I saw this pattern with some of my family(cousins) too. Luckily for us my Dad has enough income in our farm to send us to school. I was thankful for that, that I was allowed to study in Cebu City in a good school too.

I base this in some of my personal experience. As you know I grow up in the farm and we are poor. I’m proud of my parents that they really work hard to send us kids to good school. How about you guys? Let me know how you obtain your education.

Mabuhay!

Some retirement options

Today’s Guest Column is from Kevin Smith.

If you retire in the Philippines, the first question that comes to my mind is: What will you do when you get there? If you still have a few years to go before you retire as I do, then now is the time to plan and dream. For me, now is the time to brainstorm and make a vision to change my piece of the world for the better.

While I’m not living in the Philippines now, my dream is to retire to Mindanao or Cebu, or both. My definition of retire is not the traditional definition, but to change gears and do things I don’t have the proper amount of time to devote to now. I will have an education pension, but with the peso to dollar ratio going south, I may need to supplement my pension. I’m trying to plan so I could divide my time between the nonprofit, some type of teaching, and doing meaningful research. I have a few ideas swirling in my head, and maybe you can help me sort out the details.

As we know, most jobs in the Philippines pay poorly. If you need to have a job, then the key is to start a business online, or a business that has some demand.

My first idea is to teach English by starting a small tutoring business or, to just tutor on the side. For the last year I have researched the possibility of opening a small language finishing school to teach foreigners English. It seems there is some demand but it takes awhile to get started. Also, those who need extra help before they can work in the call centers might be a possibility. I have some other ideas on different businesses that I’ll save for next time.