What is the legal way to pay offshore staff in the Philippines?
Pay the right party under a written engagement, and send the money through a regulated bank or payment provider. The right party is an employer of record, a registered local entity or a genuine contractor on invoice. For non-resident staff working wholly offshore, Australian and New Zealand payroll withholding usually does not apply, but Philippine tax does.
This guide is for Australian and New Zealand owners and managers paying a Filipino team. It is general information, not legal advice. The Australian and New Zealand points come from ATO and Inland Revenue pages, while the Philippine tax points come from commercial tax guides because we could not read the Bureau of Internal Revenue's regulations. The fee figures come from provider pages that change often, so check both before relying on them. Table 1 shows the main structures.
Table 1: Four ways to pay Filipino staff, and who handles Philippine tax and contributions
| Structure | What you pay | Who handles Philippine tax and contributions | Main risk |
|---|
| Employer of record (the worker is employed by a local entity) | The provider's invoice in AUD or NZD; the entity pays the worker in pesos | The entity, through Philippine payroll, including 13th month pay | Confirm the entity is registered and who carries holiday and 13th month costs |
| Contractor of record (the worker is engaged through a local entity) | The provider's invoice; the entity pays the contractor | The contractor, with the entity keeping the records | Classification: a contractor who works like an employee can be reclassified |
| Contractor paid directly | The contractor's invoice, to the contractor's own account | The contractor registers with the Bureau of Internal Revenue, files and pays their own tax; a foreign payer withholds nothing | Misclassification under Fair Work or New Zealand's gateway test, and weak records |
| Employee paid directly by your Australian or New Zealand business | Salary direct to the worker | Unsettled: the Philippine payroll duties of a foreign employer with no local entity are unclear in our reading | Get written Philippine advice first |
Sources: our published AML and payroll compliance guides; commercial Philippine tax guides (Taxify, BIR Online Tools, TaxCalculator.com.ph, LiveInPH, WorkPinoy, 2026) for the direct contractor row, which we could not check against Bureau of Internal Revenue regulations; ATO and Inland Revenue pages for classification. General information, not legal advice.
The structure decides who owes what. Under an employer of record or contractor of record arrangement, the local entity runs Philippine payroll, tax and contributions, and you pay the provider's invoice. Where you pay a contractor directly, the Philippine tax is the contractor's own, and the label has to match reality, because the Fair Work whole-of-relationship test and New Zealand's gateway test look at how the work is actually done. Whether a foreign business can employ someone in the Philippines directly without a local entity is unsettled in our reading, and our direct-hire guide explains why.
How do you send the money?
Use a regulated provider that shows its fee and exchange rate before you send, and pay the named individual or their registered entity. Table 2 compares the main options using the figures we could verify.
Table 2: Ways to send money to the Philippines, with the costs we could verify
| Method | Reported cost | Speed and limits | Notes |
|---|
| Big-four bank wire (CommBank, Westpac, NAB, ANZ) | Online foreign-currency transfers $0 at Westpac, NAB and ANZ and waived at CommBank; $18 to $30 to send Australian dollars; about $30 to $32 in branch; plus an exchange-rate margin banks do not publish (one estimate 3% to 5%; Westpac's board rate was 3.83% below mid-market on 16 Oct 2026) | Not stated in the sources | Receiving-bank fees can be deducted; ask for the amount received. New Zealand banks were not checked |
| Wise | About A$5.86 to A$5.89 per A$1,000 at the mid-market rate (undated page) | Wise says 74% arrive in under 20 seconds and 95% within a day; bank account and mobile money | Vendor page; fee falls over A$40,000 |
| OrbitRemit | From AUD: A$4 per transfer to a bank, free to GCash; from NZD: NZ$6 to a bank, NZ$4 to GCash; free at A$10,000 or NZ$10,000 and above | Bank transfers within about 2 hours; over PHP 50,000 can take 1 to 2 working days; GCash limit PHP 50,000 per transaction from AUD and PHP 10,000 from NZD | Vendor page, undated |
| Multi-currency business account (Wise Business, Airwallex, OFX, Revolut Business) | Wise Business quoted at 0.34% plus A$1.67; Airwallex SWIFT $10 to $30 and 0.5% on major currencies, 1% on others; OFX $10 per wire; Revolut Business plans from A$15 a month | Not stated for the Philippines | No Philippines-specific business terms found; useful if you pay several people |
| Cash, third-party accounts, virtual asset accounts | Not recommended | Not applicable | Triggers bank checks and weakens a sanctions due diligence defence |
Sources: Australian Small Business Guide (prices as at 16 and 17 Oct 2026); Wise Australia Philippines page (undated); OrbitRemit Philippines page (undated); Airwallex blog (updated 15 Aug 2025). Provider pages are vendor marketing. Fees and exchange rates change daily, so get a live quote. The Currency Shop guide would not load.
The exchange rate usually matters more than the fee. Westpac's board rate sat 3.83% below the mid-market rate on 16 October 2026, which on a A$1,400 monthly payment is about A$54 a month, or A$643 a year. Wise quotes about A$5.89 per A$1,000 at the mid-market rate, which is about A$8 on the same payment if the fee scales. Rates change daily, so get a live quote from each provider and ask for the amount the worker will actually receive.
Agree in the contract which currency you pay in and who carries the exchange rate risk. Avoid cash, third-party accounts and payments to a different person or country from the one named in the contract, because those are what banks flag. Our AML guide covers why.
What do you owe in Australia and New Zealand?
Usually no withholding, super or KiwiSaver for a non-resident working wholly offshore, though GST needs a check. Table 3 sets out what the tax authorities say.
Table 3: Australian and New Zealand tax treatment of paying a non-resident working wholly in the Philippines
| Question | Australia | New Zealand |
|---|
| Withholding on pay to a non-resident employee working wholly offshore | ATO: withholding is unlikely to be required unless the payments relate to entertainment, sports, construction or gaming junket activities, but it depends on the individual's circumstances | Inland Revenue (OS 21/04): a New Zealand employer has no PAYE obligation on a non-resident's foreign-sourced income, and the employee accounts for their own tax |
| Paying a contractor | A foreign resident who does not carry on an enterprise in Australia does not need to quote an ABN | No non-resident contractor withholding where the contractor provides services from outside New Zealand and has no presence here |
| Super or KiwiSaver | ATO: no super for non-resident employees who work outside Australia, but contractors paid mainly for their labour can be eligible | Not covered in the pages we read; our NZ payroll guide explains why KiwiSaver does not usually apply |
| GST on the purchase | ATO: a 10% reverse charge applies only if conditions are met, including that the purchase is partly private or relates to input-taxed supplies | PwC: a reverse charge can apply to certain imported services used for exempt or non-taxable supplies; we found no Inland Revenue page on it, so ask your accountant |
Sources: ATO, Withholding from a foreign resident (29 Sep 2025), Work out if you have to pay super (15 Jul 2026), Reverse charge GST on offshore purchases (26 Jul 2022); Inland Revenue, Paying non-resident contractors (23 Jun 2026) and Operational Statement OS 21/04 (Dec 2021); PwC Worldwide Tax Summaries, New Zealand (6 Jul 2026). Exceptions arise if the worker does any work while in Australia or New Zealand. General information, not legal advice.
Two exceptions are worth noting. If the worker does any work while physically in Australia or New Zealand, or you send a resident of either country overseas temporarily, withholding and super or KiwiSaver can arise. And the labels matter: the ATO says contractors paid mainly for their labour can be eligible for super, so a misclassified contractor can create a bill that has nothing to do with the payment method.
What does the worker owe in the Philippines?
If an employer of record or local entity employs them, its Philippine payroll handles income tax, contributions and the 13th month pay, which is due by 24 December. If you pay a contractor directly, the commercial guides we read agree that a Filipino resident citizen is taxed on worldwide income and that a foreign payer with no Philippine presence withholds nothing.
Those guides say a self-employed worker can elect an 8% rate on gross receipts above PHP 250,000 if receipts stay under PHP 3 million and they are not VAT-registered, or pay graduated rates of up to 35% plus a 3% percentage tax. They disagree on forms, whether official receipts or invoices apply, and penalty rates, and we could not check the Revenue Regulations, so the worker should use a Philippine accountant. We suggest asking a contractor for proof of Bureau of Internal Revenue registration, because it keeps your own records clean.
What should you document before the first payment?
Keep a file for every payment that holds the signed contract naming the payee and currency, the invoice or payslip, and the payment record. Screen new payees against the sanctions lists before the first payment, and again when the lists change. Review the classification of anyone you pay as a contractor, and get written Philippine advice before paying someone directly as an employee. Diarise the 24 December 13th month deadline, and check provider fees each year, since they move.
The bottom line for Australian and New Zealand owners
Paying legally is mostly a matter of choosing the right payee, using a regulated provider and keeping a clean file. The tax on your side is usually light, and the Philippine tax belongs to the worker or the local entity. Pear Tree, with offices in Sydney, Auckland, Hawke's Bay, Cebu, Manila and Cape Town, has placed talent with 750+ Australian and New Zealand businesses on a one-time placement fee plus a flat $400 a month per hire, but we are not tax advisers, so confirm your position with an accountant and a Philippine adviser.
Frequently asked questions
Do I have to withhold tax when I pay Filipino staff from Australia or New Zealand?
Usually not for a non-resident working wholly offshore. The ATO says withholding is unlikely to be required unless the payments relate to entertainment, sports, construction or gaming junkets, and Inland Revenue says a New Zealand employer has no PAYE obligation on a non-resident's foreign-sourced income. Both depend on the facts, so confirm with your accountant.
What is the cheapest way to send salary to the Philippines?
Compare the amount the worker actually receives, because the exchange rate often costs more than the fee. Transfer specialists such as Wise and OrbitRemit publish fees of about A$4 to A$6 on a A$1,000 transfer at the mid-market rate, while bank margins are not published and one estimate puts them at 3% to 5%. Fees and rates change daily, so get a live quote.
Can I pay a Filipino worker through GCash?
Some providers can. OrbitRemit lists GCash as a payout option, with limits of PHP 50,000 per transaction from Australian dollars and PHP 10,000 from New Zealand dollars. Pay the named individual's own account, keep the payment record with the contract and invoice, and check the provider's current limits.
Who pays Philippine tax on a Filipino worker's salary?
If an employer of record or local entity employs them, its Philippine payroll handles it. If you pay a contractor directly, the commercial guides we read say a foreign payer with no Philippine presence withholds nothing and the worker registers with the Bureau of Internal Revenue and pays their own tax. We could not check the regulations, so the worker should use a Philippine accountant.
Is it legal to pay a Filipino employee directly without a Philippine entity?
The transfer itself goes through regulated providers, but the employment structure is unsettled. Whether a foreign business with no Philippine entity can employ someone directly, and what payroll duties follow, is not settled in our reading of the sources, so get written Philippine advice first. An employer of record or a genuine contractor arrangement avoids the question.
About the author
Nick, Co-Founder of Pear Tree, leads sales, partnerships and business development. Pear Tree connects Australian and New Zealand businesses directly with vetted offshore professionals from the Philippines and South Africa, with no agency middleman.
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