Estimate your home country tax liability on your EOSB payment. See the difference between receiving your gratuity before vs. after returning home.
Important disclaimer
This is an indicative estimate only. Tax rules are complex and depend on individual circumstances including other income, residency status, and applicable double taxation agreements. Always consult a qualified tax professional before making financial decisions.
End of Service Benefits (EOSB) earned in the UAE or Saudi Arabia are paid tax-free in the Gulf — there is no income tax in either country. However, your home country may tax this payment depending on your residency status at the time you receive it.
The critical factor for most nationalities is timing. Receiving your EOSB while you are still a non-resident of your home country typically means no tax liability. Receiving it after you resume tax residency can result in a significant tax bill.
The UK uses the Statutory Residence Test (SRT) to determine tax residency. If you receive your EOSB before meeting the SRT criteria (typically 183 days in the UK in a tax year), it is not taxable. After becoming UK resident, EOSB is treated as employment income and taxed at your marginal rate: 20% (basic), 40% (higher), or 45% (additional rate).
Non-Resident Indians (NRIs) are not taxed on foreign income. EOSB received while maintaining NRI status is tax-free. Deposit it into an NRE (Non-Resident External) account to keep it tax-exempt. Once you become a resident, your global income becomes taxable under the Income Tax Act.
Good news for OFWs: EOSB from Gulf employment is classified as foreign-source income under NIRC Section 23(C) and is generally exempt from Philippine income tax, regardless of when you receive it.
Non-resident Pakistanis are not taxed on foreign-source income. However, once you become a Pakistan tax resident (183+ days in a tax year, July to June), foreign income remitted to Pakistan becomes taxable under the Income Tax Ordinance 2001.