Press Release
February 28, 2017


Senator Sonny Angara has allayed the concerns of overseas Filipino workers (OFWs) about the imposition of value-added tax (VAT) on services fees of money transfer centers in the country, ensuring that their remittances will not be taxed.

"Gusto po natin klaruhin sa ating mga kababayan abroad na hindi papatawan ng anumang buwis ang kanilang mga padala sa kani-kanilang pamilya dito sa Pilipinas. Sisiguruhin po natin na hindi na madaragdagan pa ang pasanin ng ating mga OFW," said Angara, chairman of the ways and means committee.

During the committee hearing on Tuesday, Department of Finance (DOF) Undersecretary Karl Kendrick Chua explained that only the service fee of domestic remittances and not the actual remittance will be taxed with 12-percent VAT under their proposal.

"Our jurisdiction is only domestic transfers," Chua stressed.

For instance, if sending P5,000 within Metro Manila, the money transfer center charges P125 pesos, so the VAT is P15 only.

The DOF said such reform targets businesses such as pawnshops, which are initially not registered as remittance centers.

Meanwhile, the senator recognized the significant contribution of OFWs in the economy, citing recent data from the Bangko Sentral ng Pilipinas that showed that OFW cash remittances reached $26.9 billion or more than P1 trillion last year, which accounted for 9.8 percent of the gross domestic product.

"Pinaghihirapan po ng ating mga kababayan ang kanilang mga ipinapadala sa kanilang mga pamilya dito sa Pilipinas. Hindi naman po makatarungan kung bubuwisan pa natin ito," said Angara, who sponsored the law that raised the tax exemption cap of balikbayan boxes.

The lawmaker added that OFW remittances are likewise exempt from paying documentary stamp tax pursuant to Republic Act 10022 or the amended migrant workers law.

In addition to broadening the VAT base, Package 1 of the Duterte administration's comprehensive tax reform program seeks to lower personal income tax rates, and to adjust excise taxes of petroleum products and automobiles.

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