Prior Taxation and Financial Impact on OFWs
- Before RA 10022, all money transfers from abroad to the Philippines, including OFW remittances, were subject to DST.
- The DST rate was P0.30 for every P200 remitted as per Section 181 of the National Internal Revenue Code.
- For example, an OFW sending $500 (approx. P21,760 at the rate of $1 = P43.52) paid a DST of P32.64.
- This tax was in addition to service fees charged by foreign and local banks and a P0.50 per dollar margin charge by domestic banks during payout in pesos.
Statistical Data on OFW Deployment and Remittances
- In 2009, the Philippine Overseas Employment Administration (POEA) recorded deployment of 1.4 million OFWs.
- Total remittances for that year amounted to approximately P17 billion.
- Monthly, about $1.4 million in DST was collected from OFW remittances.
- The Department of Finance projected remittances of $19 billion from OFWs for the year 2010.
Government Revenue Implications and OFW Benefits
- The removal of DST on remittances results in an annual revenue loss of approximately $1.3 billion to the Philippine government.
- However, this amount translates to additional savings for OFWs, directly benefiting them by reducing their remittance costs.
Legal and Administrative Authority
- The exemption is mandated by law through RA 10022, highlighting government policy to support OFWs financially.
- The POEA Administrator, Jennifer Jardin-Manalili, officially communicated the advisory regarding this exemption.