Tax-Free Privilege Granted To OFWs

Overseas Filipino workers (OFWs) are now exempted from paying taxes such as documentary stamp tax (DST) on their remittances, travel tax and airport fee. Migrant workers now enjoy this tax-free privilege because it is included in the revised Migrant Workers and Overseas Filipinos Act.

To avail of this privilege, OFWs need to show a proof of entitlement that can be obtained from the Philippine Overseas Employment Administration (POEA).

As stated in Section 22 of Republic Act 10022, “The remittances of all OFWs, upon showing the same proof of entitlement by the OFW beneficiary or recipient, shall be exempted from the payment of documentary stamp tax.’’

Susan Ople, a former labor undersecretary and is currently running for Senator under the Nacionalista Party (NP) wants immediate implementation of this law so she urged the Department of Labor and Employment (DoLE) and the Department of Finance (DoF) to issue the guidelines surrounding the tax exemption.

Ople said. “The DoLE and the DoF should promptly issue the new law's implementing rules and regulations so that OFWs would immediately benefit from reduced remittance charges.’’

Ople also said that the exemption from DST would be of great help to OFWs and their beneficiaries because it would help them cope with the continued increase of the peso against the dollar.

Citing the DoF’s projection of USD19 billion worth of remittances for 2010,

she said, “OFWs can now count on some P1.3 billion in extra savings with the abolition of the DST on all their remittances.’’

She added, “The removal of the DST on all funds wired home by OFWs would help drive down money transfer charges, and put more cash in the pockets of those receiving remittance.’’

Before this tax-free privilege, OFWs pay a rate of a DST of Php0.30 for very Php Php200 worth on all door to door money transfers that are payable in the Philippines. On the other hand, local banks and non-bank money transfer agents such as Western Union Co. and Moneygram International, Inc. collect DST before the funds are transferred to the beneficiaries in the Philippines.