Western Union now collecting stamp tax on remittances
MANILA, Philippines- Global cash transfer firm Western Union Co. has begun collecting a stamp tax on money sent home by Filipinos abroad, which it said will be remitted to the national government.
The move, implemented since May, was in accordance with a provision in the Tax Reform Act of 1997 that imposes a thirty-centavo documentary stamp tax (DST) on each P200 worth of transactions involving the transfer of money to the Philippines.
"Our legal counsels have been studying the ruling and we’ve decided to take the conservative side and implement it," Patricia Z. Riingen, regional vice-president for Western Union, told a briefing on Friday.
The DST on money transfers made by overseas Filipino workers (OFWs) has been the subject of debate following the filing of a bill by Senator Manuel A. Roxas II, who sought the amendment of Section 181 of the Tax Code.
Critics, led by sectoral group Migrante International, have also scored the DST as another burden for Filipino workers who are already charged high remittance fees.
Ms. Riingen, however, pointed out that the DST does not form part of Western Union’s remittance charges and fees but will be remitted to the national government.
"It’s not something we collect for Western Union but we pass it to the government," she said.
"They [OFWs] could go to their mayors and congressmen to lobby for them to be exempted from the DST," she added.
Western Union said it has slashed its remittance cost by 50% to $12 for every $800 worth of money transfer deals from the US to the Philippines. Fees for money transfers from the Middle East were similarly cut to 35 dirhams for every $500 worth of remittances.
The move was made amid stiffer competition and heeded a central bank call to bring down the cost of sending money home so that OFWs stop using riskier channels.
"We are constantly reviewing our pricing. It depends on the efficiencies of the market," Ms. Riingen said.
Remittances from some eight million Filipinos living and working abroad, expected to reach $15.7 billion this year, have been a major driver of the Philippine economy. The DST on remittances, which is also equivalent to 0.15% of the transacted amount, translates to $1.5 million additional revenues for the government for every billion dollars sent home by Filipino workers. — Ma Eloisa I. Calderon, BusinessWorld