Exemption for OFW money transfers

OFW money transfers now exempt from stamp tax
OFWs get P1.3 billion remittance savings -- Ople INQUIRER.net First Posted 12:19:00 04/18/2010
MANILA, Philippines—
As the amended Migrant Workers Act come into force, overseas Filipino workers (OFWs) can now count on some P1.3 billion in extra savings with the abolition of the documentary stamp tax (DST) on all their remittances under the new law.
This was revealed by former Labor Undersecretary and now Nacionalista Party senatorial candidate Susan "Toots" Ople in a news release over the weekend.
"The scrapping of the DST on remittances is timely, and should help the beneficiaries here of migrant Filipino workers recover some of the buying power lost due to the peso's recent surge against the dollar," Ople said.
The local currency closed Thursday at $1:P44.36, eight percent or P3.85 higher compared to $1:P48.21 a year ago.
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 remittances, Ople said.
She urged the Department of Labor and Employment (DoLE) and the Department of Finance (DoF) to promptly issue the new law's implementing rules and regulations so that OFWs would immediately benefit from reduced remittance charges.
Local banks and non-bank money transfer agents such as The Western Union Co. and Moneygram International Inc. collect the DST before the funds sent home by OFWs are actually paid out to their beneficiaries here.
Based on the projected $19 billion worth of remittances from OFWs this year, the DoF said government would be giving up around P1.3 billion in revenues annually with the removal of the DST.
The new Migrant Workers Act, or Republic Act 10022, recently lapsed into law without President Macapagal-Arroyo's signature.
Section 22 of the new law provides that all funds sent home by OFWs shall be exempt from the DST. The OFWs’ beneficiary simply has to present a proof of entitlement from the Philippine Overseas Employment Administration.
Prior to the passage of RA 10022, all money transfers from abroad and payable in the Philippines, including those wired home by OFWs, were subject to the DST at a rate of P0.30 for every P200.
This means OFWs pay a DST of P33.27 for every $500 or P22,180 (at $1:P44.36) they send home. This is on top of foreign and local bank fees, plus the P0.50 to a dollar margin domestic banks are allowed when paying out remittances in pesos.
According to a previous study by the World Bank, OFWs spend up to $22 to send home $500, or as much as $14 to remit $200.