OFWs oppose proposed 12% VAT on remittances

A proposal to increase the value-added tax (VAT) on the service fee of money remittance centers has met with strong opposition from OFWs and even some party-list lawmakers, who vowed to block it in Congress.

"Ang pinapasok nila (OFWs), almost a trillion [pesos] a year. And yet papatungan mo pa 'yan ng tax. So parang dagdag pasanin na 'yan at parang lahat na lang, gusto mong patungan ng tax," said Bayan Muna party-list Rep. Carlos Zarate on House Bill 4774, in a report by GMA News' Tina Panganiban-Perez on "24 Oras" on Monday.

"Lalaban natin ito," he added.

Zarate said HB 4774, which seeks to increase the VAT on service fee of money remittance centers from 10 percent to 12 percent, will affect not only OFW remittances, but also domestic money transfers.

"Pag natuloy 'yan, lahat ng nagpapadala kahit na domestic, [maaapektuhan]. Magpadala ka, halimbawa from Davao to Palawan, or from Davao to Manila, subject na siya sa VAT," he said.

Eman Villanueva, an OFW based in Hong Kong, said he expects remittance centers to pass the additional to burden to OFWs instead of shouldering the costs themselves.

"Kapag in-adjust yung taxes, whether yan ay doon lang sa tinatawag na service fee ng mga remittance company, tataas din yung sinisigil nila sa OFWs," he said.

"Ito namang mga businesses na 'to, hindi naman nila ia-absorb yung mga dagdag [o] increase ng cost because of the taxation. Ipapasa din yan sa consumer," he added.

For his part, Ako Bicol party-list Rep. Alfredo Garbin Jr. urged Congress to consider taxing individuals with greater incomes instead of OFWs.

"Those who have greater ability to pay and those who have greater income should have a bigger tax burden," he said.

"Pero ito, sa mga forum ng Department of Finance especially pag nag-iimbita sila, hindi naman ito nadi-discuss. Mukhang tinatago nila itong expansion of the value added tax," Garbin added.

In a statement, DOF spokesperson Asec. Paola Alvarez clarified the service of remittance centers will only be taxed and not the actual amount.

"The VAT is on service, not the remittance amount. For instance, if sending 4,000 pesos, the money transfer center charges 100 pesos, and the VAT is 12 pesos, or only 0.3% of the remittance amount," Alvarez said.

Alvarez said the bill targets businesses such as pawnshops, which are initially not registered as remittance centers.

"We are cleaning up the VAT system to reduce leakages and unfair treatment. In the past, pawnshops are just pawning and don't transfer money, but now they do, so we have to consider this new business like any other service provider," she said. —Joseph Tristan Roxas/KBK, GMA News