OBBBA: 1% tax on remittances to recipients outside the USA

To justify tariff on imported goods from Canada? Remember, together with Mexico, they have a trade agreement. Likewise, it went through both the House of Representatives and the Senate.

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Similarly, therefore, that recently signed law slapping 1% tax on remittances may not stay that long. And even if it stays at that rate forever, the aggregate amount is still material. Why? Our countrymen who are now residing in the USA collectively remits 40.6% of the total OFW remittances worldwide.

To illustrate, let us consider the total remittances last year of US$38.3 billion (the highest to date). As our countrymen in the USA contributes 40.6%, in absolute amount, their remittances amount to US$15.55 billion. At the current exchange rate of P56.988 to a US dollar, that should translate to P886.15 billion. Therefore, the 1% remittance tax will result to a deduction from the current level of remittances to the amount of P8.86 billion. That's huge in any language.