Trump's proposed tax on remittances 'a concern' for PHL

US PRESIDENT Donald J. Trump’s proposal to tax the money sent home by foreign workers, may hurt the Philippine economy as remittances and household consumption are likely to slow, experts said.

- By Aubrey Rose A. Inosante Reporter

Finance Secretary Ralph G. Recto said the “One, Big, Beautiful Bill Act,” if passed into law in the US, is “a concern” for the Philippines which relies heavily on remittances from overseas Filipino workers (OFWs).

“But (it) will be difficult to implement. May be bad for the US and the US dollar. Those remittances may go through informal or other channels,” he said in a text message to Business World.

Mr. Trump’s controversial bill, which was approved by the US House of Representatives in May, includes a provision imposing an excise tax of 3.5% on money sent abroad by foreign workers in the US.

The US Senate is now deliberating on the measure.

The Center for Global Development estimated the tax will apply to around 40 million non-US citizens — green card holders, temporary workers and undocumented immigrants. However, remittances made by US citizens and nationals are exempted from the tax.

GlobalSource Partners Country Analyst Diwa C. Guinigundo said the tax will not just impact remittances from the US, but from other countries as well.

“Definitely, this would discourage OFW remittances not only from the US but also from other parts of the global market. Most remittance agents course their remittances to the Philippines through their US correspondent banks,” he said in a Viber message.

“Based on the existing protocol of last touch, remittances from OFWs in the Middle East, Europe and elsewhere would also be subject to that 3.5% tax regardless of where those incomes were made.”

Cash remittances jumped by 3% to $34.49 billion in 2024 from the $33.49 billion registered in 2023.

The US remained the top country source of cash remittances, accounting for 40.6% of the total. In a blog post on May 28, the Center for Global Development estimated that the Philippines will see a $476.53-million reduction in annual remittances if the US tax is implemented.