Tag Archives: OFW

Philippine Congress Wants to Tax Income Of Overseas Filipino Workers

January 25, 2016 Pol Pinoy 1 Comment

MANILA, Philippines (The Adobo Chronicles) – The Philippines’ Congress is at it again. Members want to exempt Pia Alonzo Wurtzbach from paying taxes on her income as Miss Universe. But Wurtzbach has declined, saying she will continue to pay her taxes just like she always did in the past.

This is not the first time that such a proposal has been filed in Congress. There have been several attempts to put forward a similar bill exempting Filipino champion boxer Manny Pacquiao from paying taxes. (Incidentally, Pacquiao is facing a P3.2 billion tax evasion case before the Court of Tax Appeals. The case was filed by the Bureau of Internal Revenue after assessing that Pacquiao had incurred “deficiency income and value-added tax” from 2008 to 2009, worth P2.2 billion. Penalties and surcharges caused the deficiency to balloon to P3.2 billion.)

Congress wanted to grant the tax exemptions, arguing that Wurtzbach and Pacquiao are the “pride of the Philippines, putting the country on the world map, and considering them as “heroes.”

Well, what about the true heroes of the Philippines — the overseas Filipino workers (OFWs)? They are the backbone of the Philippine economy, infusing more than $26 Billion in remittances to the country annually?

Currently, the wages or income of OFWs arising out of their overseas employment are exempt from income tax. Since OFWs usually already pay income taxes in the country they are working in, the Philippines exempts those taxable income of Filipinos through the virtue of tax reciprocity. With the tax reciprocity rule, Filipinos working abroad are taxed for incomes received there and are exempt from paying income taxes in the Philippines, in the same way that foreigners working in the Philippines are taxed here for incomes sourced within the Philippines and are also not required to pay income taxes anymore to their home country.

But now, some smart members of Congress want to lift that exemption, and the Aquino administration — especially Bureau of Internal Revenue Commissioner Kim Henares — favor the proposal.

“Sure, it would be a case of double taxation,” Henares said, “but think about the huge tax revenue that the Philippine government will earn from taxing OFW income abroad.”

It’s more fun in the Philippines!

Government, International, Travel

OVERSEAS FILIPINO WORKERS DITCHING THE BALIKBAYAN BOX IN FAVOR OF SUITCASES TO AVOID CUSTOMS TAX

August 27, 2015 Pol Pinoy 1 Comment

NINOY AQUINO INTERNATIONAL AIRPORT, Philippines (The Adobo Chronicles® ) – The Philippines’ Bureau of Customs (BOC) has come under very intense fire in recent weeks from overseas Filipino workers (OFWs) because of its recent announcement that balikbayan boxes will be opened and inspected to determine whether any of the items contained inside are subject to tax.

Balikbayan boxes are those corrugated cardboard boxes used by overseas Filipinos to ship gifts and household items for their families back home. Until recently, balikbayan boxes were free of inspection and customs tax.

In order to avoid inspection and customes duties, many OFWs have ditched the balikbayan box in favor of huge suitcases. They would rather bring their gifts with them when they travel back to the Philippines than have them sent through shipping companies and vendors. This way, they would be physically present when their luggages are inspected by Customs upon their arrival in Manila.

The new modus operandi is causing huge problems for the airlines because the multiple checked suitcases are creating long lines at airport counters. Airlines are also concerned about potential overloading of the aircraft.

It has also resulted in long lines at the arrival lounges at the Ninoy Aquino International Airport and has prompted BOC to deploy more customs inspectors.

Well, BOC has brought this upon itself.

Economy, Government, International, Law Enforcement

DOLLAR REMITTANCES TO THE PHILIPPINES WILL BE TAXED 35 PERCENT

August 23, 2015 Pol Pinoy 13 Comments

MANILA, Philippines (The Adobo Chronicles® ) – It seems like the Philippine government has waged an all-out war against its own citizens — especially overseas Filipino workers (OFW) and their families.

First, the Bureau of Customs announced new rules on balikbayan boxes, including opening them for inspection when they arrive at the Philippine port of entry. (Balikbayan boxes are those corrugated boxes used by OFWs to ship goods and gifts to their loved ones in the Philippines. Until recently balikbayan shipments have been tax-free. )

Today, Commissioner Kim Henares of the Bureau of Internal Revenue (BIR) announced that dollar remittances from OFWs will be subject to a 35 percent ‘gift tax.’

The Philippines ranks as the fourth biggest recipient of remittances worldwide with an estimated $24-billion inflow annually, according to a World Bank (WB) study. Remittances accounted for 12 percent of the Philippines’ Gross Domestic Product (GDP) the report said.

The Philippines trailed India , China and Mexico in terms of remittances received.

Henares said that the BIR is always looking for ways to earn tax revenue in order to sustain the Aquino administration’s anti-corruption policy of ‘Daang Matuwid’ (straight path).

“Strictly speaking, dollar remittances would be considered income for Filipino families and individuals on the receiving end of the money and should therefore be subjext to tax,” Henares said.

Updating: Henares Responds