Growth of remittances to continue amid risks — Espenilla

FILE: Bangko Sentral ng Pilipinas (BSP) Governor Nestor Espenilla Jr.  (Photo By Bangko Sentral ng Pilipinas, CC BY-SA 4.0)

MANILA — Inflow of remittances from Overseas Filipino Workers (OFWs) is not expected to take a hit from the first package of the government’s tax reform program since migrant workers are exempted from paying documentary stamp tax (DST).

This was stressed by Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla Jr., even with the increase of DST to PHP0.60 from PHP0.30 for every PHP200 remittance under the first package of the Tax Reform for Acceleration and Inclusion (TRAIN) law.

He said the first package of tax reform does not cover OFW remittances under the Bureau of Internal Revenue’s (BIR) Revenue Regulation (RR) No. 11-2012 issued in 2012.

The RR, he said, exempts OFWs from paying DST if they are able to present valid proof of entitlement, such as Overseas Employment Certificate, Overseas Workers Welfare Administration (OWWA) membership certificate, or electronic receipt issued by the Philippine Overseas Employment Administration (POEA).

Remittances are also not expected to take a hit from the anticipated rise in inflows from the business process outsourcing (BPO) sector.

The Information Technology and Business Process Association of the Philippines (IBPAP) projects BPO receipts to grow annually by 9 percent until 2022.

However, the BSP chief said that although this growth is higher than the 4-percent assumption by monetary officials for remittances, actual inflows have been higher for several years now.

Citing BPO export receipts as of end-September 2017, Espenilla said it grew by 8.5 percent to USD16.9 billion.

He cited that “based on initial (preliminary) estimates, BPO export receipts could be about USD22 billion” posting a little above nine-percent growth.

However, actual cash remittances alone as of end-November 2017 reached USD25.

3 billion.

BSP data show that total remittances in the first 11 months of 2017 amounted to USD28.24 billion, up by 5.1 percent than year-ago’s USD26.88 billion.

On the impact of recent stoppage of OFW deployment to Kuwait, the central bank chief said possible effects of this regulation on remittances “may not be significant.”

“Cash remittances from Kuwait account for about 3 percent only of total remittances. Prospective workers may still be deployed to other countries with demand for Filipino workers,” he added.