US remittances tax proposal has minimal effect on PH economy – Palace

By Ruth Abbey Gita-Carlos, Philippine News Agency

The US’ One Big Beautiful Bill includes a new 3.5 percent excise tax on remittances from non-US citizens. (Pexels Photo)

MANILA – The United States’ (US) plan to tax the money sent home by foreign workers, including overseas Filipino workers (OFWs), has minimal impact on the Philippine economy, Malacañang said on Thursday.

Citing a statement from the Department of Finance, Palace Press Officer Claire Castro said only 20 percent of the 4.4 million overseas Filipinos in the US would be affected by the proposed tax proposal, seen to take effect on Jan. 1, 2026, if passed into law.

“The tax will affect non-US citizens, including green card holders and those with working visas, H-1 visa holder. Although 41 percent of the remittances are routed to the US, not all of this are from Filipinos in the US because remittances are routed to the US via correspondent banks,” Castro said in a Palace press briefing.

“The expected loss in remittances might only be as much as USD100 million out of the USD36.5 billion projected remittances in 2026. The estimated effect is minimal decline of 0.003 percent of GDP (gross domestic product).”

The US’ One Big Beautiful Bill includes a new 3.5 percent excise tax on remittances from non-US citizens.

Castro acknowledged that the proposal would have a “substantial” impact on the families of OFWs, citing there would be a USD3.50 deduction for every USD100 that will be sent by an OFW to a family member in the Philippines.

“So, essentially, only USD96.5 will be received by the family in the Philippines,” she said.

“While we see the estimated effect is minimal in the economy, it may be substantial for many families who solely rely on the remittances from a family member in the US, talking about non-US citizen.”