30 April 2004 – Foreign Affairs Secretary Delia Domingo Albert today said that there are no plans to re-impose taxes on the income of overseas Filipinos.  The Secretary made this clarification in response to some reports that the Philippine Government would be proposing legislation that would bring back
income taxes for overseas Filipinos.

“There are no plans to re-impose income taxes on overseas Filipinos. There are no plans to amend the Tax Reform Act of 1997, or Republic Act 8424, which enshrines the decision to exempt overseas Filipinos from paying income taxes,” Secretary Albert said.

“On the contrary, our government has in fact been exerting every effort to ease the monetary burden on our overseas Filipinos,” the Secretary said, pointing out that “through the hard work of our Philippine Embassy in Washington and through the personal diplomacy of President Gloria Macapagal Arroyo, we were able to
sign last year an agreement with the US that reduces the costs of remittances to the Philippines. This agreement translates to a savings of at least US$500 million to US$1 billion a year for our overseas Filipinos in the US.”

“We have also obtained a five-year grant from the USAID worth US$3.75 million to promote the use of credit unions in remittances.  Because of the wider reach of credit unions in the Philippines, especially in places where banks are not present, remittances will also have a wider reach but at a lower cost,”
Secretary Albert said.

“This decision to exempt overseas Filipinos was based on our policy of not placing a double burden on our overseas Filipinos through double taxation. We usually implement this policy through bilateral avoidance of taxation agreements, but we wanted to relieve our overseas Filipinos of this double burden across the board, without having to wait for a bilateral agreement with each host country,” the Secretary explained. “The fact is that most overseas Filipinos are taxed in their host countries, and the double taxation that they
suffered for many years before RA 8424 had cut deeply into their income. Our overseas Filipinos should be the ones to decide how to manage their own income.  Thankfully, and it is a credit to our overseas Filipinos’ sense of civic and family duty, as well as their love of country, many have decided to reinvest
their income in the Philippines through regular remittances, which in turn have helped drive economic growth and increase household savings here,” the Secretary added. END.