Deduction of transfer fee from OFW remittances

Dear PAO,

I would like to ask if the bank has the right to deduct 2 percent to 2.7 percent from my remittance to my family.
Rino O. Frayna

Dear Mr. Frayna,

Based on your question, we can assume that you are an overseas Filipino worker (OFW).

We know it is much faster, safer and more convenient to send your remittances through the different banking institutions in the country than using other less reliable intermediaries. However, this convenience comes at a price.

In their capacity as remittance agents, banks are authorized to deduct certain charges or fees from your remittances. This deduction, which is called a transfer/remittance fee, under Bangko Sentral ng Pilipinas (BSP) Circular No. 534 Series of 2006 is defined as “the charge for processing/sending the remittance from the country of origin to the country of destination and/or charge for receiving the remittance at the country of destination.”

Based on the foregoing definition, the transfer/remittance fee is deducted from the amount that you send to your family by the bank of origin, such as a foreign bank, or by the bank of destination, such as a local bank, or by both.

The rate of the transfer/remittance fee is set by the bank and may vary depending on what bank you are transacting with. However, these rates are regulated by the Bangko Sentral ng Pilipinas in its exercise of its supervisory power over banks.

Moreover, aside from the transfer/remittance fee, banks may also deduct what we call as Documentary Stamp Tax (DST) from your remittance. Documentary Stamp Tax is a tax imposed by the national government and is defined as “a tax on documents, instruments, loan agreements and papers evidencing the acceptance, assignment, sale or transfer of an obligation, right or property incident thereto.”

Under the Internal Revenue Code of the Philippines, money transfers from abroad and payable in the Philippines, including those wired home by OFWs, are subject to the DST at a rate of P0.30 for every P200 sent through banks.We hope that we have enlightened you on your query. –PERSIDA ACOSTA, Manila Times

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