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OVERSEAS
Filipino workers (OFWs) who invest in publicly traded
Philippine shares of stock should be totally exempt from
paying the 10-percent final withholding tax on
dividends, a labor group said.
This is
one way to consciously encourage OFWs to invest some of
their savings in local equities, according to the Trade
Union Congress of the Philippines (TUCP).
TUCP
spokesman Alex Aguilar said that while OFWs are exempt
from paying Philippine taxes on their foreign earnings,
they have to pay the 10-percent final withholding tax on
dividends and other stock-transaction levies once they
invest in local equities.
In 2007
alone, the government raked in around P12 billion in
final withholding taxes on a total of P120 billion worth
of dividends paid by 79 listed corporations to their
shareholders, according to the Philippine Stock Exchange
(PSE).
Aguilar
showed how the exemption from the final tax on dividends
could provide extra investment income to OFWs and their
families here. He said that P27,000 invested by an OFW
in 100 common shares of Philippine Long Distance
Telephone Co. (PLDT) five years ago at P270 per share is
now worth P293,000 at P2,930 per share.
On top
of the large capital gain of P266,000, the OFW would
also receive P284 per share in cash dividends from PLDT
since 2005, or an extra P28,400. However, 10 percent of
the P28,400-gross dividend, or P2,840, was actually
withheld at source as final tax, thus leaving the OFW
with just P25,560 in net dividends.
Without
the final tax, the OFW would have netted an extra
P2,840.
“Compared with the huge capital gain, the extra P2,840
is nothing much. But if you compute P2,840 as a
percentage of the OFW’s original investment of just
P27,000 in 2003, the P2,840 actually represents an
additional 10.5-percent gain,” Aguilar pointed out.
PLDT
paid a total of P28.32 billion in dividends to its
659,900 shareholders in 2007 alone, according to
Standard and Poor’s Equity Research Services.
The PSE
itself earlier urged Congress to extend an improved
tax-incentive package to OFWs who invest in the country,
as part of a program to enable them to build up their
savings, and at the same time reinforce the local
capital markets. |
