Left: Promoth Manghat, CEO, UAE Exchange Group, Right: Sudhesh Giriyan, COO, Xpress Money
DUBAI: The 5% Value Added Tax that will be fully introduced in the UAE starting Jan.1, 2018 will not cover the amount expatriates are sending to their loved ones back home, according to remittance centers.
“There has been a lot of speculations about the implication of VAT on remittances from the UAE,” said Sudhesh Giriyan, COO, Xpress Money. “With the signing of the executive regulations on VAT, we finally have the answers. The Filipinos should be happy that while sending money back home, the 5% VAT will only be applicable on the remittance fees and not the entire amount to be sent,” he added.
Giriyan said this should come as good news for Filipino remitters “as there will only be a bare minimum increase in the fees for money transfers, which will be almost inconsequential.”
For his part, Promoth Manghat, CEO of UAE Exchange Group, concurred, saying the 5% VAT, which will be applicable on remittance fees, “will not have a major impact on money transfers to the Philippines.”
“According to the UAE Central Bank, OFWs remitted Dh 8.1 billion in the last quarter alone, which makes them the third top remitters from the UAE,” said Manghat.
He added, “Since the tax is only applicable on the transfer fee and not the remittance amount, there will not be a significant increase in the cost of sending money. We are positive that VAT will not slow down remittances to the Philippines.”
VAT consumption tax levied for use of goods and services. It is charged at each step of the supply chain and consumers bear the cost while registered businesses collect and account for the tax on behalf of the government.
VAT will be implemented in compliance with Federal Decree-Law No 8 of 2017 issued by President HH Sheikh Khalifa bin Zayed Al Nahyan.