By Cristina DC Pastor
Philippine National Bank’s General Manager Eric Bustamente has a lot of explaining to do as the U.S. government prepares to impose a 1 percent excise tax on certain remittance transfers from the United States to a foreign country starting January 1, 2026.
First, he must break down to Filipinos in the U.S. how President Donald Trump’s “One Big, Beautiful Bill” became law, and what it means to their remittances in the coming year.
Because Bustamante has led PNB New York in terms of profitability and customer service for many years, he wanted to make sure FilAm clients understand the implications to their cash flow and savings.
In the following Q-A with The FilAm, Bustamante pointed out what Filipinos can expect moving forward.
The FilAm: Eric, help me to understand the tax on remittances. All you must do when you send money home is not declare it as remittance, right? Am I missing something?
Eric Bustamante:The 1% tax here is on cash, money orders and similar physical instruments as a source of funding for remittance transfers. Not for the reasons.
The 1% tax will be deducted by financial institutions from remitters. Exempt are funding coming from your U.S. bank account and U.S. credit or debit cards. The tax applies to all individual senders, regardless of their citizenship. The 1% tax will be remitted by U.S. banks to the Internal Revenue Service (IRS).
TF: So, any money sent from the U.S. to the Philippines is considered remittance for whatever reason?
EB: Not necessarily,as remittance is only one form of bank transfer and refers to money sent by a person from one country to family members or dependents in their home country, usually for their support, household consumption or savings. The tax is only levied for cash, money order, or similar physical instruments as your source of funding.So, if you go to a U.S. bank and send money to Philippines using hard cash, then 1% tax is levied.
TF: If you send through Gcash or PayPal will the money be taxed?
EB: Onlycash remittance or money orders are taxed.If the source of funding is coming from a U.S. bank account or a U.S. bank debit or credit card, it’s exempt.
TF: What if the remitter has no bank account?
EB: If they remit in cash, money order or similar physical instruments, then they pay 1% tax.
TF: So, what are the other fees to be paid by remitters aside from 1% tax?
EB: There’s the 1% tax and the regular remittance fees charged by the banks.
TF: What is the average amount remitted by a Filipino family?
EB: It depends on the purpose; it could be graduation or helping someone in need, anywhere from $500 to $1K. So, if you send $500, your excise tax is $5 to be deducted plus the regular remittance fees charged by U.S. banks.
TF: With President Bongbong Marcos about to visit Washington D.C. July 20 to 22 and meeting with Trump, do you think he should raise this concern?
EB: I think he should make it one of the priority agendas since the Philippines relies heavily on foreign remittances from the United States. We are, after all, on friendly terms as allies. The original proposed excise tax is 3.5% and it became 1% in the final bill. We can only hope for the best for our modern day Global Filipino heroes.
TF: Why is the law effective on January 1, 2026?
EB: We are awaiting guidance on how to proceed. Also, I presumed that U.S. banks were given a grace period of six months to tweak our IT systems to make it compliant with the new law and how the 1% taxes will be received by the IRS.
