Finance



By Mikhail Franz E. Flores, Senior Reporter


PHL bank secrecy laws limit tax transparency




Posted on June 11, 2015


BAGAC, Bataan -- The Philippines should scrap its archaic bank secrecy laws to meet global standards in tax transparency and exchange of information, an official of the Organization for Economic Cooperation and Development (OECD) yesterday said.

Richard Parry, head of OECD’s Global Relations Division and the Center for Tax Policy and Administration, said in a briefing at the sidelines of the Asia-Pacific Economic Cooperation (APEC) Workshop on Fiscal Management here that having enough information remains the biggest challenge for administrators in going after tax evaders, launderers and other criminals in financial areas.

“The Philippines needs to be engaged in that process. You need, in other words, to have legislation in place which meets the global standards, which means the abolition of bank secrecy. That is the fundamental aspect to implementation,” Mr. Parry said.

“It is important for the Philippines to change its legislation in that issue in order to meet international obligations with regard to the exchange of information,” he added.

Republic Act no. 1405 and Presidential Decree no. 1792 consider bank deposits as confidential in nature and can only be looked into once authorized by the central bank’s Monetary Board based on suspicion of fraud.

No law has been passed amending the country’s bank secrecy laws despite calls from tax authorities to repeal the rule.

Mr. Parry said the Philippine Congress should have the political will to enact a law that would repeal bank secrecy legislation in the country.

“It is possible to do it. The political will is needed for the Philippines to meet international standards in that area,” the official said.

Internal Revenue Commissioner Kim S. Jacinto-Henares previously said she wants to repeal the bank secrecy law to allow tax authorities to examine the accounts of individuals suspected of defrauding the government.

Ms. Henares, however, conceded it would take years before the Philippines repeals the law.

Sought for comment yesterday on the OECD official’s statements, the Bureau of Internal Revenue (BIR) chief said via text: “That has always been our position.”

The tax agency has sued celebrities, businessmen, professionals and other erring individuals under its Run After Tax Evaders program.

Collections of the BIR totaled P307.09 billion in the first quarter, 16% higher than last year’s P264.71 billion but 9% short of the P338.06-billion target.