Finance dep’t eyes approval of bank secrecy easing this year

THE DEPARTMENT of Finance (DoF) is hopeful the easing of bank secrecy laws, which was lacking in the provisions of the partly vetoed Tax Amnesty Act signed earlier this year, will be implemented within 2019.

“We hope it will happen this year,” Finance Undersecretary Gil S. Beltran replied in a text message when asked when the proposal to ease bank secrecy laws — which will pave the way for the implementation of a general tax amnesty — will be approved.

The Tax Amnesty Act or Republic Act (RA) 11213 was signed but partly vetoed by President Rodrigo R. Duterte last Feb. 14.

The tax amnesty program looked to impose an amnesty charge equivalent to a portion of the taxpayers’ outstanding unpaid taxes in exchange for immunity from civil, criminal and administrative penalties.

From a five-pronged tax amnesty bill, the bill signed by Mr. Duterte retained only the provisions for estate tax amnesty, seen to generate P6.28 billion, and for tax delinquencies worth P21.26 billion.

The Chief Executive removed the provision for a general tax amnesty — which could have raised P13.63 billion if implemented. Mr. Duterte said he was forced to remove the measure in the absence of powers for the state to better run after tax evaders, namely the relaxation of the deposit secrecy law and the automatic exchange of information with foreign tax authorities.

Mr. Beltran said for a tax amnesty program to be implemented, the government should be able to look into the bank accounts of individuals.

“If the national government gives tax amnesty, it should be given the authority to check if the declared incomes and assets are truthful and honest otherwise, another amnesty will be necessary in the future. Throughout the world, there are only two countries with Bank Secrecy Act — Philippines and Lebanon. Having a Bank Secrecy Act is no longer an international best practice,” Mr. Beltran said.

“In an age where terrorist financing and tax evasion are prevalent, the law has become a shield of criminals,” Mr. Beltran added.

Mr. Beltran has earlier said having the bank secrecy law results in loss of revenues for the Philippines and affects the country’s attractiveness to international investors as it cannot join the ASEAN Trading Link which connects stock markets of Singapore, Malaysia and Thailand, to securities brokers.

However, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Chuchi G. Fonacier said separately that the lifting or easing of bank secrecy laws should be done under certain conditions.

“Easing/lifting can be done under certain conditions. One of the conditions is when the deposit account is being used for an unlawful activity or for unsafe and unsound banking activity. The decision on the filing for the petition for lifting will come from the monetary board,” Ms. Fonacier said in a text message.

Still, BSP Deputy Governor Diwa C. Guinigundo said in a text message that it has been the central bank’s “advocacy…for many years” to ease deposit secrecy laws.

Relaxing deposit secrecy rules was part of the reforms sought by the central bank when it was pushing for amendments to its charter, along with the authority to look into conglomerates that own banks.

However, these reforms were left out by Congress as they approved the BSP charter’s amendments or what is now RA 11211, which was signed into law last Feb. 14. BSP officials have said they will consider asking Congress for these amendments as the central bank looks to further boost its regulatory powers. — R.J.N. Ignacio