RP tax info exchange law vague–OECD

THE Organization for Economic Cooperation and Development (OECD) said the Philippines has yet to fully comply with global standards on tax information exchange despite the last year’s enactment into law of the Exchange of Information on Tax Matters Act of 2009. In a letter to Finance Secretary Margarito Teves, Jeffrey Owens, OECD chief for Tax Policy and Administration, said Republic Act (RA) 10021 “is a welcome development following your visit to Paris last year.”

Having said that, Owens qualified that the new law is still susceptible to misinterpretation, adding that the Philippnies has yet to meet the prescribed standards set by the OECD.

“After a preliminary analysis our initial view was that the new legislation might not address all of the ambiguities in the existing legislation with respect to meeting the international standard for effective exchange of information in the Philippines,” the letter read.

Bureau of Internal Revenue Commissioner Joel Tan-Torres however said that any ambiguities on the interpretation and application of the law may be fine-tuned in the implementing rules and regulations.

President Gloria Arroyo signed into law RA 10021 in March, allowing the BIR to exchange tax information and “pursue a tax environment that contributes in sustaining a favorable international investment climate and instills confidence in the adequacy and capacity of the country’s tax administration.”

Under RA 10021, the Philippines would have to comply with internationally agreed tax standards required for the exchange of tax information with its tax-treaty partners to curb overseas tax evasion.

The said law amended some provisions of the National Internal Revenue Code of 1997, and authorized the tax bureau to inquire into bank deposits and other information held by financial institutions at the request of a foreign tax authority without having to secure any court order.

The requesting foreign tax authorities may review the income tax returns of taxpayers on the President’s order and on the recommendation of the tax bureau commissioner.

In turn, the Philippine government may likewise inquire and obtain tax information of overseas-based Filipino investors and workers.

In April last year, the Group of 20 agreed to make the global financial system more transparent and bring an end to tax havens that fail to provide information when requested.

The OECD named the Philippines, Costa Rica, Malaysia and Uruguay as the worst non-cooperative tax havens, after they had refused to adopt new rules on financial openness.

The OECD has since decided to remove the Philippines from its black list. –KATRINA MENNEN A. VALDEZ REPORTER, Manila Times