House Speaker: Amend Revenue Code to allow tax info exchange between RP, foreign authorities
House Speaker Prospero Nograles is seeking the amendment of the National Internal Revenue Code to allow the Bureau of Internal Revenue to exchange information on tax matters with foreign tax authorities in compliance with internationally agreed tax standards (IATS).
The Speaker said his proposal will allow the Philippines to conform to the Organization for Economic Cooperation and Development (OECD) Model Agreement on Exchange of Information, which provides that the information to be supplied upon request is relevant to the determination and collection of taxes on foreign-sourced income, the enforcement of tax claims, or the investigation or prosecution of tax matters.
In a recent OECD report, Nograles said the Philippines, rightly or wrongly, was one of the four countries which were included in the list of tax jurisdictions that have not committed to the IATS.
In response to this, Finance Secretary Margarito Teves manifested to the OECD Secretary General the commitment of the Philippines to comply with the international standards on tax information exchange and its full cooperation to help fight international tax evasion, this led to the removal of the Philippines from the list of uncooperative countries, thus avoiding possible sanctions like the reduction of aid and use of political pressure on global companies to withhold investment.
“The Philippines has always been ready to comply with the IATS required for the exchange of tax information. In fact, we have more than 30 tax treaties on exchange of tax information upon request. But it has been difficult for our tax administration to comply with the provisions on the exchange of information set by international organizations due to some domestic legal restrictions, particularly the country’s stringent bank secrecy laws,” Nograles said.
To address this, Nograles said his proposal seeks to amend certain provisions of Republic Act 8424 otherwise known as the National Revenue Code of 1997 (NIRC), to allow foreign tax authorities, the country’s treaty partners, to obtain information held by banks and financial institutions of taxpayers through the Internal Revenue Commissioner, for the proper determination and collection of taxes on the foreign-sourced income of taxpayers of the foreign tax authority.
“This will also benefit our country as we can also obtain similar information from our tax treaty partners to effectively reach the foreign income of our taxpayers and determine the correct tax liabilities under our tax laws,” Nograles said.
Under House Bill 6330 or the proposed “Exchange of Information on Tax Matters Act of 2009,” the Speaker proposed the amendment of Sections 6 (F), 71 and 270 of the NIRC in order to one, authorize the BIR Commissioner to inquire into bank deposits and other related information held by financial institutions to supply information to a requesting foreign tax authority pursuant to a convention or agreement to which the Philippines is a signatory, subject to specific requirements as to the relevance of the tax information requested.
Secondly, to allow the requesting foreign tax authority to examine the income tax returns of taxpayers upon order of the President, subject to rules and regulations on the necessity and relevance that may be promulgated upon enactment of the law.
Thirdly, to penalize BIR officers/employees for unlawful divulgence of information obtained from banks and financial institutions pursuant to Section 6(F) to persons other than the requesting foreign tax authority.
And lastly, to assure effective implementation of information exchange, the bill seeks to provide for sanctions for officers of banks and financial institutions for willful refusal to supply information, and strict obligation of the requesting foreign tax authority to maintain confidentiality of the information received.
Source: http://www.mindanaoexaminer.com July 2, 2009
