PHILIPPINE NEWS SERVICE — THE Senate has passed a bill seeking to amend the National Internal Revenue Code of 1997, which when signed into law, will allow the Bureau of Internal Revenue to exchange information on tax matters with foreign tax authorities in compliance with the Internationally Agreed Tax Standards (IATS).
Senate Bill No. 3220, principally authored by Senate President Juan Ponce Enrile, was approved on third reading under the sponsorship of Sen. Ping Lacson, chairman of the committee on ways and means. It is now awaiting approval from the House of Representatives.
Enrile said the proposed amendment will allow the Philippines to conform to the Organization for Economic Cooperation and Development (OECD) Model Agreement on Exchange of Information and will allow foreign tax authorities to obtain information held by local banks and financial institutions of taxpayers, through the commissioner of Internal Revenue, for the proper determination and collection of taxes on the foreign-sourced income of taxpayers of the foreign tax authority.
“The bill seeks to comply with the Internationally Agreed Tax Standards for exchange of information to more effectively carry out the country’s commitments under bilateral tax treaties designed to combat tax abuses,” Enrile said. “This will significantly strengthen the authority of our tax administration to directly respond to requests for tax information from treaty partners,” he added.
The Senate president filed the bill in response to an OECD report which included the Philippines as one of four countries included in the list of tax jurisdictions that have not committed to the IATS.
Also, the Philippines, through the Department of Finance, made known to the OECD secretary general the country’s commitment to comply with the international standards on information exchange and its full cooperation to help fight international tax evasion.
According to Enrile, “the Philippines had always been ready to comply with international standards required for the exchange of tax information. In fact, we have more than 30 tax treaties which provide for exchange of information on request.”
He said, however, that 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. There is therefore an urgent need to amend some pertinent provisions the National Internal Revenue Code of 1997 (NIRC).”