The Philippines has enacted a law that allows the Bureau of Internal Revenue (BIR) to inquire into bank deposit accounts and other related information held by financial institutions and provide said information to a foreign tax authority pursuant to an international tax agreement. Likewise, it also allows a foreign tax authority to inspect income tax returns of taxpayers in the Philippines upon request for exchange of tax information. Conversely, the BIR can request for information of Philippine taxpayers from the foreign tax office.
The Philippines was placed by theOrganization for Economic Co-operation and Development (OECD) in a so-called “blacklist” due to its strict bank secrecy law last April 2009. Facing possible sanctions which may include among others the withdrawal of financing by multilateral institutions as well as reduction of aid from donor countries, the Philippine government made a commitment to review its existing legislation and work towards the passage of a law that will enable the country to comply with the internationally agreed tax standard.
With the enactment of the exchange of information law, it is expected that the Philippines will now be able to meet its obligation to provide information to foreign tax offices. The bureau can also use the exchange of information coming from foreign countries.
“With this new exchange of information provision, we will be able to address our commitment to our tax treaty counterparts," explains Commissioner Joel Tan-Torres. "Equally important, we will be able to get information of investments and transactions of Filipinos abroad and which we can use in our verification of taxable transactions."