Government wants to allow BIR to look into bank deposits

MANILA, Philippines - The government wants to allow the Bureau of Internal Revenue (BIR) to inquire into bank deposits when there is a request from foreign authorities.

The move is one of several drastic measures the country wants to put in place to remove the Philippines from the gray list of the Organization for Economic Cooperation and Development (OECD).

The so-called gray list is a list of countries which made a commitment to fully comply with the international tax rules.

Last April, the OECD removed the Philippines from the blacklist and is waiting for full compliance with global tax rules.

Currently, the DOF said, the country’s tax laws require a domestic interest in order for the government to obtain information which it can share to foreign tax authorities.

As such, the DOF wants to amend the National Internal Revenue Code (NIRC) to expand the authority of the BIR commission to inquire into bank deposits of all private and non-private individuals or corporations for the purpose of providing information upon the request of foreign authorities.

At present, the NIRC allows the BIR commissioner to inquire into bank deposits only to determine the gross estate of a decedent and to determine the financial incapacity of a taxpayer to pay his taxes if he applies for compromise.

The government also wants foreign tax authorities to be allowed to inspect income returns.

The Finance department said that unless these amendments are in place, the Philippines could lose investments as the OECD may put pressure on companies to withhold their investments.

In its April 2 progress report, the OECD has also named Switzerland, Singapore, the Cayman Islands, Monaco, Liechtenstein, Hong Kong and 39 other territories, as jurisdictions that have committed to internationally agreed tax standard, but have not yet substantially implemented.

The OECD standards have been developed in the context of the OECD’s Global Forum on Taxation, and were subsequently endorsed by G20 finance ministers in 2004 and by the UN Committee of Experts on International Cooperation in Tax Matters in October 2008.