Phl, France approve tax treaty amendments

Manila, Philippines - The Philippines and France have “approved in principle” an amendment to their double taxation treaty that will allow the two countries to share tax information at each other’s request, the Bureau of Internal Revenue (BIR) said yesterday.

BIR Commissioner Kim Henares said the Philippines has already agreed to the amendment while France is just waiting for the provision to be translated to French.

With the amendments, Philippines can now share relevant bank information with France.

“Tax information sharing is an important mechanism in the fight against global tax evasion practices,” Henares said.

She said the changes were stipulated in a protocol initiated by the two countries on the sidelines of the meeting of the Global Forum on Transparency and Exchange of Information last April 18 to 22.

The amended agreement is the 1976 double taxation treaty between the Philippines and France after the latter still required the alteration of the portion of the agreement despite the passage of a Philippine tax information sharing law in 2010.

Republic Act (RA) 10021 or the “The Exchange of Information on Tax Matters Act,” signed on March 2010, gives the BIR commissioner, among others, the power to look into bank deposits and share tax information with foreign counterparts.

BIR then issued the law’s implementing rules via Revenue Regulations 10-2010, paving the way for the country’s upgrade to the list of nations that “have substantially implemented the internationally agreed tax standard” by the Organization for Economic Cooperation and Development (OECD).

The list was also referred to as the “white list” of compliant nations. Prior to the September upgrade, the Philippines was on the “grey list” of those that agreed with standards but have not yet implemented them for almost a year, and even before that fell to the “black list” of non-compliant states.

Henares said “France required us to amend our treaty with them” for us to be “scratched off their separate black list” of nations, being included in which “makes it difficult for French business to do business here because of more requirements by French government.”

The amended Article 26 titled “Exchange of Information” is a “much more straightforward” provision in tax information sharing which “complies with the OECD model.”

Shared information will be a “secret” between contracting states, use of which will only be limited to “assessment or collection of, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes” on income, the amendment stated.

Contracting nations shall “take the necessary measures” to make sure that requested information are available and could be transmitted to the requesting party.