BIR urged to hold consultations on bank secrecy

MANILA, Philippines - The Bureau of Internal Revenue must hold various consultations with all stakeholders on its proposal to lift the bank secrecy law and ensure that its obligation to respect human rights and to safeguard the information taxpayers entrust to tax authorities is upheld at all times, the head of the Tax Management Association of the Philippines (TMAP) said.

“With regards to the bank secrecy law, it is something that would require congress approval and as such, they must consult and consider all stakeholders such as the banks and other financial institutions, businesses, foreign investors and the investing public in general,” TMAP president Rina Reyes Manuel said in a text message.

Manuel said all stakeholders must be consulted so they can provide input on issues of concern.

 â€œAny tax-related proposal should consider a healthy balance between strengthening tax compliance and respecting taxpayer rights,” Manuel said.

She also cited the BIR’s obligation to apply the tax law with integrity and fairness to all.

 â€œFor taxpayers, the main concerns are on ensuring that their privacy rights are respected and that they do not become subject to undue harassment,” Manuel said.

Manuel, however, pointed out that there are other options available to the BIR in order for the agency to pursue tax evasion cases.

Enacted in 1955, the bank secrecy law requires all banks and financial institutions to treat all deposits of whatever nature with absolute confidentiality. This means that all deposits may not be examined or looked into by any person, government official or agency except upon written consent of the depositor or in cases of impeachment or upon order of a competent court in cases of bribery or dereliction of duty of public officials.

Any violation of the law will subject offender upon conviction to an imprisonment of not more than five years or a monetary fine or both in the discretion of the court.

Internal Revenue commissioner Kim Henares, however, argued that banking transparency would do more than good to the country as it is expected to shore up tax collections and allow the agency to pin down tax evaders.

Henares said the country might not have any choice but to ditch bank secrecy as more and more developed countries commit to share financial information with other countries in a bid to curb tax evasion and illicit funds.

“Sooner or later, we need to do away with the bank secrecy law for tax purposes because globally that will be a requirement. That’s the movement in the OECD and the US  – all of them are requiring that there’s transparency in data, including bank data,” Henares earlier said.

The OECD or Organization for Economic Co-operation and Development, is pushing for the automatic exchange of tax information worldwide by the end of 2015.  “Whether we will like it or not, eventually, we will get to that point. Otherwise, we will be blacklisted as a country so our economic development will be affected by it,” Henares said.