MANILA, Philippines - President Aquino has allowed the opening of income tax returns of suspected tax evaders upon the request of concerned foreign authorities.
Under Executive Order No. 56 signed by the President last Sept. 6, the Finance secretary has been delegated as the authority to order the opening of ITRs of suspected tax cheats for inspection by foreign tax officials.
The directive was issued as part of the country’s commitment to combat international tax avoidance and evasion and to help address tax issues that might affect international trade and investment, Executive Secretary Paquito Ochoa said over the weekend.
“We recognize that tax information is oftentimes necessary for authorities in other countries to build cases against individuals charged with certain crimes in their jurisdictions. This EO seeks to make it easier to share that information,” he said.
According to Ochoa, the EO will pave the way for better implementation of Republic Act No. 10021, or the Exchange of Information on Tax Matters Act of 2009, which ensures compliance with the commitments of the Philippine government under existing tax treaties and international conventions and authorizes the Bureau of Internal Revenue (BIR) to exchange information on tax matters with its foreign counterparts to help combat international tax evasion.
Specifically, RA 10021 allows a requesting foreign tax authority to study the income tax returns of taxpayers, upon approval of the President. In EO 56, the Chief Executive delegated this duty to the Finance chief, Ochoa said.
EO 56 noted that since RA 10021 did not require the President to personally order the opening of accounts of specific taxpayers subject of a request, such authority could be exercised by his alter ego, in this case the Finance chief.
“Whereas, under the doctrine of qualified political agency, except in cases when the President is required by the Constitution or law to act personally or the exigencies of the situation demand that he acts personally, the multifarious executive and administrative functions of the President are performed by and through the executive departments, and the acts of the Secretaries of such departments, performed and promulgated in the regular course of business, are presumptively the acts of the President,” the EO stated.
Ochoa added that aside from being the President’s alter ego, the Finance secretary was in the best position to review and assess requests from foreign tax authorities since his department oversees the BIR.
The President also directed the Finance secretary to issue specific rules and regulations that will govern the inspection of income tax returns, upon the recommendation of the BIR commissioner.
The EO warned that any information received by a foreign tax authority as a result of the opening of the accounts “shall be treated by the authority as absolutely confidential in nature” and “shall be disclosed only to persons or authorities, including courts and administrative bodies, involved in the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes covered by such conventions or agreements.”