BIR wants tax evasion classified as predicate crime under AML

MANILA, Philippines - The Bureau of Internal Revenue (BIR), is pushing for the inclusion of tax evasion in the list of so-called predicate crimes under the Anti Money Laundering Law.

The amendment of the law is currently being discussed in the Senate.

Tax evasion should be considered a predicate crime, BIR Commissioner Kim Henares yesterday said.

Predicate crimes under the anti-money laundering law include kidnap for ransom, plunder, and drug trafficking.

Government can seek the freezing of funds or assets of individuals for these crimes.

“The inclusion of tax crimes as a predicate offense to money laundering is proper and timely,” the BIR said in a position paper submitted to the Senate Sub-committee on Anti-Money Laundering.

In its paper, the tax agency said the move is in line with the present trend among national governments and international organizations that seeks to curtailing or clamp down on illicit capital flight.

The Task Force on Financial Integrity and Economic Development (FIED) earlier recommended to the Financial Action Task Force (FATF) the inclusion of tax crimes as predicate offenses to money laundering on Jan. 17, 2011.

The Task Force on FIED, is a consortium of governments, research and advocacy organizations focused on achieving greater transparency in the global financial system for the benefit of developing countries.

In its position paper, the BIR reiterated that all income derived from whatever sources, legal or illegal, is taxable and that nonpayment of taxes on income derived from whatever sources, legal or illegal, is a criminal offense.

Furthermore, the tax agency said that “those involved in illegal enterprises are necessarily engaged in tax evasion.

The BIR argued that proponents of illegal enterprise usually would not report their true personal incomes as this would serve as an admission of guilt and could result in criminal charges.