Global effort vs Tax evasion: Phl signs multilateral pact on tax matters

MANILA, Philippines - The Philippines has signed a multilateral agreement on mutual administrative assistance in tax matters to boost its participation in global efforts to fight tax evasion.

Internal Revenue Commissioner Kim Henares signed the convention on behalf of the Philippine government last Friday in Paris.

By signing the accord, the Philippines has become the 68th signatory to the convention, which has now taken on increasing importance with the G20’s call for automatic exchange of information to become the new international tax standard of exchange of information.

The convention was developed jointly by the Organization for Economic Cooperation and Development (OECD) and the Council of Europe with the aim of promoting international cooperation for effective implementation of national tax laws.

The G-20 is a forum for the governments and central bank governors from 20 major economies.  Collectively, the G-20 economies account for around 85 percent of the gross world product, 80 percent of world trade and two-thirds of the world population.

The convention facilitates international co-operation for a better operation of national tax laws, while respecting the fundamental rights of taxpayers. It also provides for all possible forms of administrative cooperation between states in the assessment and collection of taxes, in particular with a view to combating tax avoidance and evasion.

“As the Philippines continues to grow, the government continues to look for ways to increase revenues to support this growth and ensure that critical investments in infrastructure and social services for our people are amply funded,” Henares said.

Henares said the convention would directly affect at least seven Run After Tax Evaders (RATE) cases estimated to amount to hundreds of millions of pesos.

“Every tool we use to enhance our country’s revenue generating capacity is a weapon we take to the fight for every Filipino’s right to have quality public goods and services,” Henares said.

Signing the agreement gives the Philippines an efficient and expeditious way of increasing its tax treaty network from 28 to 59 treaty partners.

It also saves time as well as financial, and human resources spent on negotiating and updating bilateral tax treaties, which usually take five to 10 years to complete.

The agreement also allows the BIR to obtain jurisdiction over non-resident taxpayers who have tax liabilities in the Philippines.

 Being a party to the convention provides the Philippines access to  automatic exchange of information, assistance in recovery, service of documents, and the freezing of assets.