DOF calls for creation of global tax ID number

MANILA, Philippines - The Department of Finance reiterated yesterday its call for the creation of a global tax identification number (TIN) to ensure an orderly movement of funds and help stamp out money laundering, tax evasion and smuggling.

At the closing of the three-day Internal Tax Forum,  Finance Undersecretary Carlo Carag said the global TIN or so-called passport of funds would allow tax authorities to enhance their oversight capabilities and efficiently implement automatic exchange of financial account information.

Carag said this new system can be implemented in three ways. “First, a global convention on tax account numbers will be needed to provide a specific or unique code to each country so that each individual or corporation’s tax identification number is linked to their country of tax residence,” he said.

He noted that the global convention on tax account numbers will only work if there is also mutual recognition so that an individual or a corporation may be able to use their tax account number in other countries.

Lastly, in order to step up oversight, countries should automatically share information regarding the use of one’s tax account numbers through bilateral or multilateral treaties, Carag said.

 “One clear analogy of how this may work is the system used by our mobile phones. There is a global convention on country codes that identifies each number’s country of origin. For example, 1 signifies North America, 63 signifies the Philippines, and so on,” he explained.

Carag likewise noted that there is mutual recognition of mobile phone numbers such that a Philippine +63 number may be used in other countries. “Thus, one would not have to buy a new sim card or a get a foreign mobile phone number when accessing mobile services abroad,” he said.

 “Our mobile phone networks automatically share information to know when one has used mobile phone services abroad. This allows our home carriers to properly charge and bill us for our use of services. In the end, this will not only make it easier for tax authorities, it will also simplify the process for legitimate businesses engaging in cross border activities,” he added.

Carag said the government remains committed to running after tax evaders.  As of the end of September this year, the Bureau of Internal Revenue has filed 301 cases since 2010 with total estimated tax liabilities amounting to P63 billion.