Department of Finance, Congress to review RP's tax laws

MANILA, Philippines - The Department of Finance said it would be working closely with Congress to review and eventually align the country’s tax laws with globally accepted standards, Finance Secretary Margarito Teves said yesterday.

The Finance chief made the commitment following the Organization for Economic Cooperation and Development’s (OECD) dropping the Philippines from its list of “uncooperative tax havens.”

The OECD also removed Costa Rica, Malaysia and Uruguay from the list it released on April 2.

“We appreciate the OECD’s quick action to remove us from the list of non-cooperative countries to the internationally agreed tax standards as we have always been ready to adopt international standards to facilitate transparency and exchange of information,” Teves said.

In a statement, the OECD said the countries in its list have officially committed to fight tax abuse as well as implement global tax standards.

“We continue to see quick progress in the adoption of the OECD standard. I very much welcome that all jurisdictions surveyed by the OECD Global Forum are now committed,” OECD Secretary-General Angel Gurria said.

“We need a level playing field and are looking forward to quick implementation of the standard.”

The OECD said it would now work with the countries that used to be on the list on the implementation of their commitments and on speeding up the process of concluding and negotiating tax information exchange agreements.

“We will be working closely with Congress to review existing legislation relative to bank secrecy and tax information secrecy to align our practices with OECD standards,” Teves said.

Currently, only a court order can lift the lid on information regarding bank deposits in the Philippines.

In its April 2 progress report, the OECD has also named Switzerland, Singapore, the Cayman Islands, Monaco, Liechtenstein, Hong Kong and 39 other territories as jurisdictions that have committed to internationally agreed tax standard, but have not yet substantially implemented them.

Tax havens have come under increasing scrutiny as the global financial crisis bites ever deeper, sparking calls for radical action to curb abuses blamed for the debacle, among them tax evasion and bank secrecy.

After US and European governments bailed out a number of banks, politicians began questioning how and why some of those same financial institutions were able to continue to operate in countries that encourage tax evasion.

Transparency International France last year estimated about $10 trillion – four times France’s gross domestic product – are stashed in secret offshore accounts away from the prying eyes of regulators or tax inspectors.

In the run-up to the G20 London summit, countries with long-held banking secrecy laws including Liechtenstein and Switzerland agreed to comply with regulation forcing states to share tax information.