THE Philippines has signed the Organization for Economic Cooperation and Development’s (OECD) Convention on Mutual Administrative Assistance in Tax Matters to Enhance Tax Compliance (MAC) to allow the country to run after nonresidents who have tax liabilities in the Philippines.
Internal Revenue Commissioner Kim Jacinto-Henares signed the agreement in Paris last Friday, with a special authority to do so from the Office of the President.
“We look forward to becoming a party to the convention. 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 in a statement.
Signing the agreement gives the Philippines an efficient way of increasing the country’s tax treaty network from 28 to 59 partners, saving time and resources on negotiating and updating bilateral tax treaties. For the treaty to enter into force, it must first be ratified by the Philippines.
The agreement also grants the country a new tool to fight tax evasion because it would allow the Bureau of Internal Revenue (BIR) to obtain jurisdiction over non-resident taxpayers who have tax liabilities in the Philippines. Being a party to the agreement allows the Philippines several forms of assistance, including the automatic exchange of information, assistance in recovery, service of documents, and the freezing of assets.
Specifically, the BIR said the agreement will directly impact at least seven cases of tax evasion, in which hundreds of millions of pesos in tax revenues are at stake.
“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.