THE Department of Finance (DOF) on Wednesday said that it got the support of the Bangko Sentral ng Pilipinas (BSP) on the proposed general tax amnesty law which will enable the government to break the walls of bank secrecy in fraud cases.
In a statement, Finance Secretary Carlos Dominguez III said BSP Governor Benjamin Diokno has informed him that the Central Bank wants to get involved in efforts to convince Congress that lifting bank secrecy law is a crucial and indispensable part of the grant of amnesty to erring taxpayers.
The Philippines and Lebanon are the only countries in the world that still implement stringent bank secrecy laws.
Dominguez earlier directed Finance Undersecretary Gil Beltran to ensure that Congress is aware of the joint DOF-BSP position on the issue. “Make sure that the general amnesty and the lifting of the bank secrecy—it has to be together,” Dominguez told Beltran during a recent DOF Executive Committee (Execom) meeting.
Package 1B of the Duterte administration’s comprehensive tax reform program covers the proposed general tax amnesty along with the lifting of bank secrecy laws and the automatic exchange of tax information among regulatory agencies.
Republic Act 11213 or the Tax Amnesty Act was signed into law by President Duterte last February, but he vetoed a provision granting amnesty to people who failed to pay the correct taxes in 2017 and earlier because it lacked a provision on the lifting of bank secrecy. The provision on the amnesty on delinquent estate tax was retained in RA 11213.
Duterte said a general tax amnesty without the lifting of bank secrecy laws would only lead to revenue losses for the government and encourage tax evasion.
Dominguez said the President “was constrained to veto the portion of the law covering the general amnesty because of the lack of provisions breaking the walls of bank secrecy, setting the framework for complying with international standards on exchange of information, and other safeguards against those who abuse by declaring untruthful assets or net worth.”
He added that had the President not vetoed the general tax amnesty provision, the law would raise only P6.8 billion in additional revenues in 2019, lower than the estimated P13.6 billion if lifting bank secrecy and allowing the automatic exchange of information were already in place.
He said indirect revenue losses resulting from enforcement activities would be around P53 billion if the general tax amnesty had pushed through without the safeguards.
Lifting bank secrecy and allowing the automatic exchange of information, however, would have generated up to P76.6 billion in direct and indirect revenues in the next five years, Dominguez said.