The Organization for Economic Co-operation and Development (OECD) is a forum where the governments of 37 countries collaborate to develop policies and programs to promote sustainable economic growth.
The OECD works through more than 300 committees and working groups that cover almost all areas of policy-making, such as education, finance, trade, environment, and taxation.
The Philippines is not among the group of 37 countries comprising the membership of OECD. However, it participates as an observer in the various events conducted by the OECD and is a member of the committees, including several taxation groups.
The OECD Tax is focused on several taxation subjects, including Base erosion and profit shifting (BEPS) Consumption tax; Dispute resolution; Exchange of information; Fiscal federalism network Global relations and development; Public finance; Tax administration; Tax and crime; Tax policy analysis; Tax treaties; and Transfer pricing. Its web site at https://www.oecd.org/tax/ provides detailed information about these activities, which are mostly relevant to the Bureau of Internal Revenue (BIR) and taxpayers of the Philippines.
The BIR is a member of the OECD/G-20 Inclusive Framework on BEPS and the Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum). However, its role in these undertakings is nominal, consisting of merely attending its various meetings and events. I am convinced that the BIR can play a more significant role and even assume global responsibility.
The BEPS Committee, consisting of 145 countries, is working on several initiatives in formulating international tax arrangements that provide a fairer and better tax ecosystem in a digitalized and globalized world economy. This Committee is proceeding with the Two-Pillar solution that is directed at helping to prevent tax avoidance, protect against the erosion of domestic tax bases, and tackle illicit financial flows.
While the rest of the world is abuzz with the BEPS and the global minimum tax, there is little noise in the tax community in the Philippines. It is high time that the various tax stakeholders, including the finance and tax officials, the tax committees in Congress, the professional tax associations, and the taxpayers, join the discourse so that they won’t be struggling to catch up on these important global tax developments.
The Global Forum is working on the implementation of international standards on tax transparency. It ensures that these high standards of transparency and exchange of information for tax purposes are in place globally through its monitoring and peer review activities. It is involved in International Standards for the Automatic Exchange of Information in Tax Matters, the Convention on Mutual Administrative Assistance in Tax Matters, and the Common Reporting Standard. I remember that way back in the 1980s when I was the Chief of the International Tax Affairs Division of the BIR, these tax administration measures were already in place and supported the BIR’s tax enforcement. These Global Forum initiatives are presenting opportunities for collaboration among tax authorities of different countries. It is good for the BIR to be proactive in its involvement in these programs of the Global Forum to gain the full benefit that these can bring to the tax collection efforts.
However, I note that the Philippines has been a laggard in these tax transparency directions of the Global Forum. In the Tax Transparency in Asia 2023: Asia Initiative Progress Report (https://www.oecd.org/tax/transparency/documents/tax-transparency-in-asia-2023.pdf), the Philippines ranked second to last among 22 Asian countries in the number of regional or bilateral Exchange of Information agreements agreed on to foster tax co-operation among them. This should improve so that the Philippines can gain recognition in the area of global tax collaboration with its peers in the region and the rest of the world.
To be continued
Joel L. Tan-Torres was the former Dean of the University of the Philippines Virata School of Business. Previously, he was the Commissioner of the Bureau of Internal Revenue, the chairman of the Professional Regulatory Board of Accountancy, and Tax partner of Reyes Tacandong & Co. and the SyCip Gorres and Velayo & Co. He is a Certified Public Accountant who garnered No. 1 in the CPA Board Examination of May 1979. He is now back to his tax and consultancy practice and can be contacted at firstname.lastname@example.org and his firm JL2T Consultancy.