BSP backs tax amnesty, lifting bank secrecy law
Credit to Author: MAYVELIN U. CARABALLO, TMT| Date: Wed, 09 Oct 2019 16:20:27 +0000
THE Department of Finance (DoF) has secured the support of the Bangko Sentral ng Pilipinas (BSP) on a general tax amnesty measure that would also allow the government to break the walls of bank secrecy in fraud cases.
In a statement on Wednesday, the Finance department said BSP Governor Benjamin Diokno told Finance Secretary Carlos Dominguez 3rd that the central bank wanted to be involved in convincing Congress that lifting
Republic Act 1405, or “The Law on Secrecy of Bank Deposits,” was a crucial and indispensable part in granting amnesty to erring taxpayers.
The Philippines and Lebanon are the only countries that still implement stringent bank secrecy laws.
Dominguez was said to have directed Finance Undersecretary Gil Beltran to ensure that Congress is aware of the joint DoF-BSP position on the measure.
“Make sure that the general amnesty and the lifting of the bank secrecy — it has to be together,” he was quoted as telling Beltran at a recent DoF executive committee meeting.
The proposed general tax amnesty, along with the lifting of the bank secrecy law and the automatic exchange of tax information among regulatory agencies, were consolidated under Package 1B of the government’s Comprehensive Tax Reform Program.
It also includes a proposal to adjust the Motor Vehicle Users’ Charge.
RA 11213, or the “Tax Amnesty Act,” was signed by President Rodrigo Duterte in 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 provisions on the amnesty on delinquent estate tax taxes were retained in RA 11213.
President Duterte said a general tax amnesty without the lifting of the bank secrecy law would only lead to revenue losses for the government and encourage tax evasion.
In his veto message, the President said “our experience with the 2006 tax amnesty under RA 9480 has shown that without safeguards and measures against tax evasion, the objectives of an amnesty, such as raising revenues and expanding the tax base, cannot be fully achieved.”
While the Finance department backs a general tax amnesty, Dominguez has emphasized that the effectiveness of the measure depends on the lifting of the said law.
“The DoF supports a general tax amnesty for everyone with pending tax cases. However, like what we have been advocating in Congress, the President saw it fit that this happens with the corresponding tax administration measures to strengthen enforcement against current tax evasion — the lifting of bank secrecy laws and setting the legal framework for the automatic exchange of information mechanisms,” he said.
The Finance chief also said 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.
Indirect revenue losses resulting from enforcement activities would be around P53 billion if the general tax amnesty pushed through without the safeguards, he added.
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.