‘Bank secrecy law impairs tax efforts’


    The Department of Finance (DOF) is keen on seeing the approval of the lifting of the bank secrecy law within the 18th Congress, as the highly restrictive law prevents revenue agencies from fully auditing and enforcing tax laws.

    “It is absolutely necessary for proper tax administration and we are determined to see this passed,” Carlos Dominguez, DOF secretary, said in a press briefing at the DOF office in Manila last week, adding he wants to see it passed within the 18th Congress.

    “We’re just asking Congress, please give us the tools so that our tax authorities and other authorities can do their job, can pursue their job properly,” Dominguez said.

    The Philippines and Lebanon are the only countries in the world that still implement stringent bank secrecy laws.

    “Can you imagine? (Bureau of Internal Revenue deputy commissioner) Arnel (Guballa) here, he knows that somebody is cheating on the tax and the only way he can prove it is to look at the guy’s bank account but he cannot do it,” Dominguez said.

    “We’re not asking him to look at it, you know, for curiosity or for gossip or for something. If we have a good suspicion that, you know, a crime is being committed, tax evasion, money laundering, that’s when we’ll look at it. But you know, how can you expect better tax collection, if you’re blind?” he added.

    Antonette Tionko, DOF undersecretary, also said during the press briefing the easing of the bank secrecy law is in compliance with international obligations.

    “Every other country in the world has it. We’re not asking for something that is not standard,” Dominguez said.

    “It’s not only for the BIR… if there is a predicate crime… if there is a suspicion of money laundering, tax evasion, heinous crimes… they will look at it,” he added.

    In a previous press statement, the DOF said together with the Bangko Sentral ng Pilipinas (BSP), it will ask legislators to ensure that the approval of a general tax amnesty law will also enable the government to finally break the walls of bank secrecy in fraud cases.

    Dominguez said BSP governor Benjamin Diokno has informed him that the central bank wants to get involved in efforts to convince Congress that lifting the bank secrecy law is a crucial and indispensable part in the grant of amnesty to erring taxpayers.

    Dominguez has directed Gil Beltran, DOF undersecretary, 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 meeting.

    Package 1B of the 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 (RA) No. 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 provisions on the amnesty on delinquent estate taxes was retained in RA 11213.


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