Republic Act No. 10021 or the “Exchange of Information on Tax Matters Act of 2009” was signed into law last March 5, 2010.This Law amends Sections 6(F), 71 and 270 of the National Internal Revenue Code and now allows the Bureau of Internal Revenue (BIR) to inquire into bank deposit accounts and other related information held by financial institutions and provide said information to a foreign tax authority pursuant to an international tax agreement. Likewise, it also allows a foreign tax authority to inspect income tax returns of taxpayers in the Philippines upon request for exchange of tax information. Conversely, the BIR can request for information of Philippine taxpayers from the foreign tax office.
The Philippines was placed by the Organization for Economic Co-operation and Development (OECD) in a so-called “blacklist” due to its strict bank secrecy law last April 2009. Facing possible sanctions which may include among others the withdrawal of financing by multilateral institutions as well as reduction of aid from donor countries, the Philippine government made a commitment to review its existing legislation and work towards the passage of a law that will enable the country to comply with the internationally agreed tax standard.
Thereafter, the House of Representatives and the Senate passed House Bill No. 6899 and Senate Bill No. 3220 respectively, last December specifically to address this commitment.
With the enactment of the exchange of information law, it is expected that the Philippines will now be able to meet its obligation to provide information to foreign tax offices. The Bureau of Internal Revenue can also utilize the exchange of information coming from foreign countries.
Commissioner Joel Tan-Torres explained “With this new exchange of information provision, we will be able to address our commitment to our tax treaty counterparts. Equally important, we will be able to get information of investments and transactions of Filipinos abroad and which we can use in our verification of taxable transactions”.