BIR tweaks to tax laws may be ‘prone to abuse’

A SENATOR warned the Bureau of Internal Revenue (BIR) that the amendments it is pitching to Congress to punish fraudulent tax activities may be prone to abuse.

In a Sept. 15 memorandum to Finance Secretary Cesar V. Purisima, a copy of which was obtained by the Inquirer, BIR Commissioner Kim S. Jacinto-Henares said she has transmitted to both the House of Representatives and the Senate draft bills aimed at amending Republic Act (RA) No. 1405 or the Bank Secrecy Law and the strengthening of the Anti-Money Laundering Law or RA No. 9160.

The Bank Secrecy Law basically provides that all deposits in banks and banking institutions are of an “absolutely confidential nature.”

BIR wanted to amend Sections 2 and 5 of the law to allow examination of the deposits “for tax purposes, implementation of tax treaties or other international tax agreements, subject however, to the provisions of confidentiality of information pursuant to Section 270 of the National Internal Revenue Code of 1997.”

The BIR also wants to amend the Anti-Money Laundering Law to include tax evasion in the “unlawful activity” list under Section 3.

The amendment would mean making tax evasion a predicate crime, or the basis of a bigger crime, such as money laundering. This means the accused, if proven guilty, will be punished for both crimes.

Sought for comment, Sen. Sonny Angara, who chairs the Senate ways and means committee, told the Inquirer that he already asked the BIR to “try to inject safeguards and come out with more tailored bills.”

“We told them [the draft bills were] too broad and subject to abuse,” Angara explained.

As for Marikina Rep. Miro Quimbo, he said “I have not seen [the proposed draft bills] despite my request that they send me [copies].”

“I will gladly sponsor [the draft bills] so we can discuss the matter soonest,” Quimbo, chair of the House ways and means committee, said in a text message.

The Department of Finance (DOF) has noted that the Philippines is one of only three countries in the world where bank secrecy provisions hamper tax collection purposes. The DOF also noted it is one of just two countries where tax evasion is not a predicate crime.

Purisima told Congress last August that such conditions serve as handicaps to the BIR’s ability to collect more taxes.

“Tax evasion is still a pervasive issue, especially among upper-tier personal income taxpayers,” Purisima said in a separate Senate hearing also in August. He noted there remains many fixed-income earners such as actors and actresses, basketball players, doctors, designers, engineers, entrepreneurs and lawyers, among other professionals, who do not pay the right taxes.

DOF estimates showed that only 400,000 of the 1.8 million self-employed in the country pay their correct taxes.