The Philippines ranked 40th or nearly at the upper third of the 112 countries and jurisdictions covered by a report by the global Tax Justice Network measuring financial secrecy, citing limits in accessing bank records.
The country was given a “secrecy score” of 65 percent in the 2018 Financial Secrecy Index, where scores of 31-40 percent were deemed “moderately secretive” and 91-100 percent were “exceptionally secretive.”
Tax Justice Network said “the secrecy score of 65 percent has been computed as the average score of 20 key financial secrecy indicators.”
In identifying the most important providers of international financial secrecy, the Financial Secrecy Index reveals that traditional stereotypes of tax havens are misconceived, according to the Tax Justice Network. It said the world’s most important providers of financial secrecy harboring looted assets were mostly not small, palm-fringed islands as many supposed, but “some of the world’s biggest and wealthiest countries.” Rich OECD member-countries and their satellites are the main recipients of or conduits for these illicit flows, it noted.
It said the only realistic way to address these problems comprehensively was to tackle them at root: By directly confronting offshore secrecy and the global infrastructure that created it. A first step toward this goal, it said, was to identify as accurately as possible the jurisdictions that make it their business to provide offshore secrecy.
The top 10 jurisdictions in financial secrecy were Switzerland, the United States, Cayman Islands, Hong Kong, Singapore, Luxembourg, Germany, Taiwan, the United Arab Emirates and Guernsey.
“Financial secrecy is a key facilitator of financial crime and illicit financial flows, including money laundering, corruption and tax evasion. Jurisdictions who fail to contain it deny citizens elsewhere their human rights and exacerbate global inequality,” according to Tax Justice Network.
In the financial secrecy indicator of ownership registration, the Philippines scored 50 percent in banking secrecy, 38 percent in trust and foundations registers, 100 percent in recorded ownership, 50 percent in other wealth ownership, and 100 percent in limited partnership transparency.
In terms of legal entity transparency, the country’s scores were 100 percent in public company ownership, 100 percent in public company accounts, 100 percent in country-by-country reporting, 100 percent in corporate tax disclosure and 100 percent in legal entity identifier.
As for integrity of tax and financial regulation, tax administration capacity scored 88 percent; consistent personal income tax, zero; avoids promoting tax evasion, zero; tax court secrecy, 100 percent; harmful structure, 25 percent, and public statistics, 50 percent.
For the international standards and cooperation indication, antimoney laundering scored 58 percent; automatic information exchange, 50 percent; bilateral treaties, 70 percent; and international legal cooperation, 30 percent.
Tax Justice Network nonetheless said that “the Philippines accounts for less than 1 percent of the global market for offshore financial services, making it a small player compared with other secrecy jurisdictions.”
It explained that the Financial Secrecy Index ranked jurisdictions according to their secrecy and the scale of their offshore financial activities.
“A politically neutral ranking, it is a tool for understanding global financial secrecy, tax havens or secrecy jurisdictions, and illicit financial flows or capital flight,” Tax Justice Network said.