Aquino authorizes DoF chief to order opening of tax records of suspected cheats

Finance Secretary Cesar Purisima. INQUIRER FILE PHOTO

MANILA, Philippines – President Benigno Aquino III has delegated to Finance Secretary Cesar Purisima the authority to order the opening of tax records of suspected cheats upon the request of other countries that have existing tax-related agreements with the Philippines.

Aquino’s directive, contained in Executive Order No. 56 and which the President signed September 6, was issued as part of the country’s commitment to combat international tax avoidance and evasion and to help address tax issues that may affect international trade and investment, said Executive Secretary Paquito Ochoa, Jr.

“We recognize that tax information is oftentimes necessary for authorities in other countries to build cases against individuals charged with certain crimes in their jurisdictions. This EO seeks to make it easier to share that information,” Ochoa said.

The new EO is in connection with Republic Act No. 10021 or the Exchange of Information on Tax Matters Act of 2009, which ensures compliance with the commitments of the Philippine government under existing tax treaties and international conventions.

It also authorizes the BIR to exchange information on tax matters with its foreign counterparts to help combat international tax evasion and allows a requesting foreign tax authority to study the income tax returns upon approval of the President.

EO 56 enables the President’s mandate to approve or disapprove the requests to the finance secretary.

Ochoa said that since the law on exchange of information on tax matters did not require the President to personally order the opening of accounts of specific taxpayers subject of a request, such authority may be exercised by his alter ego which, in this case, is the finance secretary.

“Whereas, under the doctrine of qualified political agency, except in cases when the President is required by the Constitution or law to act personally or the exigencies of the situation demand that he acts personally… the acts of the secretaries of such departments, performed and promulgated in the regular course of business, are presumptively the acts of the President,” the EO read.

Ochoa said that aside from being the President’s alter ego, the finance secretary is also in the best position to review and assess requests from foreign tax authorities since his department oversees the Bureau of Internal Revenue, which is tasked to recommend action on such requests.

Under EO56, Ochoa said, the President also directed the secretary of finance to come up with the implementing rules and regulations that will govern the inspection of income tax returns upon the recommendation of the BIR commissioner.

The EO mandates that any information received by a foreign tax authority as a result of the opening of the accounts shall be treated by the authority as absolutely confidential in nature and “shall be disclosed only to persons or authorities, including courts and administrative bodies, involved in the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes covered by such conventions or agreements.”