Global forum on transparency and exchange of information for tax purposes peer reviews: Philippines 2013 : phase 2: implementation of the standard in practice.

127 Pages·2013·1.802 MB·English

by  OECD

Global Forum on Transparency and Exchange of Information GLOBAL FORUM ON TRANSPARENCY AND EXCHANGE
for Tax Purposes
OF INFORMATION FOR TAX PURPOSES
PEER REVIEWS, PHASE 2: THE PHILIPPINES
This report contains a “Phase 2: Implementation of the Standard in Practice” review,
as well as revised version of the “Phase 1: Legal and Regulatory Framework” review already
released for this country. Peer Review Report
The Global Forum on Transparency and Exchange of Information for Tax Purposes
is the multilateral framework within which work in the area of tax transparency and Phase 2
exchange of information is carried out by 120 jurisdictions, which participate in the
Global Forum on an equal footing. The Global Forum is charged with in-depth monitoring Implementation of the Standard
and peer review of the implementation of the international standards of transparency
and exchange of information for tax purposes. These standards are primarily refl ected
in Practice
in the 2002 OECD Model Agreement on Exchange of Information on Tax Matters
and its commentary, and in Article 26 of the OECD Model Tax Convention on Income P
e
and on Capital and its commentary as updated in 2004. The standards have also been e
incorporated into the UN Model Tax Convention. r Re THE PHILIPPINES
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The standards provide for international exchange on request of foreseeably relevant iew
information for the administration or enforcement of the domestic tax laws of a requesting R
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party. Fishing expeditions are not authorised but all foreseeably relevant information must be po
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provided, including bank information and information held by fi duciaries, regardless of the t P
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existence of a domestic tax interest or the application of a dual criminality standard. a
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All members of the Global Forum, as well as jurisdictions identifi ed by the Global Forum as 2
relevant to its work, are being reviewed. This process is undertaken in two phases. Phase 1 Im
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reviews assess the quality of a jurisdiction’s legal and regulatory framework for the exchange le
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of information, while Phase 2 reviews look at the practical implementation of that framework. e
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Some Global Forum members are undergoing combined – Phase 1 and Phase 2 – reviews. ta
The Global Forum has also put in place a process for supplementary reports to follow-up tion
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international standards of transparency and exchange of information for tax purposes. Sta
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All review reports are published once approved by the Global Forum and they thus represent d
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For more information on the work of the Global Forum on Transparency and Exchange of P
Information for Tax Purposes, and for copies of the published review reports, please refer to rac
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ISBN 978-92-64-20622-9
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23 2013 78 1 P

Global Forum
on Transparency
and Exchange
of Information for Tax
Purposes Peer Reviews:
Philippines 2013
PHASE 2:
IMPLEMENTATION OF THE STANDARD IN PRACTICE
November 2013
(reflecting the legal and regulatory framework
as atAugust 2013)
ThisworkispublishedontheresponsibilityoftheSecretary-GeneraloftheOECD.
Theopinionsexpressedandargumentsemployedhereindonotnecessarilyreflect
theofficialviewsoftheOECDorofthegovernmentsofitsmembercountriesor
thoseoftheGlobalForumonTransparencyandExchangeofInformationforTax
Purposes.
Thisdocumentandanymapincludedhereinarewithoutprejudicetothestatusof
orsovereigntyoveranyterritory,tothedelimitationofinternationalfrontiersand
boundariesandtothenameofanyterritory,cityorarea.
Pleasecitethispublicationas:
OECD(2013),GlobalForumonTransparencyandExchangeofInformationforTaxPurposesPeer
Reviews:Philippines2013:Phase2:ImplementationoftheStandardinPractice,OECDPublishing.
http://dx.doi.org/10.1787/9789264206236-en
ISBN978-92-64-20622-9(print)
ISBN978-92-64-20623-6(PDF)
Series:GlobalForumonTransparencyandExchangeofInformationforTaxPurposesPeerReviews
ISSN2219-4681(print)
ISSN2219-469X(online)
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TABLE OF CONTENTS – 3
Table of Contents
About the Global Forum                                             5
Executive Summary                                                 7
Introduction                                                       11
Information and methodology used for the peer review of the Philippines     11
Overview of the Philippines                                         12
Compliance with the Standards                                       19
A. Availability of Information                                        19
Overview                                                        19
A1 Ownership and identity information                               21
A2 Accounting records                                            52
A3 Banking information                                           60
B. Access to Information                                            65
Overview                                                        65
B1 Competent Authority’s ability to obtain and provide information        66
B2 Notification requirements and rights and safeguards                  76
C. Exchanging Information                                          79
Overview                                                        79
C1 Exchange of information mechanisms                              81
C2 Exchange of information mechanisms with all relevant partners         91
C3 Confidentiality                                                93
C4 Rights and safeguards of taxpayers and third parties                  99
C5 Timeliness of responses to requests for information                  100
Summary of Determinations and Factors Underlying Recommendations   111
PEER REVIEW REPORT – PHASE 2 – THE PHILIPPINES © OECD 2013
4 – TABLE OF CONTENTS
Annex 1: Jurisdiction’s response to the review report                   117
Annex 2: List of All Exchange-of-Information Mechanisms in Effect      119
Annex 3: List of All Laws, Regulations and Other Relevant Material      121
Annex 4: People Interviewed During On-site Visit                      122
PEER REVIEW REPORT – PHASE 2 – THE PHILIPPINES © OECD 2013
ABOUT THE GLOBAL FORUM – 5
About the Global Forum
The Global Forum on Transparency and Exchange of Information for Tax
Purposes is the multilateral framework within which work in the area of tax
transparency and exchange of information is carried out by over 120 jurisdic-
tions, which participate in the Global Forum on an equal footing
The Global Forum is charged with in-depth monitoring and peer review of
the implementation of the international standards of transparency and exchange
of information for tax purposes These standards are primarily reflected in the
2002 OECD Model Agreement on Exchange of Information on Tax Matters
and its commentary, and in Article 26 of the OECD Model Tax Convention on
Income and on Capital and its commentary as updated in 2004 The standards
have also been incorporated into the UN Model Tax Convention
The standards provide for international exchange on request of foreseeably
relevant information for the administration or enforcement of the domestic tax
laws of a requesting party Fishing expeditions are not authorised but all fore-
seeably relevant information must be provided, including bank information
and information held by fiduciaries, regardless of the existence of a domestic
tax interest
All members of the Global Forum, as well as jurisdictions identified by the
Global Forum as relevant to its work, are being reviewed This process is under-
taken in two phases Phase 1 reviews assess the quality of a jurisdiction’s legal
and regulatory framework for the exchange of information, while Phase 2 reviews
look at the practical implementation of that framework Some Global Forum
members are undergoing combined – Phase 1 and Phase 2 – reviews The Global
Forum has also put in place a process for supplementary reports to follow-up on
recommendations, as well as for the ongoing monitoring of jurisdictions following
the conclusion of a review The ultimate goal is to help jurisdictions to effectively
implement the international standards of transparency and exchange of informa-
tion for tax purposes
All review reports are published once adopted by the Global Forum
For more information on the work of the Global Forum on Transparency and
Exchange of Information for Tax Purposes, and for copies of the published review
reports, please refer to wwwoecdorg/tax/transparency and wwweoi-taxorg
PEER REVIEW REPORT – PHASE 2 – THE PHILIPPINES © OECD 2013

ExECUTIVE SUMMARy – 7
Executive Summary
1 This report summarises the legal and regulatory framework for
transparency and exchange of information in the Philippines as well as the
practical implementation of that framework The international standard which
is set out in the Global Forum’s Terms of Reference to Monitor and Review
Progress Towards Transparency and Exchange of Information (ToR), is con-
cerned with the availability of relevant information within a jurisdiction, the
competent authority’s ability to gain timely access to that information, and in
turn, whether that information can be effectively exchanged with its exchange
of information partners The assessment of effectiveness in practice has been
performed in relation to a three-year period (1 July 2009 to 30 June 2012)
While the Philippines has a well developed legal and regulatory framework,
the report identifies a number of areas where the Philippines could improve
its legal infrastructure and its practice within that framework to more
effectively implement the international standard The report includes recom-
mendations to address these shortcomings
2 The Philippines consists of more than 7 000 islands occupying a stra-
tegically important location off the southeast coast of mainland Asia With a
population of over 90 million people it is the 12th most populous country in
the world
3 As a member of the Global Forum since 2005, the Philippines has
participated in all of the Global Forum’s annual assessments In 2009, it
undertook to amend its domestic laws by the end of the year to address
shortcomings, particularly in relation to access to bank information, and
thus bring its treaties in line with the international standard To this end, the
Philippines enacted the Exchange of Information Act and its accompanying
regulations in 2010 Restrictions on access to bank information for exchange
purposes have been removed and, on the whole, the Philippines meets the
international standards for exchange of information (EoI)
4 The Philippines has a wide ranging treaty network with 39 DTCs
currently in force that provide for the exchange of information It has recently
developed a model Tax Information Exchange Agreement (TIEA), approved
in February 2013, with the goal of expanding its exchange of information
PEER REVIEW REPORT – PHASE 2 – THE PHILIPPINES © OECD 2013
8 – ExECUTIVE SUMMARy
network With a few exceptions, its treaties meet the international standard
for exchange of information However, some of the exceptions involve treaties
with significant trading partners, although the deficiencies in a number of
cases arise because of impediments to exchange of information in the case of
the treaty partners, rather than the Philippines Also, the Philippines does not
have a treaty with one of its major trading partners, but is actively seeking to
negotiate or renegotiate TIEAs or Protocols to update EOI provisions under
existing DTCs with its three major partners
5 The Philippines treaty network is complemented by wide-ranging
powers to access information, including ownership, identity and accounting
information The authorities also have powers to compel production of this
information These powers include general access powers under the income
tax code as well as specific powers granted by the Exchange of Information
Act and its accompanying regulations The Philippines laws provide rights
and safeguards to persons who are the subject of EoI requests, including
notification requirements
6 Regarding the availability of information, the legal and regulatory
framework is generally in place to ensure the maintenance of ownership and
identity information for all entities and arrangements Domestic corporations
are required to keep a stock and transfer book with ownership information
as well as the records of all business transactions by the corporation and the
minutes of any meetings The requirement to keep a record of all business
transactions and meeting minutes applies to foreign corporations as well,
although there is no requirement for a foreign corporation to keep a stock and
transfer book with ownership information
7 In addition, domestic corporations, limited partnerships and partner-
ships (with a capital of more than PHP 3 000, approximately USD 68), are
required to register with the Securities Exchange Commission In the case of
domestic corporations and limited partnerships, registration requires the dis-
closure of the identity of shareholders or partners and this information must
be updated annually Separately, regulated entities such as banks, with the
exception of offshore banks, or corporations qualifying for certain incentives
are obliged to provide ownership information to the regulatory authorities or
the Board of Investments
8 For tax purposes, all partnerships must keep a journal and ledger
or their equivalent and these books will necessarily show the identity of the
partners Partners also have a duty to render on demand true and full infor-
mation on all things affecting the partnership to any partner
9 The Philippines laws allow for the creation of trusts Although no reg-
istration requirements exist, only a stock corporation or person authorised by
the Monetary Board to engage in a trust business may act as a trustee as part
PEER REVIEW REPORT – PHASE 2 – THE PHILIPPINES © OECD 2013