‘Lift bank secrecy before tax amnesty’


THE Department of Finance (DoF) said Congress must lift the bank secrecy law first before passing a tax amnesty law, to make the latter more effective.

Finance Secretary Carlos Dominguez 3rd said declaring a tax amnesty would be premature at this point.

“It’s not that its not a priority, [but]there are things that have to be done to make any tax amnesty—if there is one—effective,” he told reporters at the sidelines of the DoF’s 120th anniversary on Monday.

The lifting of the Law on Secrecy of Bank Deposits is included in the DoF-proposed Comprehensive Tax Reform Program Package One, which aims to lower personal income tax rates while implementing other measures to compensate for revenue and raise much-needed funds for the Duterte administration’s public investment program.

The bank secrecy law was put in place in 1955. It provides for a confidentiality rule for all types of bank deposits, except upon written permission of the depositor, in case of impeachment proceedings, upon order of the court in cases of bribery or dereliction of duty of a public official, or where the deposit is the subject of litigation.

The law seeks to encourage people to deposit their money in banking institutions and discourage private hoarding so that money may be used by banks in lending.

In 1981, the law was amended to allow the examination of bank records when authorized by the Monetary Board or when the examination is made by an independent auditor hired by the bank itself.

“[Lifting bank secrecy] looks like a more [appropriate measure]…They (Congress) have to realize that we can collect [taxes], that we are capable of doing it,” Dominguez said.

The government-run National Tax Research Center (NTRC) wants the bank secrecy law amended to give government agencies a fighting chance in going after persons involved in tax evasion, money laundering and other financial crimes.

Only the Philippines, Lebanon and Switzerland still have restrictive banking laws that make it difficult for authorities to go after tax evaders and money launderers, the NTRC said in a report.

The Swiss government is trying to relax its bank secrecy laws, while the Philippines and Lebanon remain the only countries in the world where tax evasion is not a predicate crime to money laundering.

“The Philippines is the only country in the Asia-Pacific region with a highly restrictive law that explicitly prohibits the Anti-Money Laundering Council from sharing data with the BIR (Bureau of Internal Revenue),” the NTRC said.

It said the lack of access to information on bank accounts for tax purposes had led to inaccurate tax assessments, weak evidence in tax evasion prosecution, and inability of the tax authority to determine the true liability of taxpayers.

“Bank secrecy is always considered one of the main aspects of private banking. It has also been pinpointed to be responsible for one (sic) of the main instruments of the underground economy, tax evasion and money laundering,” it said.

Easing of bank secrecy rules for tax purposes will allow the BIR to assess tax liabilities and properly enforce administrative and judicial remedies.

“It would also increase taxpayer compliance as it would be a global defense against tax evasion. If implemented, the Philippines can have access to financial information of Filipino citizens and entities abroad for tax purposes,” the think tank said.


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  1. pablo sanchez on

    i wish this administration will find its way to relax the bank secrecy law so that those in congress and senate will now be discourage to spent millions for their campaign. those who deserve to be in the government are those who will help their constituents not their pockets.

  2. I have long been saying get rid of this bank secrecy law. There are many in government who want it left alone. They say to uphold the integrity of the banking world. That is hogwash. Its smoke & mirrors. If it was for that it would cover all accounts even peso accounts. Every country would have to have it. There is only 1 reason to have it, to hide it from the powers that be for many different reasons. But it has to go. It will be a huge step towards cathing criminals in government & make it harder in the future to hide ill gotten monies.