THE Philippines has signed an agreement with the Organization for Economic Cooperation and Development (OECD) that will help it improve taxpayer compliance and combat tax evasion.
In a statement, the Department of Finance (DOF) said that the Philippines became the 68th signatory to the OECD Convention on Mutual Administrative Assistance in Tax Matters (MAC).
Jointly developed by the OECD and the Council of Europe, the MAC is a multilateral agreement promoting international cooperation for effective implementation of national tax laws.
An amending protocol, entered into force in 2011, aims to help developing countries secure the benefits of the new cooperative tax environment, including a multilateral approach for the automatic exchange of information.
The DOF said that Bureau of Internal Revenue (BIR) Commissioner Kim Jacinto Henares, with special authority from the Office of the President, signed the agreement in Paris on Friday last week.
“We highly look forward to becoming a party to the convention. As the Philippines continues to grow, the government continues to look for ways to increase revenues to support this growth and ensure that critical investments in infrastructure and social services for our people are amply funded,” Henares said.
The finance agency said that the signing the agreement gives the Philippines an efficient and expeditious way of increasing its tax treaty network from 28 to 59 treaty partners.
The agreement also grants the country a valuable tool for fighting tax evasion and improves international compliance of taxpayers, allowing the BIR to obtain jurisdiction over non-resident taxpayers who have tax liabilities in the Philippines, the DOF said.
Through the agreement, the DOF said the country will save time as well as financial and human resources expense in negotiating and updating bilateral tax treaties, which usually take five to 10 years to complete.
The DOF added that being a party to the convention offers the Philippines several forms of assistance, including automatic exchange of information, assistance in recovery, service of documents, and the freezing of assets.
The MAC, according to the BIR, will directly impact at least seven Run After Tax Evaders cases estimated to amount in the hundreds of millions of pesos.
“Every tool we use to enhance our country’s revenue generating capacity is a weapon we take to the fight for every Filipino’s right to have quality public goods and services,” Henares said.
To enter into force, the convention must now be ratified by the Philippines, the DOF said.
The MAC is currently in force in 22 countries while the protocol or amended convention is in force in 28 countries.