Philippine participation in a US tax evasion-detection program will also support domestic revenue collection efforts, a Bureau of Internal Revenue (BIR) official said on Thursday.
In particular, local officials will gain a clearer picture of the finances of Filipino citizens residing in the US and determine whether the correct taxes have been paid, BIR Tax Affairs Division Chief Charadine Bardon said at the 2015 Taxand Asia Conference at the New World Hotel.
Tax professionals discussed brewing global taxation issues, focusing on the impact of the United States’ Foreign Account Tax Compliance Act (FATCA), enacted in 2010 that requires foreign financial institutions (FFIs) to report assets held overseas by US citizens.
A deadline for FFIs to sign up lapsed last year. To date, over 200 Philippine financial institutions have registered with the United States’ Internal Revenue Service (IRS) given the threat of higher taxes on their foreign accounts.
To facilitate the process, the Philippines earlier this year signed an intergovernmental agreement (IGA) that will facilitate the information disclosure process.
Philippine financial institutions will be reporting to the BIR, which will forward the information to the IRS. The exchange will be reciprocal, with the IRS also informing the BIR about accounts held in the US by Filipino citizens.
“We will be getting very useful and helpful information to support revenue collection, to support our efforts in improving tax compliance,” Bardon said.
“We don’t have this information at hand. These are information on the US accounts of Philippine residents. In fact, we are not able to detect right now how many of our taxpayers are not complying with their obligation to report their income,” she added.