DOF courts Senate support in relaxing bank secrecy law

The Department of Finance (DOF) on Wednesday asked the Senate to support the proposal relaxing the country’s bank secrecy law as it would allow the Bureau of Internal Revenue (BIR) to conduct the proper audit in tax fraud cases.

Absolute bank secrecy is one of the “major” issues that need to be revisited as the Duterte administration pushes for the approval of a comprehensive tax reform program, Finance Undersecretary Karl Kendrick Chua said.

“[The] absolute bank secrecy does not allow, in many cases, the BIR to inquire and compare the declaration of taxpayers with income and wealth,” Chua said in an interview.

Tax administration, Chua said, will fund 38 percent of the P1.7 trillion budget eyed by the administration every year to “serve the people and meet the President’s promise.”

During the Senate ways and means committee hearing on the tax reform package, Chua noted only three countries have an absolute bank secrecy law in place – Lebanon, Switzerland and the Philippines.

He appealed to the Senate to “relax bank secrecy when there is a fraud case.”

“There’s no way we can audit taxpayers if we have absolute secrecy. So we will follow what all countries do except the two other countries that do not comply with international standards,” Chua said.

Relaxing the bank secrecy law was included in the proposed Tax Reform for Acceleration and Inclusion Act or TRAIN approved by the House of Representatives on May 31.

The tax reform bill is pending before the Senate.

Senator Sonny Angara, chairman of the ways and means committee, said he would have to consult his colleagues first on the DOF proposal.

“We’ll have to see kung pumayag ‘yung mga colleagues natin. We’ll consult because that’s a sensitive matter,” Angara said in an interview.

On Monday, Duterte appealed to the Senate to pass his tax reform program “in full.”