BIR to pursue leads from leak of Panama Papers

LEAKED RECORDS linking the world’s elite to wealth hidden in tax havens are expected to provide the Bureau of Internal Revenue (BIR) with leads for possible tax evasion cases, the bureau said.

The so-called “Panama Papers” leaked from Panamanian law firm Mossack Fonseca revealed the offshore financial arrangements of businessmen, politicians and celebrities.

Commissioner Kim S. Jacinto-Henares said in a text message: “[I] have not read the Panama Papers yet. If ever, it is a guide for the BIR where to look to determine if there is any tax liability or not.”

The Anti-Money Laundering Council (AMLC), meanwhile, has not looked into the Panama Papers as it is currently busy with the $81 million stolen from the Bangladesh Bank’s account with the Federal Reserve and channeled to Philippine banks and casinos.

Asked whether the financial intelligence unit has looked into the persons allegedly involved in the data leaked, AMLC Executive Director Julia Bacay-Abad said: “No, not at this point. We are so preoccupied with this case so we cannot take up other cases.”

Establishing holding companies in tax haven countries, including Panama, does not constitute an illegal act, lawyer Eleanor L. Roque, principal and division head of tax advisory and compliance at Grant Thornton member firm Punongbayan and Araullo, said in text message.

Ms. Roque, however, noted the “BIR needs to be able to check where the income came from” because Filipinos are taxed on income earned even from overseas.

“It is possible that it was earned from the Philippines but proceeds were sent abroad to escape detection. That’s tax evasion and BIR has every right to demand payment,” Ms. Roque added.

“This is a loophole that concerns most countries and not just the Philippines. Hence, most countries have committed to the BEPS (base erosion and profit shifting) action plans to address and capture untaxed income.”

The Organisation for Economic Co-operation and Development (OECD) and the Group of 20 have initiated work on a multilateral treaty to tackle BEPS or tax planning strategies involving the transfer of income to jurisdictions imposing lower taxes, if any.

“This is where the global standard requiring exchange of information with regard to tax matters will come in to provide assistance,” Ms. Jacinto-Henares noted.

“OECD Global Forums on Exchange of Information requires jurisdiction to provide information to other jurisdictions with regard to tax matters otherwise they will be blacklisted, that is why it is not correct to say that tax haven countries will not be able to provide assistance.” 

As published in Business World dated 06 April 2016 by Keith Richard D. Mariano with Melissa Luz T. Lopez