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The Exchange of Tax Information Portal is an initiative of the Global Forum on Transparency and Exchange of Information for Tax Purposes. The Global Forum conducts peer reviews of its member jurisdictions' ability to co-operate with other tax administrations in accordance with the internationally agreed standard. The standard provides for exchange of information on request where it is foreseeably relevant to the administration and enforcement of the domestic tax laws of the requesting jurisdiction. Effective exchange of information requires that jurisdictions ensure information is available, that it can be obtained by the tax authorities and that there are mechanisms in place allowing for the exchange of that information. The Global Forum's peer review process examines both the legal and regulatory aspects of exchange (Phase 1 reviews) and the exchange of information in practice (Phase 2). The EOI Portal will track the development of these peer reviews, including changes that jurisdictions make in response to the Global Forum's recommendations.

Peer Review: Philippines Second Round Review (2018)

This report for Philippines has been published on 16 Jul 2018. You can browse it online below.

Skip directly to the Executive Summary. You may also want to view the tables of determinations and ratings.


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Determinations and Recommendations

Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities. (ToR A.1)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   The requirement to identify and verify beneficial ownership is restricted to the Philippines’ Anti-Money Laundering framework and may not adequately make available such information for all relevant legal persons and arrangements. This can occur if the person or arrangement has no on-going relationship with an AML covered person.  The Philippines should ensure that beneficial ownership information is available for all relevant legal persons and arrangements in accordance with the standard. 
The AMLA includes an important exclusion from the definition of covered persons for lawyers and accountants acting as independent legal professionals in relation to information concerning their clients or where disclosure of information would compromise client confidences or the attorney-client relationship, which could impede the availability of ownership information.   The Philippines should ensure that ownership information (both legal and beneficial) is available from lawyers and accountants when such professionals are acting in a role such as a company service provider.  
Phase 2 Rating Factors Recommendations
Partially Compliant.  The Philippines’ Anti-Money Laundering Council does not currently supervise or otherwise monitor the responsibilities of all relevant designated non-financial businesses and professions to conduct customer due diligence requirements.  The Philippines should put in place an effective monitoring programme to ensure that all relevant designated non-financial businesses and professions are adequately supervised regarding customer due diligence requirements under the AML Act. 
The AMLA contains a definition of beneficial ownership in line with the standard, and the AMLC and BSP give instructions to covered persons to appropriately identify and verify the true identity of recordholders, including beneficial owners. But a lack of further guidance (such as the meaning of ultimate ownership/control) may cause AML-obligated covered persons to misapply or neglect procedures to correctly identify and verify a customer’s beneficial owners. The SEC does not have a mechanism to monitor the activities of suspended companies, which have been non-compliant with reporting requirements for more than five continuous years but continue to retain legal personality. The SEC does not maintain updated legal ownership information for such suspended companies which could be relevant for EOI purposes.   The Philippines should ensure that AML covered persons know how to properly apply identification and verification measures to obtain beneficial ownership information. 
Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements. (ToR A.2)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   A large number of companies in the Philippines are revoked or suspended, which means that no annual report and financial statements has been submitted to the SEC for at least five continuous years. Accounting records for suspended companies may not exist or be available.  The Philippines should ensure that accounting records are available for all relevant entities and arrangements, including suspended companies. 
Phase 2 Rating Factors Recommendations
Largely Compliant.     
Banking information should be available for all account-holders. (ToR A.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information). (ToR B.1)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.  The Philippines has issued guidance to clarify how the legal privilege applies to information that is subject to an EOI request. However, in one instance during the review period, legal privilege was initially claimed to prevent compliance with an information request, although the Philippines eventually obtained some information from the recordholder. Because there may be continued ambiguity in the private sector regarding applicability of professional secrecy to information sought under an EOI agreement, access to information may be impeded in practice.   The Philippines should monitor the practical application of legal professional privilege to ensure that it does not prevent effective exchange of information in line with the international standard.  
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information. (ToR B.2)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   The Philippines requires notification of the accountholder when information is requested from a financial institution pursuant to an EOI request. The BIR interprets the law as not requiring any specific timelines, and has administratively amended its regulations to only provide the accountholder with notification within 60 days after full information has been completely exchanged. No partner has ever requested that the Philippines not provide notification to an accountholder because of concerns of an investigation being undermined. The BIR regulation does not address how to handle a requesting jurisdiction’s request that notification be delayed on the basis that an ongoing investigation might be undermined.  The Philippines should ensure that there is an exception from the time-specific, post-exchange notification requirement that would allow it to not notify the accountholder in cases where notification is likely to undermine the chance of success of the investigation conducted by the requesting jurisdiction and the requesting jurisdiction, on reasonable grounds, has made a request for the application of such an exception. 
Phase 2 Rating Factors Recommendations
Largely Compliant.     
Exchange of information mechanisms should provide for effective exchange of information. (ToR C.1)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   The Philippines signed the multilateral Convention on Mutual Administrative Assistance in Tax Matters in 2014, but has not yet ratified the instrument.   The Philippines should work expeditiously to ratify the multilateral Convention on the Mutual Administrative Assistance in Tax Matters. 
Phase 2 Rating Factors Recommendations
Largely Compliant.     
The jurisdictions' network of information exchange mechanisms should cover all relevant partners. (ToR C.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdictions' mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received. (ToR C.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties. (ToR C.4)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdiction should provide information under its network of agreements in a timely manner. (ToR C.5)
Determination Factors Recommendations
The assessment team is not in a position to evaluate whether this element is in place, as it involves issues of practice that are dealt with in the Phase 2 review.   This element involves issues of practice. Accordingly no determination on the legal and regulatory framework has been made.   
Phase 2 Rating Factors Recommendations
Largely Compliant.  The Philippines has taken steps to improve timeliness of its responses. However, further improvement is needed to ensure exchange of information in a timely manner in all cases, especially with regard to bank information.  The Philippines should endeavour to further streamline its processes so that it is able to respond to all EOI requests in a timely manner.