BIR may defer notice of foreign tax probe

THE BUREAU of Internal Revenue (BIR) may now notify taxpayers that their information was sent to a requesting foreign tax authority as investigation reaches the final stages.

Revenue Regulation No. 22-2018 states that the Commissioner of Internal Revenue can opt to notify the taxpayer in writing that a foreign tax authority has requested sensitive information “after receipt of communication from the requesting jurisdiction that the investigation has already attained finality.”

This applies to “cases where notification is likely to undermine the chance of success of the investigation conducted by the requesting jurisdiction” and where the requesting authority “has made a substantiated request for a deferment of the notification,” based on the said grounds.

Previously, the BIR Commissioner was required to notify the taxpayer within 60 days following the BIR’s transmittal of information to the requesting party.

The BIR said that the regulation was issued to “effectively and fully comply with the provisions on exchange of information contained in international conventions or agreements on tax matters.”

The regulation was signed by Finance Secretary Carlos G. Dominguez III on Oct. 9 and made public on Oct. 17.

The new rules take effect 15 days after publication in a newspaper of general circulation.

Sought for comment, P&A Grant Thornton’s Tax Advisory & Compliance head Eleanor L. Roque said that the new rule will prevent erring taxpayers from thwarting investigations.

“Pag nag-notify na, baka the taxpayer can do something like removing his bank account, take it out, prepare for the eventual case being filed against him,” she said in an interview yesterday. “It’s still in the investigation portion, so the taxpayer will still be notified that there’s a case developed against him. It’s not a violation of due process since investigation pa lang. You’ll still be given a chance to refute it.”

The Philippines has existing tax treaties with about 43 countries to exchange such information as parts of efforts to curb tax fraud and money laundering.

The Department of Finance is currently pushing for the automatic exchange of such information with treaty partners as part of its tax reform program.