RP Blacklisted

The recent meeting of Group of 20 Leaders or known as G20 held last Friday in London blacklisted the Philippines for being one of the four uncooperative tax havens worldwide. Other countries include Uruguay,Costa Rica and the Malaysian territory of Labuan.

The Organization for Economic Cooperation and Development (OECD) named the four as uncooperative tax havens at the request of G20 because they failed to concede with the new rules of financial openness, failed to exchange tax information. Countries that are blacklisted will be sanctioned by the OECD, which may include withdrawal of financial assistance from the World Bank and the International Monetary Fund. The G20 summit would want to answer global economic crisis and setting off new rules on banking secrecy is a step for solving it.

Tax havens are places where taxes are collected at low rate or not at all. These will deliberately attract investors and exploit foreign demand opportunities to move in to them for tax avoidance.

After the recent summit, the Philippines released a statement that they are willing to abide with the new set of rules but it may take time as this will need a government legislation for the current Bank Secrecy Law.

The Bank Secrecy Law was legislated in 1955 primarily aimed to attract foreign investors after the nation was under colony. Under the law, all peso and dollar deposits, including government-issued bonds, are completely considered confidential unless courts order for its issuance for any pending cases or impeachment. The impeachment case of former President Estrade though was considered weak as banks did not give transaction records as they are covered with the Bank Secrecy Law. Same is what happens with the Legacy Group case where bank records are kept confidential in investigation.

Moreover, because of this law's flaws, Philippines has been declared by the Financial Action Task Force on Money Laundering as a haven for money laundering of drug trafficking, kidnapping and gambling.

The Philippines must hastily uplift the blacklist to still receive assistance from the global community, moreover, with World Bank and IMF. Bank Secrecy Law is a good strategy to attract investing firms but at times like this, global economic crisis, all we need is a decision and act that will balance everything.

For more information visit
http://ph.news.yahoo.com/star/20090403/tph-g20-blacklists-rp-other-tax-havens-541dfb4.html
http://www.abs-cbnnews.com/nation/04/03/09/govt-aims-get-oecd-tax-blacklist