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Philippines to take steps to remove tax haven tag

Philippines to take steps to remove tax haven tag

The Philippines said Friday it would take needed steps to be stricken off a list of four nations blacklisted by the Organization for Economic Cooperation and Development as uncooperative tax havens.
At the behest of the Group of 20 leaders meeting in London, the OECD named the Philippines, Uruguay, Costa Rica and the Malaysian territory of Labuan as the worst offenders, saying they had refused to adopt new rules on financial openness.
The list was made public as G-20 leaders from rich and developing nations declared at their summit Thursday that the age of banking secrecy was over, saying they would no longer tolerate shady havens draining away badly needed tax revenue.
"The Philippine government would take the necessary steps to ensure we meet their expectations," said Trade Secretary Peter Favila, also a member of the central bank's policy-king Monetary Board. "It is really up to us to prove them wrong."
President Gloria Macapagal Arroyo's spokesman, Cerge Remonde, said it was unfortunate that the country failed to meet the timetable for review and implementation of the internationally agreed taxation standard, but that the Philippines has a strong record of compliance.
OECD and non-OECD countries developed the standard that was endorsed by G-20 finance ministers in 2004 and a U.N. committee on tax matters in October 2008. It requires exchange of information on request in all tax matters and enforcement of domestic tax law without regard to domestic tax interest requirement or bank secrecy.
"We are committed to compliance with those standards and we are confident that we will meet the requirements for removal from this list," Remonde added.
The announcement by the OECD reflects mounting concern that banking secrecy in tax havens has helped to worsen the economic crisis by disguising the true value of some global assets. Anti-poverty activists say such places provide corrupt officials places to stash illicit funds, often depriving poor nations of needed resources.
The OECD has divided countries into three categories: those who comply with rules on sharing tax information, those who say they will but have yet to act and nations which have not yet agreed to change banking secrecy practices.
Labuan, the other named uncooperative tax haven in Asia, was launched by Malaysia as an international offshore financial hub in 1990 with an investment of about $800 million, but it still lags far behind other more established Asian financial hubs such as Hong Kong and Singapore.
The hub, on an island off the coast of Borneo, offers businesses big tax breaks, with trading companies having to pay a corporate tax of just 3 percent of their net profit or a fixed rate of 20,000 ringgit ($5,555) per year. In the rest of Malaysia, companies pay corporate tax of 28 percent of net profit.
Officials at Malaysia's Finance Ministry were not immediately available for comment.


Updated : 2021-10-28 00:52 GMT+08:00