Citizens who have $50K or more are subject to probe
MANILA (Mabuhay) – The Philippines and the United States on Tuesday formally agreed to share information on the bank accounts of each other’s citizens to help fight tax evasion.
Under the intergovernmental agreement (IGA), Philippine banks and other financial institutions have to audit and report on accounts of Americans who have at least $50,000.
US banks will be required to do the same for accounts of Filipinos in the US.
“The Philippines continues to stand at the forefront of fiscal transparency across the Asia-Pacific region, reaping measurable returns for our people. Tax evasion across borders is an alarming problem that we can beat back with openness and mutual cooperation. This IGA is an affirmation of that ideal,” said Finance Secretary Cesar Purisima, who signed on behalf of the Republic of the Philippines.
A total of 219 Philippine banks and financial institutions have signed up. Banks that fail to sign up and comply will result in a 30 percent withholding tax on remittances into Philippine accounts.
The US sought the agreement to enforce its Foreign Account Tax Compliance Act (FATCA), which was passed in 2010.
US Ambassador Philip Goldberg said the signing marked “a significant step forward in our efforts to work collaboratively to combat offshore tax evasion.”
“By working together to detect, deter, and discourage tax abuses through increased transparency and enhanced reporting, we can help to build a stronger, more stable, and more accountable global financial system,” he said. (MNS)