MANILA, Philippines ? The Philippines has been placed with three other countries on the Organization of Economic Cooperation and Development?s (OECD) blacklist of non-cooperative tax havens, which the OECD said had not made any commitment to respecting international standards on exchanging tax information.
After an agreement at the G20 summit in London earlier Thursday to infuse the global financial system with more transparency and bring an end to tax havens that fail to provide information when requested, the OECD named Costa Rica, Malaysia, the Philippines and Uruguay as the worst offenders, saying they had refused to adopt new rules on financial openness.
The list was made public as leaders from the Group of 20 leading industrialized and emerging nations declared at their summit on Thursday that the age of banking secrecy was over, saying they would no longer tolerate shady havens draining away badly needed tax revenue.
The government said Friday it would take needed steps to be stricken off the OECD black list, while pointing out that the internationally agreed financial standards were incompatible with present Philippine laws.
Finance Secretary Margarito Teves said the Philippines has a strong record of compliance with international financial and governance standards and has always been ready to comply with conditions set by international organizations like the OECD and the G20.
?However, meeting international commitments to organizations such as the G20 must and should always be seen with respect to the laws presently enforced in a sovereign country such as the Philippines,? he said.
In a text message, Finance Undersecretary Gil S. Beltran pointed out that under Philippine tax laws, taxpayer information is confidential.
Teves said the perceived noncompliance with international agreements was an effect of the country?s present tax laws.
To be removed from the blacklist, the Philippines would need to review existing local legislation relative to banking secrecy as well as tax information secrecy, he said.
?Invariably, this will require consultation, study and action by the Philippine Congress,? he said.
Trade and Industry Secretary Peter Favila, who is a member of the central bank?s policymaker Monetary Board along with Teves, said: ?If you?re talking of transparency, openness and so on ? we have been very transparent and very open.?
But he lamented that transparency was ?relative to some people.?
Still, the government will take the necessary steps to ensure ?we meet their expectations. We take it as a challenge, and it is really up to us to prove them wrong,? he said.
OECD and non-OECD countries developed the standard that was endorsed by G20 finance ministers in 2004 and a United Nations 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.
Countries divided into 3
Press Secretary Cerge Remonde said it was unfortunate that the Philippines 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.
?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.
?We are working diligently to ensure that our reform agenda meet the needs for the enhancement of our own tax code and these revisions are consistent with appropriate international standards,? he said.
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. Antipoverty 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.
Earlier, the Group of 20 pledged to take action including sanctions against non-cooperative jurisdictions, including tax havens, using information from the OECD as its basis.
The non-cooperative centers are accused of harboring foreign tax avoiders who park billions of dollars out of reach of their home authorities.
A separate ?grey list? of countries that have agreed to improve transparency standards but have not yet signed the necessary international accords included Luxembourg, Switzerland, Austria, Belgium, Singapore and Chile as well as the Cayman Islands, Liechtenstein and Monaco.
China is on a third ?white list? of jurisdictions that have substantially implemented the internationally agreed tax standards. But the OECD said China?s two Special Administrative Regions of Hong Kong and Macao had so far only ?committed to implement? the internationally agreed tax standard.
Labuan, an island off the coast of Borneo and 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 OECD brings together the governments of 30 developed countries committed to democracy and the market economy.
The G20 is a group of finance ministers and central bank governors from 20 economies ? 19 of the world?s largest national economies, plus the European Union. With reports from The Association Press, Reuters, and Ronnel W. Domingo