PHL tagged among those enabling illegal fund flows

THE PHILIPPINES was counted in the upper third of a list of jurisdictions that “contribute to the secrecy that enables illicit financial flows.”

The Philippines placed 40th among 112 jurisdictions in the Tax Justice Network’s Financial Secrecy Index 2018 that was released yesterday. The biennial report is the fifth since 2009 released by the Tax Justice Network, which describes itself as an “independent international network” launched in 2003 to “conduct high-level research, analysis and advocacy on international tax… and on the impacts of tax evasion, tax avoidance, tax ‘competition’ and tax havens.”

The index uses a 0%-100% scale for financial secrecy, with 0% score denoting 100% transparency and the maximum 100% score equivalent to 0% transparency. Each jurisdiction is gauged against 20 key financial secrecy indicators (KFSIs) grouped into four “dimensions of secrecy,” namely: ownership registration, legal entity transparency, integrity of tax and financial regulation as well as international standards and cooperation.

The Philippines got an overall secrecy score of 65.38% but had a “small” 0.09% share in global financial services exports, hence its relatively middle rank on a list topped by Switzerland, the United States (which had a better 60% secrecy score but had the biggest 22.30% share) and the Cayman Islands. “The Philippines accounts for less than one percent of the global market for offshore financial services, making it a small player compared with other secrecy jurisdictions,” the report explained.

The Philippines was rated 100% secretive in all five KFSIs under the legal entity transparency dimension; in “recorded company ownership,” “limited partnership transparency” and “tax court secrecy.” It got the best score of 0% in terms of “consistent personal income tax” and “avoids promoting tax evasion.”