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FOURTEENTH CONGRESS OF THE ) 
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REPUBLIC OF TRE PHILIPPINES 
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I 
Second Regular Session 
1 
Senate Bill No 
EXPLANATORY NOTE 
The attached bill seeks to comply with the Internationally Agreed Tax Standard (IATS) 
for Exchange of Information to more effectively carry out the country’s commitments under 
bilateral tax treaties designed to combat tax abuses. This international standard, developed by 
the Organisation for Economic Co-operation and Development (OECD), and endorsed by the 
G20 and the United Nations, significantly strengthens the authority of our tax administration to 
directly respond to request for tax information from treaty partners. 
In a recent OECD report, the Philippines, rightly or wrongly, was one of the four 
countries which were included in the list of tax jurisdictions that have not committed to the 
internationally agreed tax standards. In response to the said OECD report, the Philippines, 
through the Secretary of Finance, manifested to the OECD Secretary General the country’s 
commitment to comply with the international standards on information exchange and its full 
cooperation to help fight international tax evasion. Consequently, the country was removed from 
the list, thus, avoiding possible sanctions which include, among others, the reduction of aid and 
use of political pressure on global companies to withhold investment in countries that fail to 
observe said standard. 
The Philippines has always been ready to comply with the international standards 
required for the exchange of tax information. In fact, we have more than thirty (30) tax treaties 
which provide for exchange of information on request. However, it has been difficult for our tax 
administration to comply with the provisions on the exchange of information set by international 
organizations due to some “domestic legal restrictions,” particularly the country’s stringent bank 
secrecy laws. 
In this context, there is therefore an urgent need to amend some pertinent 
provisions of Republic Act No. 8424, as amended, otherwise known as the National Internal 
Revenue Code of 1997 (NIRC). 
The proposed amendatoly bill allows foreign tax authorities, our treaty partners, to obtain 
information held by banks and financial institutions of taxpayers through the Commissioner of 
Internal Revenue, for the proper determination and collection of taxes on the foreign-sourced 
income of taxpayers of the foreign tax authority. This will also benefit the Philippines as we can 
also obtain similar information from our tax treaty partners to effectively reach the foreign 
income of our taxpayers and determine their correct tax liabilities under our tax laws. 
In particular, this bill intends to amend Sections 6(F), 71 and 270 of the NIRC in order to: 
1. Authorize the Commissioner to inquire into bank deposits and other related 
information held by financial institutions to supply infomation to a requesting 
foreign tax authority pursuant to a convention or agreement to which the Philippines 
is a signatory, subject to specific requirements as to the relevance of the tax 
information requested; 
2. Allow requesting foreign tax authority to examine the income tax returns of taxpayers 
upon order of the President subject to rules and regulations on the necessity and 
relevance that may be promulgated upon enactment of the law; and 


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3. Penalize officers/employees of the Bureau of Internal Revenue for unlawful 
divulgence of information obtained from banks and financial institutions pursuant to 
Section 6Oj) of the N R C  to persons other than the requesting foreign tax authority. 
Finally, to assure effective implementation of the information exchange, the bill seeks to 
provide for: (1) sanctions for officers of banks and financial institutions for willhl refusal to 
supply information; and (2) strict obligation of the requesting foreign tax authority to maintain 
confidentiality of the information received. 
In view of the foregoing, the approval of this bill is earnestly sought 


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, 
FOURTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PEILIPPINES 
) 
Second Regular Session 
1 
Senate Bill No 
9 MAY -6 
T’h XI2 
AN ACT 
TO ALLOW THE EXCHANGE OF INFORMATION BY TBE BUREAU OF INTERNAL 
STANDARDS, AMENDING SECTIONS 6@), 71 AND 270 OF THE NATIONAL 
INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER 
PURPOSES. 
REVENUE ON TAX MATTERS PURSUANT TO INTERNATIONALLY-AGREED TAX 
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
ussembled: 
SECTION 1. Title. - This Act shall be known as the “Exchange of Znfornzation on Tax 
Matters Act of 2009.” 
SEC. 2. Declaration of Policy. - It is the declared policy of the State to promote and 
pursue a tax environment that contributes in sustaining a favorable international investment 
climate and instills confidence in the adequacy and capacity of the country’s tax administration 
to comply with its commitments under existing international cohventions or agreements on tax 
matters. 
Pursuant to this declared policy, the government shall comply with or commit to the 
internationally-agreed tax standard required for the exchange of tax information with its tax 
treaty partners to help combat international tax evasion and avoidance and to help address tax 
concerns that affect international trade and investment. The gpvernment shall likewise adopt 
measures and procedures to enhance cooperation with other countries in the efficient collection 
of taxes, consistent with the international understanding to ensuf-e the payment of taxes due the 
respective taxing jurisdictions of the treaty partners. 
SEC. 3. 
Authority of the Commissioner of Internal Bevenue to Inquire into Bank 
Deposit Accounts and Related informtion Held by Financial Institutions. - Section 6 (F) of 
Republic Act No. 8424, otherwise known as the National Inteinal Revenue Code of 1997, as 
18 
amended, is hereby amended to read as follows: 


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“SEC. 6. Power of the Commissioner to Make Assessments and Prescribe 
Additional Requirements for Tau Administration and Enforcement. - 
xxx 
xxx 
xxx 
(F) Authority of the Commissioner to Inquire into Bank Deposit Accounts 
AND OTHER RELATED INFORMATION HELD BY FlNANCIAL 
INSTITUTIONS. - Notwithstanding any contrary provision of Republic 
Act No. 1405 and other general or special laws, the Commissioner is hereby 
authorized to inquire into the bank deposits AND OTHER RELATED 
INFORMATION HELD BY FINANCIAL INSTITUTIONS of: 
(1) a decedent to determine his gross estate; [and] 
(2) any taxpayer who has filed ai1 application for compromise of his 
tax liability under Sec. 204 (A)(2) of this Code by reason of financial 
incapacity to pay his tax liability; AND 
(3) A SPECIFIC TAXPAYER OR TAXPAYERS SUBJECT OF A 
REQUEST FOR THE SUPPLY OF TAX INFORMATION FROM A 
FOREIGN 
TAX 
AUTHORITY 
PURSUANT 
TO 
A 
INTERNATIONA CONVENTION OR AGREEME3NT ON TAX 
MATTERS TO WHICH THE PHLIPPINES IS A SIGNATORY 
AND APARTY OF. 
, 
In case a taxpayer files an application to compromise the payment of his 
tax liabilities on his claim that his financial position demonstrates a clear 
inability to pay the tax assessed, his application shall not be considered 
unless and until he waives in writing his privilege under Republic Act No. 
1405 or under other general or special laws, and such waiver shall constitute 
the authority of the Commissioner to inquire into the bank deposits of the 
taxpayer. 
IN CASE OF A REQUEST FROM A FOREIGN TAX AUTHORITY 
FOR TAX INFORMATION HELD BY BANKS AND FINANCIAL 
INSTITUTIONS, THE EXCHANGE OF INFORMATION SHALL BE 


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DONE IN A SECURE MANNER TO ENSURE COWIDENTIALTTY 
THEREOF UNDER SUCH RULES AND REGULATIONS AS MAY BE 
PROMULGATED BY THE SECRETARY OF FINANCE, UPON 
RECOMMENDATION OF THE COMMISSIONER. 
THE 
COMMISSIONER 
SHALL 
PROVIDE 
THE 
TAX 
INFORMATION O B T m D  FROM BANKS AND FINANCIAL 
INSTITUTIONS PURSUANT TO A CONVENTION OR AGREEMEW 
UPON REQUEST OF THE FOREIGN TAX AUTHORITY WHEN SUCH 
REQUESTING FOREIGN TAX AUTHORITY HAS PROVIDED THE 
FOLLOWING 
INFORMATION 
TO 
DEMONSTRATE 
THE 
FORESEEABLE RELEVANCE OF THE INFORMATION TO THE 
REQUEST. 
1) THE IDENTITY OF THE PERSON UNDER EXAMINATION OR 
INVESTlGATION; 
2) A STATEMENT OF THE INFORMATION BEING SOUGHT 
INCLUDING ITS NATURE AND THE FORM IN WHICH THE SAID 
FOREIGN TAX AUTHORITY PREFERS TO RECEIVE THE 
INFORMATION FROM THE COMMISSIONER; 
31 THE TAX PURPOSE FOR WHICH THE INFORMATION IS BEING 
, 
REQUESTED IS HELD IN THE PHILIPPINES OR IS IN THE 
POSSESSION OR CONTROL OF A PERSON WITHIN THE 
JURISDICTION OF THE PHILPPINES; 
5) TO THE EXTENT KNOWN, THE NAME AND ADDRESS OF ANY 
PERSON BELJEVED TO BE 
IN POSSESSION OF 
THE 
REQUESTED INFORMATION; 
6) A STATEMENT THAT THE REQUEST IS IN CONFORMITY WITH 
THE LAW AND ADMINISTRATIVE PRACTICES OF THE SAID 


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FOREIGN TAX AUTHORITY, SUCH THAT IF THE REQUESTED 
INFORMATION WAS WITHIN THE? JURISDICTION OF THE SAID 
FOREIGN TAX AUTHORITY THEN IT WOULD BE ABLE TO 
OBTAIN THE INFORMATION UNDER ITS LAWS OR IN THE 
NORMAL COURSE OF ADMINISTRATIVE PRACTICE AND 
THAT IT IS IN CONFORMITY WITH A CONVENTION OR 
INTERNATIONAL. AGREEMENT, AND, 
7) A STATEMENT THAT THE REQUESTING FOREIGN TAX 
AUTHORITY HAS EXHAUSTED ALL MEANS AVAILABLE IN 
ITS OWN TERRITORY TO OBTAIN THE INFORMATION, 
EXCEPT 
THOSE 
THAT 
WOULD 
GIVE 
RISE 
TO 
DISPROPORTIONATE DIFFICULTIES 
THE COMMISSIONER S m L  FORWARD THE INFORMATION AS 
PROMPTLY AS POSSIBLE TO THE REQUESTING FOREIGN TAX 
AUTHORITY 
TO 
ENSURE 
A 
PROMPT 
RESPONSE, THE 
COMMISSIONER SHALL (1) CONFIRM RECEIPT OF A REQUEST IN 
WRITING TO THE REQUESTING TAX AUTHORITY AND SHALL 
NOTIFY THE LATTER OF DEFICIENCIES IN THE REQUEST, IF ANY, 
WIT” 
SIXTY (60) DAYS OF THE RECEIPT OF THE REQUEST, AND 
(2) IF THE COMMISSIONER IS UNABLE TO OBTAIN AND PROVIDE 
THE WFORMATION WITHIN NINETY (90) DAYS OF RECEIPT OF 
THE REQUEST, DUE TO OBSTACLES IN FURNISHING THE 
LNFORMATION OR THE BANK OR FINANCIAL INSTITUTION 
REFUSES 
TO 
FURNISH 
THE 
INFORMATION, 
HE 
SHALL 
IMMEDIATELY INFORM THE REQUESTING TAX AUTHORITY OF 
THE SAME, EXPLAINING THE NATURE OF THE OBSTACLES OR 
THE REASONS FOR REFUSAL 
THE TERM “FOREIGN TAX AUTHORITY,” AS USED HEREIN, 
SHALL 
REFER 
TO 
THE 
TAX 
AUTHORlTY 
OR 
TAX 


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ADMINISTRATION OF THE REQUESTING STATE UNDER THE TAX 
TREATY OR CONVENTION TO WHICH THE PHILIPPTNES IS A 
SIGNATORY OR A PARTY OF.” 
SEC. 4. Allowing a Foreign Tkx Authority to Exantine Income Tux Returns of 
Taxpayers in the Philippines. - Section 71 of Republic Act No. 8424, as amended, otherwise 
known as the National internal Revenue Code of 1997, is hereby amended to read as follows 
“SEC. 71. Disposition of Income Tax Returns, Publication of Lists of 
Taxpayers and Filers. - 
After the assessment shall have been made, as 
provided in this Title, the returns, together with any corrections thereof 
which may have been made by the Commissioner, shall be filed in the 
Office of the Commissioner and shall constitute public records and be open 
to inspection as such upon the order of the President of the Philippines, 
under rules and regulations to be prescribed by the Secretary of Finance, 
upon recommendation of the Commissioner. 
The Commissioner may, in each year, cause to be prepared and 
published in any newspaper the lists containing the names and addresses of 
persons who have filed income tax returns. 
INCOME TAX RETURNS OF SPECIFIC TAXPAYERS SUBJECT 
OF A REQUEST FOR EXCHANGE OF INFORMATION BY A 
FOREIGN TAX AUTHORITY PURSUANT TO AN INTERNATIONAL 
CONVENTION OR AGREEMENT ON TAX MATTERS TO WHICH 
THE PHILE’PINES IS A SIGNATORY OR A PARTY OF SHALL BE 
OPEN TO INSPECTION UPON THE ORDER OF THE PRESIDENT OF 
THE PHILIPPINES, UNDER RULES AND REGULATIONS AS MAY 
BE PRESCRIBED BY THE SECRETARY OF FINANCE, UPON 
RECOMMENDATION OE THE! COMMISSIONER. 
SEC. 5. Authority of the Conmissioner of Internal Revenue to Supply Infornzation to a 
Foreign Tux Authority which is at his Disposal. - Section 270 of Republic Act No. 8424, as 


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amended, otherwise known as the National Internal Revenue Code of 1997, is hereby amended 
to read as follows: 
”SEC. 270. Unlawful Divulgence of flrade Secrets] INFORM4 TION- - 
Except as provided in Sections 6(F) AND 71 of this Code and Section 26 of 
Republic Act No. 6388, any officer or employee of the Bureau of Internal 
Revenue who divulges to any person or makes known in any other manner 
than may be provided by law information regarding the business, income or 
estate of any taxpayer, the secrets, operation, style or work, or apparatus of 
any manufacturer or producer, or confidential information regarding the 
business of any taxpayer, knowledge of which was acquired by him in the 
discharge of his official duties, shall upon conviction for each act or 
omission, be punished by a fine of not less than Fifty thousand pesos 
(P50,OOO) but not more than One hundred thousand pesos (PlOO,OOO), or 
suffer imprisonment of not less than two (2) years but not more than five (5) 
years, or both. 
ANY OFFICER OR EMPLOYEE OF THE BUREAU OF INTERNAL 
REVENUE WHO DIWLGES OR MAKES KNOWN IN ANY OTHER 
MANNER TO ANY PERSON OTHER THAN THE REQUESTING 
FOREIGN T U  AUTHORITY INFORM4 TION OBTAINED FROM BANKS 
AND FINANCIAL INSTITUTIONS PURSUANT TO SECTION 6(F), 
KNORZEDGE OF WHICH WAS ACQUIED BY HIM IN THE 
DISCHARGE OF HIS OFFICIAL DUTIES, SHALL, UPON COWICTION, 
BE PUNISHED BY A FINE OF NOT LESS THAN FIFTY THOUSAND 
PESOS (P50,OOO) BUTNOTMORE THAN ONE HUNDRED THOUSAND 
PESOS (plOO,OOO), OR SUFFER A l P f U S O W N T  OF NOT LESS THAN 
TWO (2) YEARS BUTNOTMORE THANFIVE (5) YEARS, 
OR BOTH.” f 
SEC. 6. w;llful Refusnl to Supply Information. - Any officer, owner, agent, manager, 
director or officer-in-charge of any bank or financial institution within the purview of this Act 
who, being required in writing by the Commissioner, willfully refuses to supply the required 


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information shall be punished by a fine of not less than Fifty thousand pesos P50,OOO.OO) nor 
more than One hundred thousand pesos (plOO,OOO.OO) or by imprisonment of not less than two 
(2) years nor more than five (5) years, or both. 
SEC. I .  Obligation to Maintain Con$dentiali@ of Information Received - Any 
information received by a foreign tax authority from the Bureau of Internal Revenue pursuant to 
an international convention or agreement on tax matters shall be treated by the authority as 
absolutely confidential in nature in the same manner as information obtained by the latter under 
its laws and shall be disclosed only to persons or authorities, including courts and administrative 
bodies, involved in the assessment or collection of, the enforcement or prosecution in respect of, 
or the determination of appeals in relation to, the taxes covered by such conventions or 
agreements. 
SEC. 8. Separability Clause. - If any provision of this Act is declared invalid or 
unconstitutional, other provisions hereof which are not affected thereby shall continue to be in 
full force and effect. 
SEC. 9. Repealing Clause. - All laws, presidential decrees, executive order, rules and 
regulations or parts thereof which are inconsistent with or contrary to this Act are hereby 
repealed or modified accordingly. 
SEC. 10. E’ectivi@ 
Clause. This Act shall take effect fifkeen (15) days after approval