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12.5. Other Anti-Avoidance Rules

Exchange of Cross-Border Tax Rulings

The Philippines has agreed to exchange tax rulings with eligible jurisdictions from 1 January 2015 in line with the implementation of BEPS Action 5. A specific ruling can be exchanged with a relevant jurisdiction if it is international in nature and affects the relevant jurisdiction. The exchange is possible if there is an agreement between the Philippines and the relevant jurisdiction providing for the spontaneous exchange of tax information. The agreement can be a tax information exchange agreement (TIEA), a tax treaty, or the OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters. Exchange is also required for “historical” rulings granted either:

  • On or after 1 January 2015 but before 1 September 2017; or
  • On or after 1 January 2012 but before 1 January 2015, provided they were still in effect as of 1 January 2015.

Financial Account Information Reporting and Exchange

The Philippines concluded an Intergovernmental Agreement (IGA) with the United States on 15 July 2015 to improve international tax compliance and to implement the U.S. Foreign Account Tax Compliance Act (FATCA).

Ultimate Beneficial Ownership Disclosure

Beginning 1 January 2019, all corporations (including foreign corporations) registered with the Philippines Securities Exchange Commission (SEC) are required to disclose their ultimate beneficial ownership (UBO) information in their annual reports to the SEC.  

Under the law, a UBO refers to any natural person who satisfies the following conditions:

  • Ultimately owns or controls a legal person or arrangement or on whose behalf a transaction or activity is being conducted; or
  • Has ultimate effective control over a legal person or arrangement. Ultimate effective control is considered to be exercised if:
    • the person owns directly or indirectly 25% or more of any category of voting shares;
    • the person has the ability to exert dominant influence over the management or policies of the corporation; or
    • a majority of the board of directors are accustomed to or are under an obligation to act in accordance with the person’s directions in conducting the affairs of the corporation.

In January 2021, the SEC published a guideline on the measures to promote transparency of beneficial ownership. Under the guidelines, the information on beneficial ownership is required to be maintained in the corporate records of the company at its principal office, and the records may be subject to shareholders’ inspection. Further, the guidelines also require additional mandatory disclosure of principal persons, directors, shareholders, nominees, etc., within 30 days from 29 January 2020 (the effective date of the guideline) or within 30 days from the time they assume such roles.

Failure to comply with the reporting requirements is subject to  administrative sanctions, including fines ranging from PHP 5,000 including fines of PHP 1,000 per day of a continuing violation, up to a maximum of PHP 2 million.