Pandora necklace

Pandora Papers: what the tax authorities can do

In ancient Greek mythology, Pandora, the one who carries all the gifts, had a box believed to contain horrible things – misery, war, and death – which flew out into the world when the curious Pandora opened the box.

The Pandora Papers, a report published by the International Consortium of Investigative Journalists (ICIJ), is a compilation of over 12 million documents that reveal the interests and activities abroad of world leaders, politicians and billionaires. prominent, and for some, their tax shelter. diets.

It was named after the artefact in the poems of the Greek poet Hesiod because it might reveal dirty secrets in the future. Or in the case of those on the Philippines list, it may also not reveal anything dirty or illegal.

Offshore accounts, after all, are not illegal, at least not for Filipinos or their businesses.

But it would be good if the country’s tax authorities used the information wisely; if he wants to go further – or several steps further – to see if Filipinos with offshore accounts actually pay taxes on their income from those accounts.

For example, if a Filipino tycoon has an offshore account, the Bureau of Internal Revenue (BIR) can follow the money trail.

Using offshore accounts

Usually, some of the billionaires in the country open offshore accounts when they have joint ventures or overseas investments and they want to protect their Philippine companies from trouble in case the joint venture collapses or is sued by other shareholders of the country. this society. For some it is that simple.

There is nothing illegal about having offshore accounts, really.

But the BIR should check whether the businessman linked to the offshore account paid income taxes on the dividends or the income from this overseas joint venture. It is a long and tedious audit process.

It’s a different story, of course, if the reason is simply to hide wealth to avoid paying good taxes in the Philippines or if the billionaire is just a front or a dummy for a politician (a Philippine president, for example) with the intention of hiding the unexplained wealth of the politician.

But generally, tycoons can justify their wealth very well.

It’s a different case for public servants whose salaries may not justify wealth in the British Virgin Islands, Panama, the Cayman Islands or elsewhere.

Transport Secretary Art Tugade, for his part, insists that the money in his offshore account was earned before joining the government.

Again, it is the role of the BIR to examine this if it is to ensure that offshore accounts are not used to evade or avoid taxes.

I was able to discuss with the former BIR commissioner, Kim Henares, who shared some of these ideas with me. I asked her if she does the same with people involved in offshore accounts during her time. She said there hadn’t been any revelations like the Pandora Papers at the time.


Besides the BIR, the Securities and Exchange Commission (SEC) can also review all documents of registered companies.

Companies generally include in these documents their subsidiaries which are part or are in fact offshore accounts.

Both the SEC and the BIR sit on a wealth of information – piles and piles of documents and some of these documents can unearth Pandora’s Boxes if they are close enough.

Money laundering

Of course, it is also not surprising that surveys reveal that offshore accounts are also used for money laundering.

It’s no secret that the money laundering laws in the country are still relatively weak.

This is the reason why the Philippines are back on the “gray list” of the Financial Action Task Force (FATF), based in Paris, of countries subject to increased surveillance, which puts us in the league of Haiti. , Malta and South Sudan, which have also been added to the gray list.

The Philippines is now required to submit progress reports to the FATF three times a year, including progress in monitoring casino junkets, POGOs, money transfer operators, etc.

The Philippines still has a long way to go in the fight against money laundering.

So many channels and products can be used to launder money, from art to jewelry, digital assets, virtual gems and more.

I wouldn’t be surprised if multi-million dollar supply contracts with the government, like the one involving Pharmally Corp. – a practically non-existent company before concluding agreements with the government – were also involved in money laundering. But it’s up to our authorities to find out.

Banking secret

Today, the Philippines still has the strictest bank secrecy laws, with just two countries, Lebanon and North Korea.

In this context, individuals who use offshore accounts to launder money may have made a mistake because in reality their money is better hidden in the country.

As Kim Henares joked, “if they want to hide their money, they should keep their money here.”

Follow the money trail

Whatever reasons government officials or billionaires may have for maintaining offshore accounts, the BIR can follow the money trail. Who knows, he could collect more taxes and recoup even part of the lost government revenue thanks to CREATE, a friend of billionaires, which DBCC says could reach 478.5 billion pesos up to ‘in 2024?

Note that in the tale about Pandora’s Box, Pandora closed the lid before hope could escape. Our tax authorities could very well find this hope.

Iris Gonzales email address is [email protected]. Follow her on Twitter @eyesgonzales. Column Archives at

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