Bank Secrecy Law: Will She Be Forever Your Financial Ally?

“When you DIE, there’s no more Bank Secrecy” – Kim Henares, BIR Commissioner once said, according to the report of BusinessWorld Online about three years ago. More recently, the same guy had said that “Relaxed Bank Secrecy Law soon a global standard”. In that recent news, Commissioner Kim confirmed that the government has been planning to repeal the Republic Act 1405 known as the Bank Secrecy Law of the Philippines although it is not yet their priority. The Philippine government seemed serious in searching and going after those individuals who are deliberately evading taxes – this time it is on Estate Taxes.

For many years, the Bank Secrecy Law has been the great vehicle for concealing the true value of an individual’s wealth in Cash. For many years, this Law has also been of great help and an avenue of transferring wealth to the heirs unnoticed by the Tax man. However, over the time, there has always new Laws, Acts, amendments, decrees and so on that weakens the teeth of prior Laws. An example is the Anti-Money Laundering Act of 2001 (Republic Act 9160) where financial transactions like receiving or transferring a certain amount of money thru vast financial institution such as banks, brokers, investment companies, etc.… must be covered by a corresponding AMLA document where sources of funds and its purpose must be declared. In other words, transferring say 10 million inheritance to your son’s bank account can no longer be done without informing your government by filling up the AMLA declaration.

More so, BIR commissioner declares that the government will require banks to surrender the records of their deceased clients for the last five years so that they will find out if the heirs were religiously paying their estate tax due. They will also find out if banks have allowed withdrawal of the deposits and investments of their deceased clients without clearance from their tax liabilities.

This is another clear evidence of what the advocates have been anticipating the government will be doing as national budget bloats and the economy’s outlook seemingly improving. This government will definitely streamline its operation’s efficiency, especially in revenue collection in order to earn the good economic reputation possible to their prospected investors so that they can achieve the perceived economic progress. This way, the government will have so much room to suck the wealth of its citizen by continually inducing currency devaluation thru inflation, stricter policies and regulations, more taxes, intimidation and so on in favor of a few elites. This will grant them to squander the wealth of the nation by indulging to massive deficit spending, increasing national loans, printing more money out of thin air and deliberately expanding the economy.

Clearly, with this direction of our national government, the old ways and practices to cut or reduce tax liabilities will soon cease to work. The Bank Secrecy Law, which has been the best friend to many individuals will not stay there forever. She (RA 1405) is in danger because right now, she has been the target of your government to repeal because they smell and knew there is something in there. Very soon, the several magic which individuals, small business and corporations have been doing like “under declaration”, the “two-books” system, and others will no longer work as well because your government will do in their best capacity to break these unhealthy economic practices that are a deterrent to achieving their optimal revenue collection.

Whether you like it or not, sooner or later you have to pay taxes squarely in order to avoid trouble with the government. If you will not prepare or establish a solid financial structure in your family’s finances, you will probably be devastated with the result of these implementations and direction. Sticking as well to the old ways of doing things with your financial transactions and activities will definitely be fatal to you and to your family, businesses, or corporations – both monetary wise and legal
Thus, at that time, only the financially educated and financially prepared – those :

•    Who understands the whole system (the economy and the government) and how it works.
•    Who knows and understands asset class that are Tax-favored and bear lesser tax liabilities.
•    Who knows who and how to arrange a contract in settling her tax obligations (especially on Estate Taxes) at the very minimal cost without losing 20% of her asset in favor to the government.

Shall be able to sustain and set up a system to religiously settle their obligations at a discounted, cheaper price. The ignorant and unprepared shall feel the pain of handling out huge portions of their hard-earned fortune to the Tax man.

Further, according to the news report, the BIR or the Bureau of Internal Revenue had recently reduced the TAX to maximum of 20% of the deceased person’s asset which is substantially lower than the previous 70%. This is to encourage compliance among the families of the deceased, the news concluded.

Bottom line, only those who are wise – who have a good and efficient plans and execute them can take the lead; can taste success; can experience peace; can be saved from troubles – in other words, can enjoy the promised abundance from the Master and Creator. The Lord says, “I have a good plan for you, to prosper you and not to harm you”. This is one of Your creator’s design and plan for all of us – to enjoy His blessings and to be a blessing to others. But if we stay ignorant and foolish to allow these few elites to deliberately abuse us by willfully conforming to their desires and refuse or willfully delaying to implement plans and programs to lessen the impact of their schemes, then there comes pain, curse, trouble, fear, anxiety, struggles hardships, and so much more woes, and then finally – financial destruction.

A wise decision is to seek financial education by reading and to commit yourself into learning them, then apply and implement in your own finances. Only by then that you shall not be caught unaware should worse things come and most certainly you will not be worse-off should this just continue  and nothing happens. Instead, the plans and strategies you have in place will afford you to grab passing opportunities and enable you to create wealth for your family.

 

Till next, & for your freedom.

Bong Bungalan Jr.

Financial Literacy Advocate / Financial Advisor

http://beFinanciallyFreePinoy.blogspot.com

 

References:
http://www.gmanetwork.com/news/story/354200/economy/finance/bir-chief-henares-relaxed-bank-secrecy-law-soon-a-global-standard
http://www.bworldonline.com/content.php?section=TopStory&title=Bank-secrecy-laws-don%E2%80%99t-apply-to-the-dead----BIR-chief&id=72278