Country in ‘white’ list of tax standard-compliant states
THE PHILIPPINES has been raised to the "white list" of countries complying with an Organization for Economic Cooperation and Development (OECD) tax information sharing standard.
"The Philippines today moved up to the list of jurisdictions that ‘have substantially implemented the internationally agreed tax standard’," the OECD yesterday said in a statement.
The announcement came shortly after Finance Secretary Cesar V. Purisima, who is in the United States, signed Revenue Regulations (RR) 10-2010 that will be used to implement Republic Act (RA) 10021 or The Exchange of Information on Tax Matters Act.
RR 10-2010 will still have to be published in a newspaper of general circulation before taking effect 15 days after.
BusinessWorld reported last Monday that Finance and tax bureau officials were finalizing RA 10021’s implementing rules in time for a September 29 to 30 meeting in Singapore of the Global Forum on Transparency and Exchange of Information for Tax Purposes. The forum monitors compliance with the OECD tax standard among OECD and non-OECD member states.
The country landed on the OECD’s list of tax havens last April 2, 2009 and was transferred to the "grey list" after it pledged to uphold the standard. RA 10021 became law in March this year.
"The Philippines has a network of more than 30 treaties that provide for exchange of information in tax matters. Until now, however, domestic legal restrictions prevented its tax authorities from obtaining and exchanging certain types of information ... The new law and regulations remove these restrictions, thus enabling many of the Philippines’ existing treaties to meet the international standard," the OECD said in the statement.
Internal Revenue Commissioner Kim S. Jacinto-Henares, whose agency is tasked with implementing RA 10021, said money flows "would now be easier." Ms. Jacinto-Henares is currently attending the Global Forum meet.
Revenue Regulations 10-2010 expounded on the provisions of RA 10021, particularly on Section 3, which gave the Bureau of Internal Revenue (BIR) commissioner the authority to look into bank deposits upon the request of a foreign tax authority.
A Finance official said there were "misinterpretations" on a provision that states tax information may be given to foreign authority "provided that such information would be used for tax assessment, verification, audit, and enforcement purposes."
This has been clarified in the rules, which state "the BIR is likewise authorized to use, for tax assessment, verification, audit and enforcement purposes, any such information" requested.
Imports grew to $4.68B in July; trade deficit eases to $2.69B
THE COUNTRY’S import bill grew 16.2 percent year-on-year to $4.68 billion in July, increasing for the ninth straight month, National Statistics Office said Tuesday.
Total external trade—the combined value of outbound and inbound goods—in the seven months to July reached $59.14 billion, an increase of 31.6 percent from a year ago.
This kept the trade balance in favor of the rest of the world with the Philippines incurring a deficit of $2.69 billion, down from $3.87 billion in the same period last year.
The July imports were also up 11 percent from $4.21 billion in June.
A strong inflow of goods from abroad, which indicates a similar movement in exports in succeeding months, is considered a good sign for a country like the Philippines, which relies heavily on foreign supplies of electronics inputs for its biggest source of export revenues.
NSO documents showed that electronic products accounted for 34.9 percent of total imports in July, with the value rising 2.4 percent year-on-year to $1.63 billion. Semiconductor devices and parts made up 27.6 percent of all electronics shipments, racking up $1.29 billion in bills.
The operation of modern electronic devices such as computers, cell phones, transistors, solar panels, diodes and integrated circuitsdepend on semiconductor materials. Silicon is widely used in the production of commercial semiconductors.
Electronics imports in July increased 12.9 percent from $1.45 billion in June.
July shipments of mineral fuels, lubricants and related materials—which represented the second biggest group in terms of value—jumped 17.8 percent to $719 million.
Transport equipment, the country’s third largest import for the month increased 27.7 percent to $260.86 million. In fourth were industrial machinery and equipment, which jumped 36.7 percent to $211.65 million. This was followed by metal ores and scrap, which rose 89.4 percent to $200.56 million.
U.S. Stocks Fluctuate as Walgreen Rally Offsets Confidence Drop
U.S. stocks advanced, erasing most of yesterday’s drop, as Walgreen Co. led a rally in consumer- staples and health companies and investors speculated the Federal Reserve will buy more debt to safeguard the economy.
Walgreen, the largest U.S. drugstore chain, jumped 11 percent as earnings topped estimates. Pfizer Inc. and Johnson & Johnson paced gains in health-care shares as the Supreme Court agreed to hear an appeal by pharmaceutical companies seeking to block thousands of public hospitals from suing over a federal discount-drug program. Monsanto Co. slid 8.1 percent on concern its SmartStax corn seeds aren’t performing as well as predicted.
The Standard & Poor’s 500 Index climbed 0.5 percent to 1,147.70 at 4 p.m. in New York after tumbling as much as 0.9 percent. The Dow Jones Industrial Average climbed 46.10 points, or 0.4 percent, to 10,858.14.
Treasuries Rise as U.S. Auction of Five-Year Notes Draws Record Low Yield
Treasuries gained as the government’s $35 billion sale of five-year notes drew the lowest yield since the government began quarterly offerings of the securities in 1976.
The yield on the current five-year debt fell to the lowest level in almost two years as a drop in consumer confidence spurred speculation that the Fed will increase purchases of Treasuries to support the economy. The securities were auctioned today at a yield of 1.260 percent, compared with the 1.276 percent average forecast in a Bloomberg News survey of 8 of the 18 primary dealers obligated to participate in U.S. debt sales.
“You have new pieces of uncertainty, with the Fed and quantitative easing 2 priced in,” said Sean Simko, who oversees $8 billion at SEI Investments Co. in Oaks, Pennsylvania. “With the volatility in the marketplace, you’re going to see the Treasury market well-bid.”
The current five-year note yield dropped 6 basis points, or 0.06 percentage point, to 1.23 percent at 4:18 p.m. in New York, according to BGCantor Market Data. The price of the 1.25 percent security maturing in August 2015 gained 9/32, or $2.81 per $1,000 face amount, to 100 3/32.
The yield touched 1.22 percent, the lowest level since Dec. 17, 2008, the day after the Fed cut its target lending rate to zero to 0.25 percent. Yields on two-year notes dropped 2 basis points to 0.43 percent, compared with the record low of 0.41 percent reached on Sept. 22. Benchmark 10-year note yields slid 6 basis points to 2.47 percent.
Crude Oil Trades Near Three-Day Low on Gasoline Supply Gain, Weak Demand
Oil traded near a three-day low in New York after reports showed an increase in U.S. gasoline stockpiles and lower demand for the fuel, adding to signs of slowing economic growth.
Futures declined yesterday as MasterCard, the second- biggest payments network company, reported gasoline demand declined for the fifth time in six weeks. The American Petroleum Institute said inventories of the fuel rose by 3.02 million barrels last week. An Energy Department report today may also show supplies climbed.
“Demand is relatively weak and we have more than sufficient supply,” said James Williams, an economist at WTRG Economics, an analysis and research firm for energy companies based in London, Arkansas. “Inventories are in good shape, so there is no fundamental reason for oil prices to keep rising.”
The November contract traded at $76.22 a barrel, up 4 cents in electronic trading on the New York Mercantile Exchange at 8:51 a.m. Sydney time. Yesterday it lost 34 cents, or 0.4 percent, to $76.18, the lowest close since Sept. 23. Prices are down 4 percent for the year.
Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com
Jonathan Ravelas
Chief Market Strategist
(632) 858-3145
Rhys Cruz
Junior Researcher
(632) 858-3001
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