[Ask the Tax Whiz] Tax evasion as corruption: A global imperative and a PH priority

Tax evasion is often treated as a technical infraction — a matter of forms, loopholes, and compliance. It is not. Tax evasion is corruption. It is the deliberate theft of public resources meant to build classrooms, strengthen hospitals, finance climate resilience, and uplift communities. It enables illicit wealth, distorts public policy, and erodes trust in institutions. And it is time the world finally treated it as such.

Globally, tax evasion drains an estimated US$483 billion every year, according to the Tax Justice Network. The International Monetary Fund (IMF) estimates that developing countries lose up to 6% of GDP annually, far exceeding many nations’ combined budgets for health and education. Where corruption generates illicit income, tax evasion hides it. The two crimes reinforce each other — one produces the stolen money; the other conceals it.

This is why the United Nations Convention Against Corruption (UNCAC) must update its framework. And this is why the Philippines must lead the call.

The Philippine reality: Corruption converts directly into lost taxes

Conservative studies by the Department of Finance and the IMF estimate that the Philippines loses P700 billion to P1.3 trillion every year to tax evasion — funds that could build thousands of classrooms, upgrade hospitals, and support superior and long-term programs for transport, flood-control, and climate adaptation.

Every peso stolen through corruption becomes a peso concealed through tax evasion. The public loses twice — first from the theft, then from the cover-up.

A global shift must begin with Philippine leadership

1. Launch a nationwide risk-based investigation of politically exposed persons

The Department of Finance and the Bureau of Internal Revenue (BIR) must urgently conduct a nationwide, intelligence-driven investigation covering elected officials, their families, campaign donors, contractors, and individuals implicated in flood-control, pandemic procurement, and other major controversies. Mandated lifestyle checks, Statement of Assets Liabilities and Net Worth (SALN) reviews, and cross-matching with property, vehicle, and offshore records must form part of an integrated anti-corruption strategy.

This is not political persecution. It is good governance — long delayed and desperately needed.

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2. Lift bank secrecy for tax purposes

The Philippines remains one of only three countries — along with Lebanon and Switzerland — that still shields bank accounts from tax authorities. This archaic regime protects big-time evaders while imposing strict compliance on ordinary taxpayers.

Lifting bank secrecy is essential to detecting illicit wealth, enforcing anti-money laundering rules, and aligning with UNCAC, Organisation for Economic Co-operation and Development (OECD), and Financial Action Task Force (FATF) standards. No honest public official has anything to fear from transparency.

3. Replace manual audit with a modern, digital, risk-based system

The problem is not merely corruption inside the BIR — it is the outdated system that enables it. Manual audits enable bribery; random audits repeatedly target MSMEs; and large, well-connected taxpayers easily negotiate settlements.

The Philippines must adopt a risk-based, computer-assisted audit system that leverages AI, data analytics, blockchain, third-party information, and cross-agency data to:

• Target high-risk individuals and large taxpayers;
• end repetitive audits on MSMEs;
• reduce human discretion;
• strengthen cross-border transparency; and
• build tamper-proof digital trails.

Modern tax administrations catch tax criminals through intelligence — not harassment.

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4. Hold private-sector enablers fully accountable

Tax evasion is rarely committed alone. It often involves complicit accountants, contractors, brokers, and auditors who manipulate records or create sham transactions. Global frameworks — including OECD BEPS (Base erosion and profit shifting) and AML (anti-money laundering) standards — already recognize these enablers. The Philippines must do the same.

5. Use the tax code as a weapon against corruption

Unexplained wealth, kickbacks, bribery, and fraudulent procurement all create taxable income. Even when graft cases stall, tax evasion charges can freeze assets, impose penalties, and permanently disqualify officials from public office.

This is how the US took down organized crime. It is how countries prosecute kleptocrats. It is how the Philippines can finally end impunity.

A call to action

To reimagine a Philippines — and a world — without corruption, without climate change, and without poverty, we must plug the largest leak in public finance: tax evasion.

The path forward is clear:

• Classify tax evasion as corruption under UNCAC;
• lift bank secrecy;
• launch nationwide risk-based investigations;
• modernize audits through automation and data;
• hold both bribe-takers and bribe-givers accountable; and
• protect honest taxpayers, MSMEs, and public funds.

No nation has ever prospered while allowing corruption to thrive. Treating tax evasion as corruption is not just good policy — it is a moral imperative.

And the Philippines must lead the way. – Rappler.com

Raymond “Mon” Abrea is the Global Tax Policy Expert and Chief Tax Advisor of the Asian Consulting Group (ACG). Known as the “Philippine Tax Whiz,” he is a Harvard-educated public policy expert, Oxford-trained in climate policy, and Duke-certified in tax policy. He is the author of the Reimagining the World Without Corruption, which he launched at Harvard, and has served as a tax expert resource in both the Senate and in the House of Representatives, including during the Pharmally investigation.

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