9 December, 2020
Gone are the days when parties to real estate transactions can leave unscathed from non-payment of taxes.
If they had banked before on the obliviousness of the tax man to certain transactions, there is nowhere to hide now that the Registry of Deeds has formally signed a cooperation arrangement with the Bureau of Internal Revenue (BIR) for the sharing of information in respect of real estate transactions.
Through the BIR’s Revenue Memorandum Circular No. 123-2020, issued on November 23, 2020, a copy of the Memorandum of Agreement (MOA) between the BIR and the Land Registration Authority (LRA) regarding data sharing had been published and made publicly available.
The MOA finds basis in Section 5(B) of Republic Act (R.A.) No. 8424 or the National Internal Revenue Code (NIRC) of 1997, as amended by R. A. No. 10963, or the Tax Reform for Acceleration and Inclusion (TRAIN) law.
The law grants the Commissioner of Internal Revenue the power to obtain any information such as, but not limited to, costs and volume of production, receipt or sales and gross incomes of taxpayers, and the names, addresses, and financial statements of corporations, mutual fund companies, insurance companies, regional operating headquarters of multinational companies, joint accounts, associations, joint ventures of consortia and registered partnerships, and their members from any office or officer of the government.
These include national and local governments, government agencies and instrumentalities.
The MOA also relies on Section 23 of the Data Privacy Act and Section 31 of its Implementing Rules and Regulations (lRR), allowing on-site and online access as well as off-site access of data in the government as provided in the guidelines of the National Privacy Commission (NPC).
These agreements are contained in Data Sharing Agreements which shall be in writing and must specify the purpose/s of the data sharing agreement, including the public function or public service the performance or provision of which the agreement is meant to facilitate; all personal information controllers (PICs) that are parties to the agreement; and the term or duration of the agreement, for a maximum of 5 years without prejudice to the execution of a new Data Sharing Agreement.
Under the rules, the data subject shall be provided with the following information prior to collection or before his or her personal data is shared:
-Identity of the personal information controllers or personal information processors that will be given access to the personal data, in this case, if the PIC is LRA, the data subject must be informed that the BIR shall likewise be given access to data subject’s information
-Purpose of data sharing
-Categories of personal data concerned
-Intended recipients or categories of recipients of the personal data
-Existence of the rights of data subjects, including the right to access and correction, and the right to object, and
-Other information that would sufficiently notify the data subject of the nature and extent of data sharing and the manner of processing.
Under these premises, the MOA provides for the sharing by the LRA of personal data or information of the registered property owners relevant to land titles to be utilized by the BIR for assessment, collection and enforcement of national internal revenue taxes only.
The sharing is subject to compliance with Section 4 of the NPC Circular No. 16-02 which provides for Data Sharing Agreements Involving Government Agencies.
Under the MOA, access to the shared personal data shall be limited to the list of BIR and LRA officers/employees specified in the Technical Annex of the MOA.
The types of processing to the shared data shall likewise be limited to those specified in the Technical Annex.
Any modification to the access list and the types of processing allowed shall require the approval of the Commissioner of Internal Revenue for BIR and the Administrator for LRA. Personal data shared between the LRA and the BIR shall not be divulged by each party to third parties.
Likewise, in compliance with the Data Privacy Act and its relevant implementing rules, the BIR shall not share information regarding business, income, estate, secrets operation, style of work, apparatus of any manufacturer or producer, or any confidential information regarding the business of the taxpayer, knowledge of which was acquired during the performance of duties pursuant to Section 270 of the NIRC of 1997.
Both LRA and BIR must keep confidential any information received under the MOA to preserve the privacy of taxpayers and the integrity of government transactions.
Indeed, with great power comes great responsibility.
The power of information is one of the greatest powers there is in this age where information and data are valuable currencies. Hence, it is hoped that access to such information serves its avowed purpose and care is given to curb abuse and unauthorized leaks.
First published on The Daily Tribune.
For further information, please contact:
Nilo T. Divina, Managing Partner, DivinaLaw
nilo.divina@divinalaw.com
