In 2013, local staff of the Manila-headquartered Asian Development Bank were caught in a firestorm.
As part of a concerted national government effort to minimize tax evasion and increase revenues, the Philippine government tax agency, the Bureau of Internal Revenue, launched aggressive and high-profile collection campaigns against various segments of the professional class, including doctors, lawyers and celebrities. The government’s clear strategy and goal was to catch a few big and visible fish, which would then raise public awareness and encourage more professionals to pay their due share of taxes.
As employees of a high-profile international development bank known for good paying jobs and benefit packages, local ADB staff were also scrutinized. The BIR very publicly issued a regulation stipulating that the income of Philippine nationals and aliens employed by foreign governments, embassies, diplomatic missions and international organizations in the Philippines, including ADB, were subject to tax.
The BIR then acknowledged an agreement between ADB and the government of the Republic of the Philippines, which stated that only officers and staff of the ADB who are not Philippine nationals shall be exempt from income tax.