(First of two parts)
Maybe you are wondering, how can someone who spends more save more? A premise against the rule of economics, you might say. Well this may not necessarily be true when it comes to complying with Philippine tax rules and regulations, especially now that we have a revitalized Bureau of Internal Revenue (BIR). Spending now to become tax compliant may help you avoid unnecessary expenditures and headaches in the future.
But how do you become tax compliant? You may use the available tax books authored by Philippine renowned tax practitioners for reference and apply the principles on your own, whether you are self-employed, a businessman or a freelancer. Likewise, attending tax seminars conducted by seasoned tax professionals to get updates on current tax rules and regulations may also be helpful. However, these measures will work only if you already know the basic rules of taxation.
Though expertise in tax can be self-taught, it will require much of your time and effort due to its complex nature. And most of you might say that you are so busy with work that you do not have time to learn it. Taxation’s complex nature might also make it hard for you to thoroughly understand it and learn it on your own, more so to apply its general rules, exceptions, rates and the like. But this does not mean that you have to stop looking for ways to be tax compliant. Many individuals take for granted the importance of paying the right taxes, thinking that the BIR will not run after them and that it will prioritize examining the books of multinational and domestic corporations. This is a risky stance to take given that the BIR takes its job of running after tax offenders very seriously.
Have you ever heard about the “Conglomerate Audit” Program and monitoring of “Big Ticket Items”; “Run After Tax Evaders” (RATE) Program and Tax Compliance Verification Drive; and Taxpayers Lifestyle Check of former Commissioners Guillermo Parayno Jr. and Joel Tan Torres? How about the interminable effort of current Commissioner Kim Jacinto-Henares in filing tax evasion cases under the RATE program?
(To be continued)
(Ryan E. Cabello is a Senior Manager for Tax of Manabat Sanagustin & Co., CPAs, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity.
The views and opinions expressed herein are those of the author and do not necessarily represent the views and opinions of KPMG in the Philippines. For comments or inquiries, please email manila@kpmg.com or rcabello@kpmg.com)