Spend more to (eventually) save more

(Conclusion)

For 2010, the BIR’s target collection of the right taxes amounts to P830 billion. Considering this paramount goal of the Aquino government to run after tax evaders, do you think the BIR will just let its hand down on individual taxpayers? Think twice.

There were cases of tax evasion filed pursuant to RATE Program under the Aquino administration. The said cases were filed because of failure to file income tax return, under declaration or non-declaration of income or revenues earned. It is worthy to note that these cases have arisen due to non-compliance with Philippine tax rules and regulations.

In case you choose the risky route, the probability that you may be exposed to future tax assessments is high and may lead to the payment of deficiency taxes or worse, imprisonment.

The solution is to spend more to be tax compliant. You can hire a reputable accounting firm to check your level of tax compliance, and later on, reap its benefits – save money and time, and have peace of mind. It would also be good to conduct “Cost-Benefit” analysis prior to hiring an accounting firm and analyze if the money you will spend in hiring an accounting firm will outweigh the deficiency tax and penalty assessments you may face in the future. The cost, of course, refers to the accounting firms’ professional fees. Bear in mind that the fee is usually based on the complexity of one’s business.

On the other hand, the benefits of seeking professional tax help include minimizing tax payments and penalties (surcharge and interest) in case of deficiency tax assessments. The rate of penalty surcharge is 25 percent and the rate of penalty interest is 20 percent per annum, as provided in Sections 248 and 249 of the National Internal Revenue Code, as amended, respectively. Moreover, since the BIR assessment usually extends to more than three years, it increases the interest penalty to 60 percent of the basic deficiency tax at the minimum.

So, start spending now to become tax compliant and realize its rewards in the future.

(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 [email protected]  or [email protected])