#AskTheTaxWhiz: Top 10 common violations of startups

In connection with the top 10 frequently asked tax questions startups ask, here’s the other side: the most common tax violations and what startups could lose.

In relation to BIR registration requirements:

1. Failure to register the business with BIR

COMPROMISE PENALTY: If the subject establishment is (located) in the following:

 

• Cities – P20,000
• 1st class municipalities – P10,000
• 2nd class municipalities – P5,000
• 3rd class municipalities – P2,000

 

2. Failure to pay and display Annual Registration Fee (BIR Form 0605)

COMPROMISE PENALTY: P1,000 every year and/or during tax mapping

3. No Certificate of Registration and Notice to the Public displayed

COMPROMISE PENALTY: P1,000 during tax mapping

 4. Failure to display the poster “Ask for BIR Receipt” or “Notice to the Public” to demand receipts/invoice

COMPROMISE PENALTY: P1,000 during tax mapping

In relation to invoicing requirements:

1. For failure to issue receipts or sales invoices or commercial invoices

COMPROMISE PENALTY: P10,000 first offense, P20,000 second offense*

2. For refusal to issue receipts or sales invoices or commercial invoices

COMPROMISE PENALTY: P25,000 first offense, P50,000 second offense*

3.  Possession or use of unregistered receipts/invoices

COMPROMISE PENALTY: P20,000 first offense, P50,000 second offense*

*Subsequent violations shall not be subject to compromise.

In relation to bookkeeping requirements:

NATURE OF VIOLATION	AMOUNT OF COMPROMISE
1. Failure to keep/preserve records required by law or regulations	If gross annual sales, earnings, or receipts Exceed But Do Not Exceed Compromise is P xxx 50,000 100,000 500,000 5,000,000 10,000,000 20,000,000 50,000,000 P50,000 100,000 500,000 5,000,000 10,000,000 20,000,000 50,000,000 xxx P1,000 3,000 5,000 10,000 15,000 20,000 30,000 50,000
2. Failure to withhold or remit withheld taxes at the time or times required by law or regulations	If the amount of tax not withheld or remitted Exceeds But Does Not Exceed Compromise is Pxxx 5,000 15,000 20,000 50,000 500,000 1,000,000 P5,000 15,000 20,000 50,000 500,000 1,000,000 xxx P1,000 3,000 5,000 10,000 15,000 20,000 25,000
3. Failure to file and/or pay any internal revenue tax at the time or times required by law or regulation	If the amount of tax unpaid Exceeds But Does Not Exceed Compromise is P xxx 5,000 10,000 20,000 50,000 100,000 500,000 1,000,000 5,000,000 P5,000 10,000 20,000 50,000 100,000 500,000 1,000,000 5,000,000 xxx P1,000 3,000 5,000 10,000 15,000 20,000 30,000 40,000 50,000

 

Know more about taxes and avoid confusion with all these BIR compliance requirements. Abrea Consulting Group will conduct its first certificate courses on Accounting for Non-Accountants with Introduction to Philippine Taxation on November 29 with Ricardo Palo, curriculum director and coordinator of the Ateneo Graduate School of Business (AGSB), and yours truly, as resource speakers.

See you in the seminar and get a free copy of our bestselling tax handbook, Got a Question About Taxes? Ask the Tax Whiz! For inquiries, email us at consult@acg.ph or call (02) 6227720. – Rappler.com 

Got a question about taxes? #AskTheTaxWhiz! Tweet @rapplerdotcom or email us at business@rappler.com.

Mon Abrea is a former BIR examiner and an advocate of genuine tax reform. He serves as chief strategy officer of the country’s first social consulting enterprise, the Abrea Consulting Group, which offers strategic finance and tax advisory services to businesses and professionals. Mon’s tax handbook, Got a Question About Taxes? Ask the Tax Whiz! is available in bookstores nationwide. Follow Mon on Twitter (@askthetaxwhiz) or visit his group’s Facebook page. You may also email him at consult@acg.ph.