Franchisees need to know how much tax to pay
MANILA Philippines – Franchisees may need to be educated on how to keep their books and pay taxes, said Finance Secretary Cesar Purisima and officials of the Philippine Franchise Association (PFA).
Speaking at the opening of Franchise Asia Philippines on Wednesday, July 17, Purisima outlined the importance of paying tax.
“The government accounts for less than 20% of the economy, you account for 80% of the economy. Do your part because no matter how much part we make, it will be for naught,” he said in his keynote speech.
Purisima said the PFA can help sustain the country’s average economic growth of 6.1% over the last 3 years by using good governance as a key principle in running their businesses.
“I encourage all our franchisees who are still not in the formal economy to come out, declare yourselves to the BIR and pay the right amount of taxes,” said Purisima, referring to the Bureau of Internal Revenues.
Elizabeth Pardo-Orbeta, president Philippine Franchise Association and Chairman of Wendy’s Philippines, said that while on their end they make sure tax is paid, it is hard to monitor all their franchise holders and make sure that all are meeting deadlines and paying the right income tax.
“As a franchisor or association all we can do is remind our members to remind the franchisees to do their duty and pay the right taxes. We don’t have the manpower and it’s not our job to check on them,” said Pardo-Orbeta, speaking on the sidelines of the event.
“But I am almost sure that there are some (that do no pay taxes),” she added.
Pardo-Orbeta said that when franchisees buy stock from them, they already withhold the tax on the stock so from their end the taxes are paid. It’s the income tax once the stock is sold that may or may not be paid.
According to Samie Lim, Chairman Emeritus of the PFA, there are 1,300 franchisors and 125,000 franchisees under the organization. With every new member, they hand him or her franchise handbooks so that they are aware.
“Small businesses don’t know how to keep their books and therefore don’t know how to file the income tax so sometimes they don’t know how to do it. We should educate them,” he said speaking on the sidelines of the event.
The local franchising industry is poised to grow around 20% this year and 30% in 2014, as the Philippines emerges as one of the best destinations for overseas expansion for franchising firms. - Rappler.com