Consequences You Must Face with Tax Evasion

  • Post author:
  • Post category:Tax

There are people who look for ways to save money to preserve more of there income. Unfortunately, some do it the wrong way. If you are one who purposefully avoids paying taxes, you need to stop what you are doing right now. Every professional tax services in Manila agree that this practices does no good and provides no benefits for you. You’re cheating yourself and the government. In fact, when you get convicted of tax evading, you’ll be spending way more money than you would if you took paying your taxes seriously.

It is crucial for you to comply with tax codes and pay your taxes as a Filipino citizen or an alien resident earning income on Philippine soil. Paying your taxes will help improve the lives of many Filipino communities that are less fortunate. Failing to pay taxes on time will deprive the Filipino people of vital government services they are supposed to enjoy like public health, education, highways, and more. Avoid evading your taxes because compensation for this will be heavy on your finances and even on your reputation. Here are some of the consequence you  must face with tax evasion.

Imprisonment and Fines

According to expert tax and audit services in the Philippines, you will need to pay a fine of not less than 500,000 PHP but not more than 10 million PHP if proven guilty of tax evasion. In cases where there is an attempt to evade tax, you can get imprisoned for not less than six (6) years but not more than ten (10) years. 

The following are the grounds for fines and imprisonment:

  • Issuing receipts, sales, commercial invoices (even without the BIR authority)
  • Double/Multiple Sets of Invoices and Receipts
  • Invoices and Receipts without a business name, numbers, and identification information 

Levied With 25% or 50% Surcharges

A 25% penalty will be imposed on those who won’t be able to file or pay their taxes on time. A 50% surcharge will be applied to cases where they willfully falsify their tax returns. Those who provide accounting services in the Philippines reiterate that even honest mistakes such as wrong calculations of tax dues or failure to show supporting documents will be levied these hefty surcharges.

Pay 20% Annual Interest on Unpaid Taxes

You will get a 20% annual interest on the taxes you have not paid. Failure to pay your full taxes on time will make you susceptible to the 20% annual interest on your unpaid taxes. For example, if you don’t pay your taxes for 5 years, you will end up paying twice as much as the original tax amount because all of these will compound over time.

Up to 50,000 Compromise Penalties

BIR sometimes will impose a penalty for compromise on violators who fail to pay their taxes rather than file criminal charges or a tax evasion case. Depending on the unpaid amount of taxes, the penalty would range from 200 PHP to 50,000 PHP. Rather than file tax evasion cases or criminal charges, the BIR may instead impose this on violators who fail to pay their taxes.

Suspension or Temporary Closure

BIR has a program called Oplan Kandado Program. It’s a program that runs after businesses that could potentially be tax evaders. The BIR has the authority to close down or suspend an establishment until the company will be able to pay its taxes. When your business is closed, you have no income to pay your obligations. It’s better to comply with regulations to prevent this from happening. 

If you fall into one of the following grounds, your business could be closed under the Oplan Kandado Program:

  • Failed to issue receipts
  • Failed to file VAT return or value-added tax return
  • Under-declared Taxable sales by 30%
  • Failed to register the business with BIR

Will the BIR Publicly Announce the Convicted Tax Evaders?

Many are curious about this question The names of the convicted taxpayers will be publicly announced and published in either the newspapers, BIR’s website, and/or articles. Apart from the penalties, evading taxes will also ruin your reputation and if you have a business, it will also ruin your brand’s credibility.

Pay Your Taxes on Time and Avoid the Penalties

Comply with the requirements to avoid developing problems with the BIR. Know the latest laws and regulations. Make sure you are documenting properly, submitting requirements on time, and filing your taxes correctly. Don’t give yourself a headache and avoid complications by seeking professional help.

Remember that if you are new to this area or if you are still confused about it, you can always choose to ask for help from experts in the field. Call our team for assistance as we provide tax and accounting services in Pasig. We can lower your taxes legally with tax avoidance measures so you won’t be a convicted tax evader.