Tax Mapping and What You Need to Know to Stay Compliant

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When you run a business in the Philippines, the law requires that you be fully compliant with the current tax laws not just during tax filing season but every single day. By staying vigilant and seeking counsel from tax and audit services in the Philippines, you can keep updated with the laws and prevent receiving citations and hefty penalties from the Bureau of Internal Revenue or BIR during tax mapping. 

Tax mapping can be complex and challenging with documentary requirements to penalties for non-compliance. Though it sounds daunting, you must stay informed to make sound decisions when it comes to your tax mapping strategy. Keep on reading this short guide to get you through the tax mapping process and ascertain compliance for your business. 

Explaining the Concept of Tax Mapping

This term refers to a surprise visit of the BIR RDO staff to check if your establishment is in compliance with tax laws. This includes the inspection of your business registration documents and assessment if you follow other rules. Failure to do so puts you at risk for “Oplan Kandado” where they slap penalties and fines, with the worst result being temporary or permanent closure depending on the violation.

The primary goal of the BIR in doing this is to assess and identify who is remiss in following regulations. They also discover those who evade paying their tax dues. If you don’t want to face any of these harsh punishments, consider hiring expert tax services in Manila.

The Tax Mapping Process 

The BIR announces that you ought to comply with requirements because they will conduct tax mapping. After some time, RDO representatives execute tax mapping at random. This spot check is made is to see how you conduct your business. Hence, you will not schedule an appointment and they will come at a random date. They want to see that you comply with the laws even if no one is watching. This assures you don’t merely put your best foot forward.

When you violate BIR regulations, you will be fined from P1,000 up to P50,000, depending on the infarction. As noted above, some extreme violations can lead to business closure and even imprisonment of the proprietor. Sounds scary? Yes, it is, so be vigilant by seeking tax and accounting services in the Philippines to make sure you’re compliant. Check out the potential violations you may be making without knowing: 

  • Issues with BIR Requirements: This includes failing to register and not paying the right fees. It also includes not displaying your certificates or “Ask for a BIR Receipt” sign. 
  • Invoicing Problems: Failing to issue official receipts or sales invoices and using unregistered receipts or invoices for customers. 
  • Other Violations: Failing to remit withholding taxes required by law, not paying taxes on time, and being unable to keep records required by law such as supporting evidence for tax deductibles or documentation of de minimis benefits for your employees.

9 Things You Can Do to Avoid Getting Fined

As a business owner, you want to retain as much of your profits as allowed by the law. Bear in mind that tax avoidance is legal but tax evasion is a crime. For this reason, you must stay compliant with BIR regulations. It is the only way you can avoid penalties during tax mapping. To help you out, do the following: 

1. Ensure your business is legal and has a registration certificate from the BIR. 

2. Make it a point to display the following documents: 

  • BIR Form 2303 or BIR Certificate of Registration
  • “Ask for Receipts” red sign
  • BIR Form 0605 or proof of Annual Registration Fee

3. Pay the annual registration fee on time which is on or before January 31st of each new fiscal year. 

4. Register your POS (Point of Sales) Machine or CRM (cash Registered Machine) to the BIR. 

5. Any device in your business must have an authorization sticker. 

6. Utilize only the accredited invoices and ledgers by the BIR. 

7. Issue an official receipt or invoice for every single transaction. 

8. Always record our transactions in a registered book of accounts. 

9. Pay the correct taxes that apply to your business whether monthly, quarterly, or yearly, and include withholding taxes of employees. 

When you ascertain that you follow the above tips, you can avoid paying hefty penalties to the BIR. When you run a business, every peso counts. Making it a point to stay compliant will allow you to save more money while ensuring you don’t get slapped with tax evasion charges. Even if you’re a small business like an online seller, you still have to register with the BIR to avoid potential issues. If you have any questions, it would be prudent to get in touch with a CPA and secure tax and accounting services in PasigCall us and take advantage of our free 30-minute consultation.