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#AskTheTaxWhiz: Top 10 common violations of startups

The Tax Whiz sums up the most common violations of startups and the corresponding penalties.

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

 

Tax Academy

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.

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