The Bureau of Internal Revenue (BIR) conducts regular inspections of business establishments all over the Philippines. This initiative is part of their Oplan Kandado program, also known as the Tax Compliance Verification Drive. Colloquially, this is known as “Tax Mapping.”
What is Tax Mapping?
This BIR program ensures that businesses are compliant when it comes to registration, invoicing, bookkeeping, and following other regulations of the government. The primary objective is to catch tax evaders, whether deliberate or accidental miscalculation resulting in under-declared income.
This drive is commonly done by an authorized BIR representative who comes to your establishment without warning. Because the visit is unannounced, numerous companies have already been slapped with charges for violations. The consequence for non-compliance to BIR regulations concerning business entities ranges from penalties costing P1,000 to P50,000. The amount varies depending on the nature and extent of the violation.
Noteworthy, those who are found with severe violations can face the closure of their enterprise. On top of that, the owners may face criminal charges, which include imprisonment, apart from penalty fees. As such, you must be vigilant with your tax obligations and ensure you remain compliant at all times.
Things You Must Do to Avoid Penalties and Repercussions
To avoid serious repercussions, read on below. This article enumerates helpful tips and legal fixes to help you avoid violations during BIR Tax Mapping. Remember, prevention is better than cure. Pay all your tax dues and comply with requirements to avoid being called a violator. Let’s get started:
1. Ensure Your Business is Registered
Any business, no matter the size, must register with the BIR. Even small, online companies must register, or it will cost you at least P20,000 in penalty fees. You must register yearly, too. Failure to pay the Annual Registration Fee (BIR Form 0605) on or before January 31 of each new year will cost you at least P1,000.
To make sure that the BIR officer knows you are compliant, display the following documents in your place of business. Put them in an area that can be easily seen by everyone. These documents are:
- BIR Form 2303 or the BIR Certificate of Registration
- BIR Form 0605 or the Annual Registration Fee for the Current Year
- The Signage Notice to the Public that says “ASK FOR RECEIPT”
If you fail to display these documents in your establishment, the BIR will levy you an additional penalty of at least P1,000.
2. Issue Official Receipts/ Sales Invoices to Your Clients
If you are engaged in selling products or services, you must always issue a registered Sales invoice or Official receipt for the transaction. This will include your business name and other pertinent tax details. Failure to provide a receipt and refusing to give one can result in the following:
- 1st Offense: P10,000 (Failure) P25,000 (Refusal)
- 2nd Offense: P20,000 (Failure) P50,000 (Refusal)
Upon registration of the machine, you will be given a sticker of authorization. Upon receipt, adhere it to the device straight away because non-compliance will result in at least P1,000 fine per unit.
3. Make Sure Your Company’s Cash Register Machine or POS Machine is Registered
You must make sure that your company’s Cash Register Machine (CRM), Point of Sales Machine (POS), or any similar devices are all registered with the BIR. Failure to do will result in the following:
- 1st Offense: P25,000.00/unit
- 2nd Offense: P50,000.00/unit
4. Register Books of Accounts to the BIR
Be sure to register your books of accounts to the BIR and maintain it diligently to stay organized. If you don’t comply, it can cost you from P1,000.00 to P50,000 based on your Gross Sales or Receipts. Make sure to record every transaction in your books. You may be familiar with this task as bookkeeping. Failure to properly register and maintain your company’s books will also result in the same penalties above.
5. Withhold and Remit the Proper Taxes
As a business owner, you must withhold and remit the taxes of the following elements to the BIR:
- BIR Form 1601C or Compensation of Employees
- BIR Form 0619E/1601EQ and 0619F/1601FQ or Payments subject to expanded and final withholding taxes respectively
Non-compliance will cost you stiff penalties and surcharges based on your employees’ salary and Gross Sales. Make it a point to withhold the right amount and compute for the right tax remittances. Apart from the income tax, you need to take note of the Value Added Tax (VAT) or Percentage Tax (for Non-VAT). Take note of the proper filing dates, whether monthly, quarterly, and yearly. If you go past the due date, you need to pay more penalties.
Final Wrap Up
The BIR’s Tax Mapping or Oplan Kandado Program is executed quarterly. This shows that the government is vigilant in pursuing and levying fines on tax evaders. So, you can stay on top of your business’ financial health and avoid unnecessary violations, it would be prudent to seek the counsel of a reputable accountant. With a professional’s help, you ensure your company’s financial data remains organized. They will assist you in filing the right tax amounts at the right time using the proper procedures.