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Handling Tax Case

Taxation is the government's lifeblood, as it funds public infrastructure, education, law enforcement, health care, and food security for its citizens. The government's taxation agency, the Bureau of Internal Revenue (BIR), collects taxes from individuals or businesses that have met the revenue criteria.

BIR has pursued a more aggressive approach to implementing regulations and programs to persuade all taxpayers to comply with the required requirements in line with the tax law. They collected P2.08 trillion in 2021 despite the challenges brought by the COVID-19 pandemic.

Meanwhile, the program Run After Tax Evaders Program (RATE), Oplan Kandado Program, and Tax Compliance Verification Drive (TCVD) has resulted in the filing of 137 cases with the Department of Justice, closure of 523 establishments, collection of P2.948 billion, and tax mapping of 120,220 business establishments nationwide.

What is Tax Case mean?

A tax case is an investigation with an individual or company to resolve a dispute with the BIR for nonpayment and underpayment of taxes. 

What is the Common Tax Case?

Tax evasion is the case filed by the authorities against a person or entity's illegal activity which intentionally avoids paying an actual tax liability under the tax code of the Philipines. Those caught evading taxes are subject to serious criminal charges and penalties. 

Most Common Forms of Tax Evasion

  • Not paying taxes
  • Non-filing of appropriate tax returns
  • Over declaration of expenses
  • Underreporting income
  • Claiming personal expenses as business expenses (for tax shield)
  • Failure to remit withholding taxes
  • Failure to register with the BIR
  • Using Spurious entries in financial books

Tax Evasion Penalties in the Philippines

Tax Reform for Acceleration and Inclusion (TRAIN) Act requires the Bureau of Internal Revenue (BIR) to increase fines and extend jail terms for anyone guilty of tax evasion.

To evade or defeat income taxes, for those convicted by the court for tax evasion, the fine is between P500,000 and P10 million. And the imprisonment, meanwhile, will range from six to 10 years, longer than two to four years in previous years. Same fines and jail time to those who will print fraudulent and unauthorized receipts as well as commercial or sales invoices.

Corporate taxpayers who failed to transmit sales data to the BIR’s electronic sales reporting system would be penalized with one-tenth of 1 percent of the annual net income reflected in the taxpayer’s audited financial statements in the second year after the current taxable year, or P10,000 whichever is higher, for every day of violation.

The penalties range from P500,000 to P10 million, plus two to four years in prison, for individuals who used, acquired, owned, sold or offered, installed, transferred, updated, upgraded, retained, or maintained "sales suppression devices" that wiped electronic records to evade tax payments. The maximum punishment applies to the suppression of electronic sales records totaling more than P50 million, deemed economic sabotage.

How to Avoid Tax Evasion?

Tax avoidance is far more like soliciting a headache. It can harm your business and harm your money, causing stress.

Here's what you need to consider to avoid tax evasion;

  • Be prominent about the tax laws in the Philippines
  • Stay updated on new release tax rules and regulations
  • Pay the right tax on time
  • Declare your income with transparency
  • Don't do things that can put you in the gray area
  • Ask for the help of a certified tax accountant to avoid inaccuracy in filing returns.

Who is Westwise Consult Inc.?

Westwise Consult Inc. is a firm in the Philippines instituted with a Certified Tax Accountant that helps individuals and companies diligently handle their tax compliance, tax case handling, and any accounting-related services.

Want to know more about the Philippines' tax laws and compliance? Contact Us to learn more!