Tax Savings on SME education

With much due respect, we disagree with the notion that education is costly, and instead, we submit that ignorance is more costly! Let me share hereunder our views.

As Article 3 of the Civil Code of the Philippines puts it, and hereunder quoted:

“Ignorance of the law excuses no one from compliance therewith.”

This is a sad truth for the entrepreneurs. For an entrepreneur, large or small, everyday is a great competition that if one could not stand ground, it may loss the battle. One entrepreneur might have great business ideas for operations and marketing, but if it does not possess the required knowledge in complying applicable rules and government requirements, its hard earnings may simply go to government coffers in the form of unexpected dues such as penalties for simple lapses, or worst to private pockets.

 As the saying of Martin Luther King, Jr. says:

“Nothing in the world is more dangerous than a sincere ignorance and conscientious stupidity”

Ignorance of applicable existing laws, rules and regulations is not a good excuse not to comply. While honest mistake or unintentional lapses makes one’s conscience clear, our government authorities does not easily accept them. Bureau of Internal Revenue (BIR) for instance imposes a 25% surcharge based on the basic amount of tax on tax returns not filed on time, regardless of whether or not the delay covers a day, or weeks, or months, or years. What is 25% may mean a lot because any peso amount paid to penalties are actually peso net income after deducting all the related expenses and taxes. It could have been used to other operational investments and multiplied more profits.

Likewise, BIR imposes interest of 20% per annum for incomplete payments, and compromise penalties ranging from P200 to P25,000 or even as much as P50,000 in some instances. Worst, one could even go to jail without knowing it ahead because before he knew it, a simple lapses resulting to an under-declaration of income or overstatement of expense by more than 30% is presumed fraudulent and is subject to criminal sanctions after due proceedings.

Securities and Exchange Commission (SEC) likewise imposes a penalty for simple errors on the filed reports such a corporate stockholder being made a director when the same is even impossible to be true because directorship is only for natural persons. Late filing of General Information Sheet (GIS) and Audited Financial Statements (AFS) entails penalties. SEC is now even penalizing corporations for erroneous or incomplete notes to audited financial statements. Or worst, too much of these would even cost the Company’s Certificate of Registration in such a way that it will really have headaches on how to transfer properties.

Why risk your earnings with your ignorance. Educate to compete and succeed in your business undertaking. Invest on good education to protect your hard earned business income.

Disclaimer: This article is for general conceptual guidance only and is not a substitute for an expert opinion. Please consult your preferred tax and/or legal consultant for the specific details applicable to your circumstances. For comments, you may also please send mail at info(@), or you may post a question at Tax and Accounting Center Forum and participate therein.

See our quality seminars, workshops, and trainings…

See how we can help you with our other professional services : company registrations; Ph Working Visa; and HR Services

Get to know more about us…

Read More Articles…

© Tax and Accounting Center 2022. All Rights Reserved

error: Content is protected !!