How can Filipinos save more by paying the right taxes?

One of the trickiest issues in tackling personal finance in the media here in the Philippines is tax payment. A group called CSR Philippines promotes a way for ordinary citizens to declare true profit and pay the right taxes in a way that saves money at the same time.

Raymond Abrea used to be AVP for BIR Examiner. He applied for the job, with the sole purpose of understanding the tax system, tax law and the administration of taxes. He was with the BIR for two years. Abrea now heads the Center for Strategic Reforms of the Philippines and is at the forefront of tax reforms with the mentorship of former Finance Secretary Jesus P. Estanislao, partnership of Senato Bam Aquino among others.

Abrea said that tax planning will help people pay the right taxes without paying more. Their company can give good options to help companies avoid getting into the under the table deals. The Citizen's Tax Planning reminds each tax payer of the duty to pay the right taxes since paying the right taxes does not mean paying more taxes. The application of science and the system behind it, from the tax profiling up to the assessment that an examiner does during audits, all of these are services offered by the CSR Philippines. And as part of their social responsibility, CSR is also honest in case they see that a company is not complying or not at par with the threshold of the Bureau of Internal Revenue to avoid any conflicts and problems in the future. Abrea also highlighted that using fixers would not solve the problem but instead it only increases the company expenses.

CSR is advocating to do the right thing that can give peace of mind at the same time cheaper costs. Not paying taxes is subject to 25%, 20% interest and compromise penalty of up to P50,000 surcharges.  Most of the time when you get assessment the penalty reaches 300% of the total amount which means it is really costly unlike if it is done the right way.

Doing the right thing however requires in-depth knowledge about how much you should be paying monthly, quarterly and yearly. For most businessmen or professional, this requires time to study complicated tax advisories and keeping track of tax deadlines. That will not be an issue in an entity have the money to hire a consultant, but that costs too much for small businessmen and professionals.

Ideally, Tax advisers should be coming from the BIR, unfortunately these services are not available as they are more focus on collecting taxes. Its common knowledge that even small strides in improvement of our tax system will have big impact on our people. As the country is now facing so many issues that the government would not have enough time and resources to support the reform in our tax payment process. The best thing that we can do as citizens is to have the willingness to do the right thing.

Abrea's Recommendation to Tax Payers :

• Know your deadlines
• Know your requirements - When you file tax return, do not forget the supporting documents specially the financial statements or book of accounts.
• 
  

Abrea's Recommendation to BIR:

•  Remove face-to-face audits
•  Computerize the tax system
•  Pay examiners well

Abrea added, the Philippines needs legislative reforms on simplifying the tax system and lowering the tax rate so it can be affordable to small businessmen.The BIR also needs to simplify the process off tax payment further, fully computerized to create an integrated system for registration up to audit so that examiners do not have to talk directly to tax payers to audit them. The audit in the BIR is not helping but even support the corrupt system because with the small salary of our examiners which is roughly P15,000 compared with the amount of taxes they collect from tax payers who would be willing to pay to clear up everything which always give the tendency of negotiation.

The right attitude it to embrace and accept our civic duties to pay the right taxes and to vote honest leaders so we would not have complaints that our tax payments are being corrupted and at the same time to know our obligations so that we don't end up paying all those penalties. "At the end of the day, we will have peace of mind if we do the right thing. There is no replacement to that; a disposition that you are honest, that you have done your part. If other people won't, it doesn't change anything. You did the right thing." Raymond Abrea - Founding President of Center for Strategic Reforms of the Philippines.

"In the end, what will save all of us is the culture of honesty and system that supports that culture." -

Salve Duplito. 

Acknowledgement: 
Content Credit: ANC- Salve Duplito
Image Credit: Philstar.com