Filing and paying taxes in the Philippines is one of the most physically- and mentally-demanding activities that self-employed professionals have to endure on a regular basis.
It’s even more worrisome for OFWs with businesses back home who can not tend to all the duties and responsibilities that a Philippine-based entrepreneur normally enjoys.
According to the “Paying Taxes 2018” report made by the World Bank and Pricewaterhouse Coopers (PwC), many freelancers and business owners encounter challenges in filing taxes which equate to about 182 hours a year wasted in complying with BIR’s tax requirements.
This is also one of the major factors why BIR deputy commissioner for Operations Nelson Aspe said that only 30 million of the estimated 103 million Filipinos are registered taxpayers.
Why Many Self-Employed Filipinos Do Not Really Like Filing Taxes
There are quite a few specific reasons why many self-employed professionals are not registered as taxpayers.
One reason is that they find tax filing a time-consuming process due to:
+ Long lines spent lining up at the bank or RDO of the BIR
+ Figuring out how to properly calculate tax dues, and
+ Filling out various and complicated tax forms.
It is also costly for OFW entrepreneurs to come home just to file their taxes before the deadline.
Also, Filipinos find it discouraging to file taxes because of the constantly changing tax rules and regulations. In 2018 alone, BIR has released 16 Revenue Regulations, 29 Revenue Memorandum Orders, and 60 Revenue Memorandum Circulars.
When you are already thinking about the possible penalties because of late filing, or other costs such as maintaining an accountant or your accounting software, running a business while working abroad as an OFW may sound too much of a stress already.
And if you are a Balikbayan, you may think of delaying your business plans until you find the right people and solutions to help you launch your startup successfully.
But you don’t need to think that way.
How Filing Taxes Can Empower OFW or Balikbayan Entrepreneurs
Despite all the hassles and challenges, a self-employed professional can get a handful of benefits from filing tax returns and paying the right amount of taxes.
OFW and Balikbayan entrepreneurs can further appreciate their status as modern-day heroes through these benefits when they pay and file taxes on time.
1.) Lesser BIR Assessment
There are basically three main reasons why a business, whether small or large, receives a Letter of Notice (or the LN) from the BIR. Most often, it is caused by:
+ failure to file your tax return,
+ failure to pay/remit the tax dues, or
+ questionable amount of tax paid
If you are filing on time and paying the right amount tax, there will be lesser chances of you or your business records being audited by the BIR.
2.) Higher Credit Reputation
Do you know that banks or micro-financing institutions look at audited financial statements and tax returns when reviewing applications for business loans?
If you are filing and paying taxes, chances are you have a good credit rating. And the higher income tax you declare and pay, the higher the credit rating.
Get that loan application approved to further expand your business.
3.) Your Business Becomes Attractive to Investors
There are so many interesting startups around looking for potential people or capitalists to invest in their companies.
However, to encourage more investors to help you grow your business, you need to have accurate accounting and tax records.
Being transparent to the public and to your investors will help you build a reputation as a trustworthy business partner.
4.) Less Exposure to Civil or Criminal Liabilities
Embassies of the US, European or other Asian countries do look into your income tax returns when you are applying for a Visa.
If you are filing an inaccurate amount of tax, your chances of getting disapproved is relatively high. Worse than that, if the Embassy verifies your records with the BIR and found that you submitted an erroneous tax return, you have surely found the trouble you’ve been looking for.
That’s why it is very important that you file and pay the correct amount of tax for you to get approved of that long time dream of visiting other countries.
5.) Helping The Country By Paying Tax Can Help Grow Your Business
What goes around, comes around. While this proverb connotes negative impression of the basic understanding of karma, it also tell how the law of cause and effect on doing good deeds works.
Paying taxes is a responsibility to the country. If all citizens who are earning income will pay the right amount of tax, the government can use the money to build more roads, schools, telecommunication facilities, secure our communities, and improve their services to people.
More infrastructures and government services that are working well can attract more investors and create more jobs. More jobs means more people and more money to spend. More money means more customers for you and your business.
There’s Even A New Way To Reduce Your Tax-Related Stress
If you are an OFW who has already started a business or a Balikbayan who’s planning to launch a startup company and have not been registered yet, then it’s high-time that you get registered soon and file your taxes with the help of Taxumo.
Taxumo is an online tax app that lets you FOCUS on your passion, and stop WORRYING about Business Registration & Taxes. It does this by providing business registration / renewal services + easy automated tax filing for self-employed individuals, professionals and businesses.
Learn more at taxumo.com and sign up for free. Use my code Rock2RichesPH and get Php 100 off from your first tax filing.
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