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As tax deadline nears.

It is almost tax deadline and there are still many frantically trying to beat the deadline with a few days left. It maybe late for reminders on tax savings and maintain records to properly support financial reports but it is always good to start a new taxable year with being conscious of how to plan for the year. Maybe it is a clichAaAaAeA@ to say that the are only two things that are truly inevitable and these are taxes and death. But it is an important reminder that we should be prepared for both; not just act on it when it is almost tax deadline or when we are on the brink of death (that is if we are still given a little time to prepare for death). As citizens we are to make our tax contributions if we expect progress in our country

With proper planning at the start of the year and proper information, a taxpayer maybe able to have tax savings when filing time comes. Tax savings are tax avoidance measures which are legal. Proper supporting documents is crucial to avoid penalties and to maximize tax savings.

The Philippines stands at rank 127 of the 189 economies in the ease of paying taxes - slipping from rank 121 in 2014 by -6. Here in our country (based on Doing Business 2015 Report by World Bank on paying taxes in the Philippines), businesses makes 36 tax payments a year, pay taxes in an estimated 42.5% of profit and spend on the average 193 hours a year filing tax reports.

Singapore which ranks 5th of the 189 economies remains at the same rank compared to 2014 and has only 5 tax payments a year, spend 82 hours in filing and pay total taxes at 18.4% of profit. Their statutory corporate tax rate is only 17% based on taxable profit compared to the Philippines 30% tax rate.

With the number of tax payments a business should make for the year, a proper tax planning should be in place to avoid penalties for late or non-filing. Although the new regulation of EBIR forms may be inconvenient now and because implementation is made closer to the tax deadline, in the long run this will help the ease of paying taxes. What is needed is just proper information and support in the implementation.

There are also certain important reminders that a taxpayer should be particularly mindful in the preparation of their tax reports for this coming tax deadline of April 15 - such as improperly accumulated earnings after tax which is subject to 10%, net operating loss carryover (NOLCO) which are not properly presented in the prior years' financial statements and failure to treat such as tax deductible, expenses not properly supported by withholding tax payments form (BIR Form 2307). Often overlooked too particularly by the small and medium enterprises are the limitations on the deductibility of certain expenses such as representation and entertainment (1% of services income or 0.5% of goods) and donations and charitable contributions (5% for corporations and 10% for individual) with proper supporting documents showing that these are made to accredited institutions. For bigger companies with different group of companies under where there are transfer of funds, there should be a documentary stamp taxes on debts between companies. There are other reminders which a business should take note and it helps if taxpayers should really make a list of those which will affect their businesses and be mindful of these.

It is amazing at how so many regulations we have now and which we should strictly observe aside from the Philippine Financial Reproting Standards which we should be updated to comply with the right reporting requirements.

BIR is doing its best to help improve tax payment efficiency with EFPS and EBIR forms. Indeed we are looking forward to that day when tax payment and filing should really be simple to help improve tax collections and efficiency.

***

(Wilma Miranda is the Chairperson of the Media Affairs Committee of the Financial Executives Institute of the Philippines, Managing Partner of Inventor, Miranda & Associates, CPAs, Treasurer of KPS Outsourcing Inc. The opinions expressed herein are the views of the writer and do not necessarily reflect the views and opinions of these institutions wimiranda@inventormiranda.com)

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Title Annotation:Business News
Publication:Manila Bulletin
Date:Apr 8, 2015
Words:715
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