BIR’s new target: Accountants

MANILA, Philippines - The accountant who does your taxes may be a tax evader.

Based on records, only one out of three accountants in Makati filed income tax returns for 2012.

The Bureau of Internal Revenue (BIR) said only 111 or 32 percent of the 337 registered accountants in Makati filed BIR Form 1701.

Of the 111, 17 paid income taxes lower than the P27,360 paid by a
public school teacher earning P18,549 a month. The government said the income tax payments of Makati-based accountants were ridiculously low.

An accountant with an annual gross income of P810,100 paid a meager P313, while another who earned P1.31 million in 2012 remitted only P1,361 to the BIR.

Self-employed professionals reportedly have an estimated combined annual income of more than P500 billion.

Last year, the BIR was only able to collect P11.3 billion from this sector.

Self-employed professionals are required to issue an official receipt and maintain records to support expenses and input VAT (value-added tax).

Aside from the annual ITRs, they need to file monthly and quarterly returns with the BIR.

A sole practitioner must pay income tax at a rate of five to 32 percent on taxable income, which is the excess of gross receipts over the costs incurred in rendering service and other related general and administrative expenses.

Professional fees are subject to the expanded withholding tax of 10 percent and 15 percent if the annual gross receipt of the professional exceeds P720,000.

A professional is also liable to pay three percent tax on gross receipts or 12 percent VAT if gross receipts exceed P1,919,500.

Failure to comply with these requirements will result in the imposition of penalties, surcharges and interest.

The government aims to raise the annual average tax collection on self-employed individuals to P200,000 before the end of President Aquino’s term in 2016.

Its goal also includes increasing the number of taxpaying professionals to 1.8 million.

Self-employed professionals paid a combined P15.1 billion of the estimated P223 billion remitted to the government in 2012.

The amount represented 0.13 percent of the country’s gross domestic product.

Doctors and other self-employed professionals have until the end of the month to comply with a new ruling requiring them to disclose their service fees, as well as the names of their clients.

Internal Revenue Commissioner Kim Henares has extended the May 5 deadline to give self-employed professionals enough time to prepare and comply with the new requirements.

The new regulation is in line with the BIR’s sustained campaign to strictly monitor tax payments of self-employed professionals to shore up revenue collections.

The Supreme Court (SC) has excluded lawyers from the order to submit the required documents, including books of accounts and official appointment books containing client information.