Business owners usually fret at the prospect of receiving the dreaded notice of audit or Letter of Authority (LOA) from the Bureau of Internal Revenue (BIR). The fear usually comes from celebrated cases of tax disputes with the BIR. With this year’s BIR collection target at P2.3 trillion, 14 percent higher than the previous year’s goal, expect the BIR to intensify its tax enforcement and collection drive.
Lawyer OIivier Aznar, partner at P&A Grant Thornton, one of the top five auditing and professional services firms in the country, who handles corporate taxes for some of the country’s largest corporations, believes everything begins with integrity. “Adhering to the basic principle of following the tax rules enables you to argue your position in any tax inquiry. Then, while the BIR reserves the right to audit, taxpayers also have the right to a fair assessment,” he said.
He then prescribed four quick pointers taxpayers may adopt:
1. Simply comply. “Do it right the first time,” Aznar said. “Discrepancies call attention and raise the red flag with the BIR that something is up and must be looked into.”
- Keep abreast.Needless to say, it is important for the taxpayers to be updated of the tax rules and BIR issuances that are relevant to their businesses. Visit the BIR website regularly and attend tax seminars.
- Engage experts.Some accountants specialize in financial audit, some in tax, and some in other fields. Financial reporting standards and BIR rules are not the same, said Atty. Aznar, who was also a former financial auditor at P&A Grant Thornton for several years.
- Maintain complete records.Don’t shred those old tax documents just yet. Remember that the BIR has its right to examine the taxpayers within a prescription period.