“Initiative is doing the right thing without being told.”

Victor Hugo, French Poet and Novelist



By Realttorney


BIR taps regulator in tax evasion driver.” This was the headline of an article in the Business Section of the Philippine Daily Inquirer last 22 July 2013. The article said that the BIR has asked the help of the Professional Regulation Commission (PRC) to solve the long-standing issue of rampant tax evasion among self-employed professionals.

Under the proposed regulation, “the PRC would decline applications for renewal of licenses submitted by professionals if they fail to submit [Income Tax Returns].” Now, is this a cause of concern for PRC-registered professionals like real estate service practitioners (RESPs)? It depends.

Tax_EvasionClearly, this is another measure to be implemented by the BIR in its drive to increase tax collection and plug tax leakages. As a matter of fact, Commissioner Henares emphasized that “the move could significantly increase the number of registered taxpayers among the self-employed professionals and, in the process, curb tax evasion.

Based on BIR records, [Commissioner] Henares said that there were only about 500,000 self-employed professionals who were registered taxpayers. However, she noted that there were about 1.8 million self-employed professionals in the country based on the records of the PRC and other sources.

With this glaring disparity between the number of licensed professionals with the PRC and BIR-registered licensed professionals, requiring the submission of ITRs among professionals renewing their licenses will force the “self-employed professionals who were not yet registered with the BIR [to] finally come out and contribute to state coffers. Those who resort to under-declaration of income are also expected to rectify their tax payments.

There is no escape from the clutches of the tax man. It has been repeatedly stated that there are only two things that are certain in life: death and taxes. So, how can RESPs respond to this looming directive?

First, if you have not registered with the BIR then proceed to the Revenue District Office of the BIR nearest you and register. You may download the “Guide on How to Register Your Business or as a Professional” which I provided in my previous article. Or get direct instructions on how to register with BIR as a self-employed individual (professionals) in the article “Reminders as 2012 Rolls In.”

Second, pay the correct taxes on time. If you register with the BIR, you have the option of being a VAT or non-VAT taxpayer. Regardless of your choice, you are required to file a monthly tax return and pay the appropriate amount of taxes due on the previous month’s gross revenue.

BIR Form 2550M is used for monthly filing of VAT and Form 2550Q for the end of quarter VAT payments. For non-VAT professionals, you have to pay a percentage tax of 3% along with BIR Form 2551M. All returns and payments should be filed and paid on or before the 20th of the succeeding month. For quarterly VAT payments the deadline is on or before the 25th of the succeeding month.

Third, organize your BIR returns and ITR, and keep them in a safe place. This is to make sure that when the time comes that PRC does require professionals to furnish them a copy of the most recent ITR – this year or the next – you know where to find them.

At this time, PRC has not issued any regulation that requires RESPs to submit a copy of their ITR as a requirement for renewing their licenses. But, it is almost an absolute certainty. Therefore, it is better to be prepared.

Don’t let the BIR catch you as a licensed professional but unregistered taxpayer. Do what is right. It is not worth the trouble to pick a fight with BIR, now or any other time.

There may be certain consequences for registering late. If this is so, then face them head on. A licensed real estate broker is a responsible citizen. Would you forego renewing your license and be called a “colorum” instead of doing the right thing?

Think about it.