Tax savings every year

2010 income tax filing has ended a month ago. I can still remember the pressure of handling the audit and discussing with the auditors some tax exposure we may have if the financial statements are not presented in a proper way.

As much as possible we try to avoid being examined by BIR. But right now, I think BIR has this project of running after tax evaders so they really do tax audit on most of the companies, especially those who have been declaring losses for three consecutive years.

But how do we make sure we have tax savings avoid to be penalized? First you have to familiarize yourself with BIR regulations and circulars. This would ensure that we are complying 100% with their regulations, if not, a penalty is always being charged to non-compliant taxpayers.

Second, make sure that all expenses are supported with legitimate and valid receipts. Un-receipted expenses will be subject to being disallowed by BIR.

Monitor some expenses because, some expenses have cap or limit. For example,
representation expenses is allowed up to 1% only of the gross revenues. If you go beyond that, the excess will be disallowed expenses, thus making your taxes higher.

The key to have tax savings is to get familiar with these BIR issued regulations. Once your familiar with it, you will be able to work your way towards bigger savings for your company.