The Bureau of Internal Revenue (BIR) has turned more aggressive in chasing tax violators, whether businesses or individuals. Why is it difficult for many ventures and people to comply with the requirement to pay proper taxes?
For seasoned taxation and corporate lawyer Ma. Louella ‘Peaches’ M. Aranas, there should never be any issue if organizations and individuals diligently and correctly comply with this obligation to the nation.
“It has often been said, ‘Taxes are the lifeblood of a nation.’ To put that in a relatable context, our bodies will not function properly and we can even die if we don’t have enough blood going through our system, carrying oxygen and nutrients to the different organs,” Atty. Peaches starts to explain.
“Without taxes, the different government agencies will not function properly, and government services will not be provided to the people. Utilities and basic necessities [services] will not be available; roads and airports will not be built; we will not have policemen or firemen to secure lives and properties. We will not have teachers to educate children, nor will have doctors, dentists, and nurses to take care of our physical health,” she continues.
Tax and civilized societyAtty. Peaches reiterates that taxes are what citizens pay for them to be able to live in a civilized society. “Without taxes, a nation will suffer and perish,” she adds to emphasize the importance of complying with the obligation. At the same time, the tax lawyer reminds that paying the right and correct amount of taxes is key to avoiding problems with the tax collectors.
Employees don’t usually have tax problems as income taxes are automatically deducted from their salaries. The pitfalls are encountered by businesses and individuals who voluntarily pay taxes on their own.
“I advise businesses to be compliant with the requirements of the law and more importantly to pay the correct taxes. I believe that it is advantageous for businesses to partner with their tax lawyers to ensure that they are compliant with the law. Much like an executive checkup, it is advisable for corporations to do a tax diligence review every year,” she advises. Logically, the idea also applies to high-tax-paying individuals.
Resolving tax conflictsTo date, among the most persistent taxation issues that corporations and even individuals face is when the BIR imputes additional income based on the agency’s own audit findings. In such cases, the additional income means that there is additional tax to be paid. This usually constitutes deficiencies in taxes demanded by the BIR.
Atty. Peaches reminds everyone that the law is always there to guide and support taxpayers, even those who are facing problems with the BIR. “I believe that taxpayers should avail of the remedies given by the law to them. This includes remedy in the form of judicial recourse. If the BIR makes a wrongful or erroneous tax ruling, I do agree that this should be challenged before the Court of Tax Appeals,” she explains.
Atty. Peaches is the Founder and Managing Partner of LMA Law, a law firm focusing on taxation and corporate law. She is also a Co-Founder and CEO of Alternative Center for Continuing Education and Seminar Solutions, Inc. (ACCESS), a pioneer in online and on-demand programs covering Mandatory Continuing Legal Education (MCLE) in the country. At the same time, she is a faculty member of the Lyceum of the Philippines University College of Law, where she teaches tax laws.
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