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BIR eases tax burden on micro, small businesses with lower penalties

The Bureau of Internal Revenue (BIR) implemented new regulations slashing interest and penalty rates for micro and small enterprises (MSEs) aiming to ease their tax burden.

BIR Revenue Regulation 6-2024, signed in March and released in April, reduces penalties for late tax filing and payment from 25 percent to 10 percent for businesses generating less than P20 million in annual sales.

Businesses with annual sales below P3 million will qualify as micro enterprises and enjoy the lowest penalties.

Businesses with sales between P3 million and P20 million are categorized as small taxpayers and benefit from the reduced penalties.

The BIR emphasized stricter measures for willful neglect or fraudulent activities. Penalties will jump back to 50 percent for such cases. Underdeclaring taxable income or sales by 30 percent or more constitutes “substantial underdeclaration” and could be treated as evidence of fraud.

The regulation also sets a P500 penalty for minor offenses like failing to file specific information returns, maintain proper records, or provide necessary information, as long as the amount involved doesn’t exceed P12,500.

The BIR offers a 50 percent compromise penalty for non-fraudulent violations of the tax code, providing an alternative to potential criminal prosecution.

This move by the BIR aims to simplify tax compliance and lessen the financial burden on MSEs, a crucial sector for the Philippine economy.

Milyonaryo | Latest News