Most people may confuse themselves that tax avoidance and tax evasion are similar to one another, but they have totally different meanings and implications. The main difference between the two is that tax evasion occurs when the taxes are lowered by illegal means due to fraudulent acts while tax avoidance is lowering of one’s taxes through legal means with the help of an accountant or lawyer. Some examples of fraudulent acts of tax evasion are under reporting of income, overstating expenses, non-recording of sales, and fictitious entries in the books of accounts. On the other examples of activities of hand tax avoidance are tracking of expenses that can be deductible, implementing discounts to senior citizens and PWDs and making donations to government agencies that are essential for the needs of the citizens.
"Tax Evasion is illegal and it is punishable by law."
The following are the consequences that one may face if caught engaging in tax evasion. The BIR can assess taxes on fraudulent returns up to 10 years from the discovery of the said fraud.
- 50% penalty if the intentional misstatement was caught by the BIR
- 20% annual interest
- Penalty of P10,000
- Imprisonment of not less than 1 year but not exceeding 10 years
Government Agencies Concerned
Bureau of Internal Revenue
The BIR is in charge of assessing as well as collecting the taxes from people as well as businesses.
Main office building: BIR National Office Bldg., BIR Road, Diliman, Quezon City, Philippines
Telephone number: 8981-7000, 8929-7676
Email address: contact_us@cctr.bir.gov.ph
Main website: http://www.bir.gov.ph/
Department of Trade and Industry
The DTI is responsible for making sure that no other business has the same name as the business one wants to set up. For a business to operate legally, it is necessary for it to be registered under the DTI.
Main office building: 361 Trade and Industry Building, Sen. Gil J. Puyat Avenue Makati City 1200 Philippines
Telephone number: 1-DTI (384)
Cellphone number: 0917 834 3330
Email address: ask@dti.gov.ph
Main website: http://www.dti.gov.ph/
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