For many entrepreneurs in Cebu, filing taxes is often seen as a routine task—something to get out of the way once deadlines approach. But in reality, tax filing is a legal obligation with serious consequences if done incorrectly. The Bureau of Internal Revenue (BIR) imposes surcharges, penalties, and even closure orders for non-compliance.
As lawyers often remind clients: “Ignorance of the law excuses no one—especially when it comes to taxes.”
Here are the most common tax filing mistakes Cebu business owners make—and how you can avoid them.
1. Missing Filing Deadlines
One of the most frequent mistakes is filing late. Even a one-day delay can trigger:
A 25% surcharge on the tax due.
12% annual interest.
Compromise penalties.
📌 Lawyer’s Note: The BIR does not accept “I forgot” as an excuse. Mark tax deadlines in your calendar or engage a professional to track them.
2. Failing to File “No Transaction” Returns
Some Cebu business owners assume that if they had no sales or income in a period, they don’t need to file. This is incorrect.
BIR requires a “no transaction” return even with zero income.
Failure to file still results in penalties.
📌 Example: A small café in Cebu City with zero sales during lockdown must still file its VAT or percentage tax returns on time.
3. Incorrect Tax Classification
Many businesses mistakenly register under the wrong tax type:
Choosing Percentage Tax when already required to file VAT.
Misclassifying income or deductible expenses.
📌 Lawyer’s Reminder: Wrong classification may lead to underpayment, which the BIR can penalize after an audit.
4. Using Unregistered Receipts or Invoices
Some entrepreneurs print their own receipts or buy from non-accredited printers. This is a costly error.
Expenses without valid receipts cannot be deducted.
The BIR may treat these as “ghost transactions.”
📌 Tip: Always use BIR-authorized printers and register your receipts properly.
5. Underreporting or Overreporting Income
Underreporting income is considered tax evasion.
Overreporting income, on the other hand, inflates taxes unnecessarily.
📌 Lawyer’s Warning: Intentional underreporting carries not just penalties but also possible criminal liability under the Tax Code.
6. Incorrect Computation of Deductions and Credits
Many Cebu businesses lose money because they:
Fail to claim allowable deductions.
Deduct expenses without valid supporting documents.
Misapply input VAT credits.
📌 Legal Tip: Keep receipts, contracts, and vouchers. In a BIR audit, undocumented expenses are automatically disallowed.
7. Not Keeping Proper Books of Accounts
Some entrepreneurs think bookkeeping is optional. It is not.
The BIR requires businesses to keep and register their books.
Failure to do so weakens your defense in case of audit.
📌 Lawyer’s Note: Books of accounts are legal evidence. Without them, it is almost impossible to challenge BIR assessments.
8. Doing It Alone Without Expert Help
Tax laws are complex and frequently amended. Many Cebu business owners try to file on their own, only to make costly mistakes.
📌 Pro Tip: Hiring a licensed bookkeeper, accountant, or tax lawyer often saves money in the long run by preventing errors and penalties.
Final Thoughts
Tax compliance is more than a legal requirement—it is a shield that protects your business. Avoiding these common mistakes will not only save you from BIR penalties but also build your business’s credibility and long-term stability.
As lawyers emphasize: “In taxation, prevention is always better—and cheaper—than correction.”
✅ Whether you are a freelancer, café owner, or corporation in Cebu, investing in proper tax filing practices is one of the smartest business decisions you can make.
Navigating the business landscape in the Philippines can be both rewarding and intricate. Whether you’re embarking on a new venture or scaling up, ensuring that your corporate endeavors are in line with local regulations is paramount.
At CBOS Business Solutions Inc., we pride ourselves on simplifying these processes for our clients. As a seasoned professional services company, we offer comprehensive assistance with SEC Registration, Visa processing, and a myriad of other essential business requirements. Our team of experts is dedicated to ensuring that your business is compliant, well-established, and ready to thrive in the Philippine market.
Why venture into the complexities of business registration and compliance alone? Allow our team to guide you every step of the way. After all, your success is our commitment.
Get in touch today and let us be your partner in achieving your business goals in the Philippines.
Email Address: gerald.bernardo@cbos.com.ph
Mobile No.: +639270032851
You can also click this link to schedule a meeting.
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