SEC AFS Rules vs. BIR Compliance in Cebu: What Small Businesses Must Know

Does your Cebu business need an Audited Financial Statement (AFS)? Understand the SEC ₱3M threshold and avoid BIR penalties with CBOS.

A frequent point of confusion for business owners in Cebu is the difference between SEC annual reporting requirements and BIR tax compliance rules.

The SEC ₱3 Million AFS Exemption Threshold

Under current SEC guidelines, corporations with total assets or liabilities under ₱3,000,000 are exempt from submitting a mandatory Audited Financial Statement (AFS) audited by an independent CPA.

For SEC annual reporting through eFAST, exempt corporations only file:

1. Non-Audited Financial Statements (Balance Sheet and Income Statement).
2. Notarized Statement of Management Responsibility (SMR) signed by the President and Treasurer.

The BIR Catch: Don’t Get Caught Off Guard

While the SEC relaxes rules for smaller entities, the Bureau of Internal Revenue (BIR) enforces separate standards:

Tax Warning: If your gross quarterly sales, receipts, or earnings exceed ₱3,000,000, the BIR strictly requires an Audited Financial Statement attached to your Annual Income Tax Return (BIR Form 1702).

If a Cebu corporation generates ₱4.5M in sales but holds less than ₱2M in total assets, it is exempt from an AFS at the SEC level, but must submit an AFS to BIR RDO 80/81/82/83 to remain compliant.

Stay 100% compliant: CBOS Business Solutions handles both your non-audited SEC filings and full BIR tax compliance. Contact our Escario, Cebu team today at (032) 520 6253.