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. 

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.