How to reduce taxes 2020
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How to Reduce Your Philippine Tax in 2020

Five (5) ways to reduce Philippine taxes in 2020. It includes also examples of how to do it.

If you own a business, April is probably your least favorite months-it’s tax season. Not only do you need to worry about your business tax, but there is also an individual tax. With all these taxes to stress about, you may seek to elicit some advice on tax evasion, but that is never a good idea. So, instead of putting you and your business in danger, why not try these legal tax reduction tips-how to reduce taxes 2020? Some may sound straight forward and obvious, but you’ll be surprised at how many business owners fail to follow the basics.

Let’s begin.

1. Make sure you pay the right taxes to reduce taxes 2020.

Some business owners think they are smart by not issuing receipts. After all, without receipts to show, you pay less tax. Wrong. The BIR knows all the tricks and strategies business owners use and can quickly figure you out. When they do, you’ll be paying hefty fines and penalties; you’d regret your ‘smart’ idea. When it comes to taxes, honesty is indeed the best policy. The only way you can sleep sound at night is by playing by the rules. Get a bookkeeper to record your actual receipts and pay taxes accordingly carefully.

2. Keep your accounting records organized.

The best way to be organized is to have a system from the beginning. For example, you can use a simple folder system and put all your income tax payments (monthly, quarterly, and annual) in one folder. Then, when preparing your annual tax return, you can cross-check them easily. Remember that even a slight error in filing your return can cost you dearly, so make the organization a habit.

3. Consider automating your accounting system.

Although manual accounting systems are affordable, they have one disadvantage- human error. Unfortunately, the BIR doesn’t give any leniency if the cause of your violation is because of human error. It is your job to ensure your accounts are in order, and a computerized accounting system may be the answer. Although automated systems like Quickbooks do require a fee, they can save you a lot of money in the long run.

4. Consider computerizing your payroll system.

If you have less than five employees, then keeping manual records may suffice. However, if you have more than five employees, you should seriously consider automating your payroll system. Since your income tax filing includes your payroll and employee deductions, computing them correctly as to how much the payroll expense can save you a lot of money.

5. Know how to reduce tax legally.

As we mentioned, tax evasion should never cross your mind as a business owner. Instead, do your research and discover how you can reduce tax payments legally. One of the tricks you should master is how to charge different expenses and business activities to save on taxes.

Check out this video on how to reduce your taxes legally 2020

 Here are a few examples to reduce taxes 2020: 

• If you have a business that does some research and development. You can charge travel expenses, both international and local, as tax-deductible -make sure you visit your suppliers along the way.

• Donations for charitable causes are 100% tax-deductible as long as they are accredited non-governmental organizations. If the organization is not registered, you can still deduct up to 5% of your income if you are a corporation and 10% if you are an individual proprietor.

• Writing off bad paying clients as “bad debt expense” is another way to save on taxes. If you have bad paying clients for more than 12 months, changing their status to “bad debt expense” can save you a lot.

• Hiring family members is another strategy to reduce your taxable income. The salary you pay to family members is a deduction from taxable income.

• Representation expenses that include meeting clients in a restaurant or other establishment or even travel expenses incurred going to customers. You can charge from 0.5% to 1% of net sales to this account as long as you collect all the receipts.

• Deducting tax withheld in advance by customers can also save you some pesos. Make sure you have the BIR form 2307 so you can claim them against your taxable income.

• Opening a small business can give you 100% tax savings. As long as your assets are below 3 million pesos, you are eligible to apply as a Barangay Micro Business Enterprise (BMBE). Once you are approved, you can enjoy 100% income tax exemption and exemption from minimum wage plus lower local taxes.

Final thoughts

If tax season is a dreaded time of the year for you, there is a lot you can do to reduce your tax in 2020. As long as you follow these wise business practices, you will find yourself with lower fees as time goes by. So, instead of hating tax season, view it a time to grow and improve your business. And remember, if you need any help on how to reduces taxes 2020, send us a message or leave a comment.

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Revenue Memorandum Circular No. 72-2020 amends RMC No. 36-2020 relative to the removal of requirement for submission of photocopies of documents evidencing credit extensions and credit restructurings granted by covered institutions during ECQ. RMC 72-2020

Revenue Memorandum Circular No. 73-2020 publishes the full text of CSC Memorandum Circular No. 14, s. 2020 re: Interim Guidelines on Appointments and Other Human Resource Actions for the Period of State of Calamity Due to COVID-19 Pandemic. RMC 73-2020/Annex

Revenue Memorandum Circular No. 71-2020 circularizes the advisory for the adoption of fast-track measures during the COVID-19 state of calamity issued by the Anti-Red Tape Authority through its Advisory No. 01 Series of 2020. RMC 71-2020/Annex A

Revenue Memorandum Circular No. 70-2020 circularizes the List of Expired Tax Credit Certificates. RMC 70-2020/Annex A

Revenue Memorandum Order No. 23-2020 clarifies the issuance of Authority to Release Imported Goods for VAT Exemption on the sale and importation of prescription drugs and medicines pursuant to Section 1 of RA No. 11467, further amending Section 109 (AA) of the NIRC of 1997, as amended, and as implemented in Revenue Regulations No. 18-2020. ​RMO 23-2020

Revenue Regulations No. 19-2020 prescribes the use of the new BIR Form No. 1709, replacing Form No. 1702H, Series of 1992.​ RR 19-2020/Annex A

Revenue Regulations No. 18-2020 implements Section 1 of Republic Act (RA) No. 11467, further amending Section 109 (AA) of the NIRC of 1997, as amended by RA No. 10963 (TRAIN Law), providing for VAT Exemption on the sales and importation of drugs and medicines prescribed for diabetes, high cholesterol, hypertension, cancer, mental illness, tubercolosis and kidney diseases. RR 18-2020


2550M (Monthly VAT Declaration) – eFPS Filers under Group D

23 Thursday
2550M (Monthly VAT Declaration) – eFPS Filers under Group C
The month of June 2020

24 Friday
2550M (Monthly VAT Declaration) – eFPS Filers under Group B
Month of June 2020

25 Saturday
Quarterly Summary List of Sales/ Purchases/Importations by a VAT Taxpayers – Non-eFPS Filers
TQ ending June 30, 2020
Sworn Statements of Manufacturer’s or Importers’ Volume of Sales of each particular Brand of Alcohol Products, Tobacco Products & Sweetened Beverage Products
TQ ending June 30, 2020
2550Q (Quarterly VAT Return) & 2551Q (Quarterly Percentage Tax Return) – eFPS & Non-eFPS Filers
CQ ending June 30, 2020
2550M (Monthly VAT Declaration) – eFPS Filers under Group A
Month of June 2020
2550M (Monthly VAT Declaration) – Group E, D, C & B
Month of June 2020

30 Thursday
Computerized Books of Accounts & Other Accounting Records in Electronic Format
FY ending June 30, 2020
Inventory List
FY ending June 30, 2020
Required Hard Copies of Financial Statement & Scanned Copies of Form 2307 to e-Filed 1702 RT, MX & EX

(Original Due Date: June 30, 2020)

FY ending February 29, 2020
Required Hard Copies of Financial Statement & Scanned Copies of Form 2307 to e-Filed 1702 RT, MX & EX FY ending March 31, 2020

Quarterly Summary List of Sales/Purchases/Importations by a VAT Taxpayers – eFPS Filers
TQ ending June 30, 2020

1702Q & Summary Alphalist of Withholding Taxes (SAWT)
FQ ending March 31, 2020

31 Friday
Sworn Statement by every Lessee/Concessionaire/Owner or Operator of Mines & Quarry/Processor of Minerals/Producer or Manufacturer of Mineral Products
1st Semester of 2020
Contract of Lease and Information on Lessee/Lessors/Sub-Lessors of Commercial Establishments, Building or Space for Tenants
January 1 to June 30, 2020

1601-EQ & 1601-FQ and Quarterly Alphalist of Payees (QAP)
CQ ending June 30, 2020
1602Q & 1603Q
CQ ending June 30, 2020


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