27/08/2026
Don't you have Books of Accounts? โ ๏ธ Be careful, because your BIR compromise penalty can reach up to โฑ50,000! ๐ธ
For Filipino business owners, taxpayers, accountants, and bookkeepers, keeping and preserving Books of Accounts is strictly required by law. If you don't, you'll face a separate penalty of โฑ1,000 to โฑ50,000.
STEP 1 โ CHECK IF YOU HAVE BOOKS OF ACCOUNTS
If you haven't kept or preserved your records (NIRC Sec. 232/235), your BIR compromise penalty is based on your Gross Annual Sales, earnings, or receipts:
โข โฑ50,000 and below = โฑ1,000
โข โฑ50,001 to โฑ100,000 = โฑ3,000
โข โฑ100,001 to โฑ500,000 = โฑ5,000
โข โฑ500,001 to โฑ5,000,000 = โฑ10,000
โข โฑ5,000,001 to โฑ10,000,000 = โฑ15,000
โข โฑ10,000,001 to โฑ20,000,000 = โฑ20,000
โข โฑ20,000,001 to โฑ50,000,000 = โฑ30,000
โข Over โฑ50,000,000 = โฑ50,000
(Note: The underlying criminal penalty is a fine not exceeding โฑ1,000 or imprisonment not exceeding 6 months, but the compromise penalty is often applied by revenue officers in practice.)
STEP 2 โ AUDIT YOUR BOOKS WITH A CPA IF REQUIRED
According to NIRC Section 257(7)(i), your books must be written in English, Spanish, or your native language. If not, there's a separate penalty of โฑ1,000 to โฑ50,000.
โ ๏ธ WARNING: If your books are in a native language, it's not allowed to compromise them! It will be considered a fraud indicator by the BIR.
STEP 4 โ BE PREPARED FOR TAX MAPPING
Revenue officers will check your Books of Accounts on the spot during BIR Tax Mapping visits. If they find a ledger and you can't show it, you'll have to pay the penalty assigned to your gross sales bracket using BIR Form 0605.
๐ IMPORTANT REMINDER ON DISCOUNTS:
Do not immediately assume that you are eligible for the 50% discount for micro and small taxpayers under RR No. 6-2024. Section 232/235 record-keeping failures are NOT included in the sections explicitly listed in RR No. 6-2024, so first confirm with the officer which section you are charged with before relying on the discount.
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PRACTICAL REMINDER:
Always update and keep your Books of Accounts in your business location ready and avoid penalties!
