The Bureau of Internal Revenue (BIR), in its Memorandum No. 4-2013, identified professionals, the self-employed, and sole-proprietorships falling under certain criteria as candidates for priority tax audit and investigation by Revenue District Offices (RDOs).
Sole-proprietorships in the priority target list are those whose income tax due is less than P200 thousand per annum, whose gross revenues is less than 40 per cent over the previous year, and whose tax payment for each tax type is less than 3.5 per cent compared to the previous year.
The BIR will also keep a watchful eye on business owners engaged in high-traffic operations and those that deal in expensive goods.
These include business related to wrist watches and jewelry, petroleum fuels like gasoline, real estate, contractors that deal with government entities, advertising agencies, business processing outsourcing companies, manpower and recruitment agencies, and e-commerce companies.
Other audit targets are operators of hotels, motels, pension or lodging houses and inns, and dormitories and boarding houses, schools and review centers particularly those that cater to foreigners, as well as restaurants, fat food chains, catering services, bars and coffee shops.
Also covered are those who run hospitals, clinics, medical and dental laboratories, clinics for beauty enhancements, factories and dealerships of beauty and health supplements, and entertainment or event centers.
BIR Memorandum 4-2013 also announced that other businesses must also expect an audit of their tax returns especially those in sectors that are “peculiar to the area of jurisdiction of the district office.”
Last week, the BIR announced it was waging “war” against high-earning individuals who pay very small amounts of taxes.