BIR Registration Philippines

Implications of a Company Not Being Registered with the BIR in the Philippines

Question: The company I used to work for is not registered with the BIR. What will happen?

Answer: The registration of businesses with the Bureau of Internal Revenue (BIR) is crucial under Philippine law. If a company operates without registering with the BIR, it could face a series of consequences:

1. Penalties for Non-Registration:

   • According to the National Internal Revenue Code (NIRC), any person who fails to register their business as required will be penalized with a fine ranging from PHP 5,000 to PHP 20,000 and may face imprisonment of not less than six months but not more than two years.

2. Charges of Tax Evasion:

   • If the non-registration is accompanied by the non-payment of taxes or undeclared income, the company and its responsible officers can be charged with tax evasion. Tax evasion is a criminal offense that can result in substantial fines and imprisonment.

3. Closure of Business:

   • The BIR, in coordination with local government units, has the authority to temporarily or permanently close businesses that fail to comply with tax regulations, including non-registration.

4. Implications for Employees:

   • Employees may face challenges in claiming tax-related benefits or deductions because of the company's non-compliance. Without the proper documentation from a registered employer, employees might have difficulty establishing their employment history or income for purposes such as loan applications, tax returns, or future employment.

5. Implications for Business Transactions:

   • A company not registered with the BIR may face challenges when entering into legal contracts, securing loans from banks, or any transaction that requires proof of legitimate business operations.

6. Civil Penalties:

   • Apart from criminal liabilities, the company may also be subjected to civil penalties, which could include the payment of surcharges, interest, and compromise penalties.

Recommendation: If you are aware that a company you used to work for (or are currently working for) is not registered with the BIR, it may be prudent to consult with a tax lawyer or advisor. Understanding your rights, potential liabilities, and available remedies can be vital in such situations. Additionally, if you are a business owner, it's always in your best interest to ensure compliance with all BIR requirements to avoid legal complications.

Conclusion: Operating a business without proper registration with the BIR can lead to significant legal and financial consequences for the company and potential challenges for its employees. Ensuring compliance with tax regulations is essential for the legitimate and smooth operation of any business in the Philippines.