What You Need to Hear About BMBE Certification

The Barangay Micro Business Enterprise (BMBE) law has certainly come a long way.

If you had applied for it in 2013, you might have encountered staff and officers at the municipal hall’s business permits and licensing office blankly wondering what the heck are you applying for.

But now, it’s one of the first things small-scale entrepreneurs ask about.

There’s plenty of information online about the BMBE nowadays, so I won’t write anymore about the stuff you’ll find rewritten in various forms all over the Internet.

Instead, let’s talk about the nitty-gritties of BMBE—the stuff you seldom hear about. Read more

Withholding Tax 101 (or, ‘Why Is My Pay Less Than What My Client Said It Would Be?’)

Withholding Taxes Philippines
How withholding tax feels like, sometimes: someone taking a bite out of your favorite doughnut before you can eat it. (Then again, lessening calories can be good for you.)

If you’re a freelancer with local clients, you must be familiar with withholding tax. 

Simply put, it’s the amount of money that your client deducts from the amount you’re supposed to receive; so if you’re expecting, say, Php 3,000, you might end up getting Php 2,700 instead.

Where did that missing Php 300 go?

It went to your withholding tax. 

What is withholding tax? Read more

Basic Taxes Every Proprietor and Professional Needs to Pay to the BIR (Bureau of Internal Revenue)

Basic Taxes Every Proprietor and Professional Needs to Pay to the Bureau of Internal Revenue

Many of us who start a business come from a regular employment setting.

So when we decide to register our business with the Bureau of Internal Revenue (BIR), we think, “Oh, now I’ll need to pay my own income taxes.”

But wait. There’s more.

It comes as a rude shock to many when they find out that, aside from income tax, there are other taxes that a business owner needs to pay–and that they need to file various tax forms many times a year.

Of course, we can’t spare you the payments, but we can at least spare you the shock.

Here, for your reading pleasure, are all the basic taxes and fees every professional or business owner needs to pay once they have registered with the BIR:

Read more

Chasing Your Passion? Better Make Sure You Pass It On

Is following your passion awful advice? Not if you pass it on

Every year, we celebrate Labor Day on May 1 as a way to recognize and appreciate our hard work. 

Perhaps some of us see the holiday as an excuse to take a rest from the toil and troubles of our daily grind. And to some, it may serve as a necessary pause to reflect whether we’re really doing what we love to do.

At Taxumo, we’re guided by our two-pronged mission: help you focus more on your passion, and make you you worry less about taxes.

From one perspective, this is an all-too selfish promise: it only concentrates on how we can help YOU, the aspiring entrepreneur or self-employed professional.

But while it is true that the promise of alleviating your tax pains is about YOU, helping you pay your taxes also helps ALL OF US collectively progress as a society.

With more funds for the government to use, we hope to create more infrastructures and improve services for the benefit of everyone.

(Whether our government’s coffers is being used properly is another discussion altogether, but if anything, we hope that the new government inspires people to fight corruption.)

Paying taxes is a social contract. We are acknowledging our greater responsibility as part of a group.

So what about focusing on your passion? Is it purely selfish? And if so, is it worth pursuing?

Is following your passion meaningful advice?

For the record: a lot of people say that following your passion is meaningless advice. (Read this. And this. And this too.)

They say one you just don’t follow your passion. You cultivate it.

Naysayers and semantics aside, we think pursuing, discovering, and enriching your passion is both sensible and sound.

But let’s be clear: following your passion doesn’t guarantee success.

Here’s a truth: not everyone will become successful.

We have a bias towards survivors, but forget to look at the cemetery of broken dreams, hopes, and wishes.

Malcolm Gladwell, in his book Outliers, argues that chance and circumstance are important factors in creating our success.

Bill Gates became successful not merely because he was the smartest, but because he also had a lot of opportunities in life that helped him reach his full potential. Aside from being born to a well-to-do family, he had access to tools which helped him pursue his passion.

Sometimes, success is all about being at the right place and the right time. It’s not always about being the best and the brightest: a stroke of luck can set the winners and losers apart.

Take the Concorde, for example: it may have been the fastest plane in existence, saving people crucial time, but circumstances simply weren’t in its favor. It was too expensive, and the sonic boom it made during flight had been such a pain that it limited its routes. (Not to mention the environmental issues it caused.)

By no means is this a discouragement for you to resolve into doing whatever job it is that you hate. On the contrary, this is more than that.

We want you to not just follow your passion. We want you to focus on it. We want you to want it so badly, so feverishly, that you don’t see any other course of action but to see it through.

We want you to see the opportunities that are around you, so you can go around and seize them when they come.

We at Taxumo want to help you save time so you can do other things, like network with other people, hone your craft even further, or upgrade your skills, so you can reach your full potential.

Opportunity may knock, but it won’t come in unless you open the door.

But is it all about you?

Going back: is pursuing your passion all about selfish interests?

Well, it can be. You can stop at that. But it’s very rare that you’ll be successful without thinking about how your passion helps others.

Doing what you love should transcend yourself, and become something much bigger than you are. It should be an opportunity for others to also discover how they can make things better for themselves and for others.

So allow us to rephrase our mission: we at Taxumo want to help you focus more on your passion–so you can spread the opportunities that you also have found yourself.

If we recognize that, while hard work is important for your success, it is not the only factor that brings success to us, then we should become all the more willing to help other people to discover how they too can do what their love, discover their success, and eventually also find meaning in helping others.

Unless you think about your passion’s bigger role in the world, all those efforts will be in vain.

Let your passion also be a social contract. Make it an aspiration to make it go beyond yourself. 

Trust us: passing it on can help you multiply your success.

Pay it forward. Make it your passion to also pass it on.

Ready to focus on your passion? We’ll help you make it happen by helping you worry less about taxes. Sign up at Taxumo today. www.taxumo.com

Will the Philippines’ New Real Estate Tax Amnesty Bill Affect Your Property Taxes?

Real Estate Tax in the Philippines House Bill 4814

If you’ve been following the news recently, you would know that Congress unanimously approved House Bill No 4814.

Anyone who owns real estate properties will find this significant to them since it is a tax amnesty on real estate taxes.

Before delving into the content of the bill, it is noteworthy to explain certain legal concepts.

What is Estate Tax? Read more

#FocusOnYourPassion Series: That Big, Crazy Thing That Drives Rach of Treehouse Yoga

Passion Focused: Rach Bonifacio of Treehouse Yoga

While it took more than a decade for Rachel Limjoco-Bonifacio of Treehouse Yoga to trade high heels and office swivel chairs for bare feet and yoga mats, she has always been focused on one thing: her passion for teaching.

After thirteen years in the corporate world (the last few years of that, as a training manager in UnionBank of the Philippines), she decided that it was time to make a career shift.

And this is when she discovered something bigger and crazier to fuel her passion.

For Taxumo‘s #FocusOnYourPassion series, Rach shares the secret to facing one’s weaknesses (and other nuggets of advice for every Filipino small business owner and self-employed professional who’s dreaming of doing something amazing.)

Read more

What Can We Do with High Local Taxes in the Philippines?

High local business taxes in the Philippines

The proposed income tax reforms have been hogging the headlines lately. Based on the latest draft at end of February 2017, an annual basic salary of P250,000 that used to be taxed as high as P37,500, will now be ZERO (not a typo). Everyone can’t wait for this to happen. It’s about time to experience a tax REDUCTION for a change.

But while national taxes (e.g. income taxes) are getting all the media attention, there is set of taxes that are under the radar, and have risen significantly in recent years. I’m referring to city/municipal or “local” taxes.

Read more

How President Trump May Hurt (or Help) the Philippine BPO Industry

President Trump and the Philippine BPO Industry

There have been various news coverage on the election of Donald Trump, and how Trump’s “America First” policies could negatively impact our country’s thriving business process outsourcing or BPO industry. Many are concerned of possible US legislation that could discourage companies from further outsourcing or make offshore services more expensive through some form of “border tax”. With analysts estimating well over 50% of BPO revenues emanating from the US or US companies, some industry stakeholders, especially BPO employees, are frankly scared.

Read more

With Lower Income Taxes, How Will Duterte Deal with the Philippines’ Huge National Debt?

Duterte's Solution to Philippine Debt Despite Lower Income Taxes
President Duterte’s photo taken from DuterteNews.com

The Duterte administration is aware of the potential risk of lowering Philippine income taxes. This is how he might manage the Philippines’ tremendous national debt—in the face of rising interest rates.

Ever wondered how much is the Philippines’ total debt?

Can you guess without Googling it? No?

Read more

How can we get lower taxes in the Philippines?

Lower tax rates for the Philippines
Lowering taxes for Filipino businesses is possible, but it will take a lot of compromise

Lowering tax rates in the Philippines is possible, but it will take a lot of compromise for us to move things forward.

There’s been several proposals of late aiming to lower the tax rates for the Philippines’ middle class. These include, among others, lessening the individual income tax rates, exemptions for start-ups, and one-time exemptions from the estate tax.  People are certainly having their fingers (and toes?) crossed as taxes here are universally acknowledged to be quite high.

Lowering the rates like tax exemption on all income below P240,000 (based on current proposal) would be a godsend.  Small businesses, meanwhile, need all the support to compete with the big boys, and a tax holiday can be that booster shot. And increasing the threshold for estate taxes would surely help certain families avoid having to borrow or worse be forced sell their ancestral home, just to pay the estate tax bill.  But as you lower income taxes on one end, the government needs to be certain that the total tax receipts will not decline significantly AND abruptly, that it negatively impacts delivery of basic social services. And this need to find immediate alternative sources to go along is where things get complicated.

The proposed tax reform package include revenue “raising” measures to offset the income tax reduction for the middle class, like introducing a higher 35% (yes 35%) rate for any income exceeding P1,450,000 in the year 2018, elimination of VAT exemptions for seniors and PWDs, and raising VAT on petroleum products.  As expected, there is now considerable pushback to the notion of increasing VAT as this would hurt the poor as they’re more likely to save less and spend a greater portion of their income on consumption (and VAT).  So here we are now, stuck yet again. Some are now wondering if the promise of lower taxes is just that, an empty promise.

Many members of Congress (including some allied with the administration) are against raising the VAT, with some suggesting we should just tax the rich further. But think about this for a moment. The 2016 Forbes billionaires list has eleven Filipinos with a total wealth of $42.75 billion or approximately P2 trillion, and all that wealth, all of it, is not even enough to finance our government’s 2017 budget of P3.3 trillion. Suppose we seize all their wealth, what’s next and who’s next after we’ve spent all of it? Do we then target the next eleven richest families?

The obvious answer is we go after tax evaders.  But it would be foolish to expect President Duterte (or any administration) to be able to eradicate tax evasion within months or years.  With the millions of self-employed individuals and businesses, it may even take a generation to change this culture that one can get away without paying taxes.  We may have to consider introducing a fair tax amnesty plan to encourage people out of the shadows.  But this can’t be free pass and must go along with very tough penalties for dodging taxes going forward, plus a law that will prevent succeeding administrations from granting further tax amnesties as such would defeat the purpose. Various self-proclaimed tax experts have a laundry list of suggestions, but one item that is absolutely necessary, however unpopular, is the need to expand the tax base. Expanding the tax base will likely include removing certain tax exemptions, and will impact certain industries and lower-income households.  But taxing the rich alone simply is not enough. The math doesn’t work at all.

So how do we get things done? How can we reduce taxes without putting a big hole in our government’s budget, a budget that for many is still not enough to address our country’s infrastructure needs and increasing welfare costs?  There’s only so much taxes the rich or anyone can stomach. No one would wish our business people to choose to invest elsewhere.

Hopefully the Duterte administration, with its current favorable trust ratings, can effectively explain to the public why expanding the tax base now, i.e. increases to VAT (but maybe a bit less than what is currently proposed) is the right long-term solution.

On the other hand, maybe the proposed income tax cuts would have to be scaled down. I’m sure everyone would be happy with a lower income tax cut, rather than us being stuck and nothing happening.

This is no easy task.  Every sector and every business group wants a bigger slice of the “tax-cut” pie. Virtually no one wants a tax increase if it affects them.  But compromise is needed for us to move things forward. We need this to finally implement sensible reforms that will finally grant much needed tax relief to our middle class in a manner that:

  • does not take away funding for our infrastructure backlog;
  • through tax cuts that are sustainable;
  • and will not impact our country’s fiscal health and credit rating.

Our country has gone from the “sick man of Asia” to one of the world’s fastest growing economies. We can surely make this work by coming together.

Yes we can!