Why Should You Pay the Correct Customs Duty and Tax?
In the importing industry, paying the right customs duties and taxes does not only ensure a smooth flow of importation but also saves you from a lot of headaches in the long run. Going back to the basics, all goods coming from a foreign country needs to be declared, such as their description, quantity, and their value which will be the basis for assessment of duties and taxes.
Import duty can also be ad valorem – based on the value of the goods, or specific – based on weight, dimensions, or other units of measure. In the Philippines, the dutiable value of a cargo is the sum of the actual value of the goods, plus the insurance and transport/freight/shipping cost. It will then be multiplied by the rate of duty which may vary according to the type of goods being shipped.
To arrive at Value Added Tax, the dutiable value is combined with customs duty, brokerage fee, and other charges (customs documentary stamp, import processing fee, and BIR documentary stamp) then multiplied to 12% Expanded Value Added Tax rate.
Cutting off the chase, what really are the benefits of paying the correct customs duty and tax? In this post, we will discuss the reasons why paying the correct customs duty and taxes is not only beneficial to you and your business but to the society as well.
Peace of Mind
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Being reviewed by the Bureau of Customs may cause a high amount of stress especially to a taxpayer who intentionally or illegally, decreases their tax payments. Sometimes it can affect even your personal life which gives you sleepless nights and anxieties.
If you pay the right amount of tax, you can eliminate these stress and anxieties. You will have more peace of mind and you can focus on growing your business.
Honest Income Tax Return
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Some importers, who do not file the correct amount of tax, encounters a problem when they need to generate an Income Tax Return for purposes of loan applications. As such, they resort to preparing inaccurate income tax returns in order to produce the said requirements. Producing an inaccurate tax return is extremely risky because if the agency verifies it to the BIR, it might cause a lot of trouble.
However, if you are diligently filing and paying the right amount of tax, it’s easy to produce accurate income tax return without any risk.
Good Investor Reputation
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To grow your business, at some point, you will need people or institutions with money that are willing to invest in your company. These investors will aspect into your financial and tax records to support their investment decisions.
Maintaining a truthful and accurate accounting and tax records will boost the confidence of investors. On the other hand, fraudulent and inaccurate will create an impression that the company is not trustworthy to invest with.
Social Responsibility and Contribution to the Country
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Paying the right amount of duty and tax is a social responsibility to the country. The duties we pay from importing goods has the purpose of protecting our country’s economy, residents, local jobs, environment and so on. The taxes we pay will go to the government funds that will be used in developing and improving the government facilities and life of our countrymen, inside and outside our country.
Overall, as a responsible importer, paying the correct customs duty and tax will ultimately benefit your business as it will make your name more credible in the eyes of the authorities, to your stakeholders, and ultimately, to your clients.
Let Excelsior Worldwide Freight Logistics Corp. help you throughout the whole importing and exporting process. Call us at (+632) 525-9775 or email us at email@example.com.