The Predictive vs. Declared Income of an I-Café
The Predictive Income Level (PIL) of an i-café is already discussed here in my blog and this one is a follow-up in view of issues regarding its use versus the income figure that an i-café owner declare in his application for renewal of business permit with a local government unit (LGU). More often than not, questions arise as to the accuracy of the sales figure in the application and the issue becomes more complicated when the same figure was the one filed by the café owner with the Bureau of Internal Revenue (BIR).
By nature, this is just a personal observation on my part, i-café owners and taxpayers in general tend to under-declare their income to save (I would rather say, evade) on taxes. As one would know by now, income derived from business is taxed not only once nor twice but many times.
A taxpayer with business income is first taxed for it on his Community Tax Certificate at one (P1.00) peso per one thousand peso gross income. The same gross amount of income is taxed three (3%) percent by BIR and another two (2%) percent by the LGU. Lastly, income tax up to maximum of thirty-two (32%) percent is levied on any net amount after deducting the allowable expenses.
Could the above be the reason for such underdeclaration? What happens when the income figure declared by the i-café owner does not tally with the predictive income level figure that an LGU has established for local tax purposes? I am sure there are cases like this happening in many parts of the country and resolving them could always end up favoring the side of the government. But should this situation always prevail? What about the honest taxpayer who declares his correct income figure but the LGU would not believe?