03/09/2025
Why Your SME Might Be Audited by the BIR: The #1 Reason You Should Know
Running a small or medium enterprise (SME) in the Philippines is already a challenge — dealing with operations, employees, and of course, taxes. One day, you might receive a Letter Notice (LN) or worse, a Letter of Authority (LOA) from the Bureau of Internal Revenue (BIR), signaling the start of an audit.
The question is: Why you?
Let’s talk about the #1 reason why your SME could be selected for BIR examination — and how to avoid it.
The Main Reason: Discrepancy in Reported Sales or Expenses
The BIR doesn't choose businesses randomly.
Your SME becomes a candidate for a BIR audit primarily due to discrepancies between your tax declarations and third-party data submitted to the BIR.
These discrepancies may come from:
Customers who report higher purchases from you
Suppliers who report higher sales to you
Banks or agencies reporting financial data you didn’t declare
Employees’ withholding tax returns that don’t match your payroll records
Through automated systems like RELIEF and the Tax Reconciliation System, the BIR cross-checks your tax returns with what others (customers, suppliers, government agencies) submit.
If there’s a mismatch — that’s a red flag.
Call now to connect with business.
