Thesis Paper

POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
Chapter 1
PROBLEM AND ITS BACKGROUND
This chapter present the introduction, background of the study, conceptual
framework, statement of the problem, hypothesis, significance of the study and its
scope and limitation.
Each year business runs into tax problem that can easily be avoided. It is
important for business owners to understand every tax law that affects their
enterprises. Failure to do can result in the organization being levied penalties and
interest costing it a lot of money.
Introduction
Taxation is the imposition of a mandatory levy on the citizens of a
country by their government. In almost all countries tax revenue is the major source of
financial for public. Taxation has not always been the chief source of revenue for
government. The two primary objectives of every business are profitability and
solvency.
Small businesses include both self-employed sole traders, who are taxed as
individuals, and small incorporated firms, which are taxed as companies. Many
economic activities could be carried out either by an employee working for a company
or by a self-employed individual. In the case of a small, owner managed company, for
example, the owner-manager has considerable discretion over the way in which he
derives taxable income from the firm. If the tax treatments of income in the form of
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wages and income in the form of distributed profits are substantially different, the tax
system is likely to have a significant impact on the ways in which small business
proprietors choose to take their remuneration.
This may also favor more economic activity being undertaken by small firms
and less activity being undertaken by employees of larger firms, who cannot reduce
their tax liabilities so easily. Avoiding these kinds of inequities and distortions will
again require appropriate alignment of personal and corporate tax rates. Smaller firms
may also be placed at a competitive disadvantage compared with larger firms by
higher costs of tax compliance, relative to their size, and the scale of this
disadvantage will tend to increase with the complexity of the tax system.
This chapter addresses a focused set of structural issues concerning the way in
which small, owner-managed businesses are taxed. This may sound limited, but in
fact these issues are highly complex and pervade the design of the entire tax system.
They affect the interaction between taxation of income from labor and that of income
from capital.
Economic growth in every country is defined by the performance of its
production sector. In many highly developed countries a great share of production is
manufactured by small enterprises an important part of their market economies.
The development of small enterprises is greatly affected by the level of
taxation, its administration and compliance: the higher the tax rate is, or the greater
the efforts to fulfill taxation requirements are, as well as to check how those
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requirements are met, the lower the initiatives are for SMEs to perform well.
Therefore, maintaining the tricky balance between tax rates, compliance costs, tax
administrating and economic development should be a main goal of every tax policy.
Background of the study
The need for this objective is because much is expected from individuals from
the viewpoint of providing employment opportunities, self-reliance in basic food and
material production, high per capital income, and the production of industrial raw
materials.
It is generally agreed by many that the way out of the problem of economic
development for many developing countries is to devote a lot of energy to the
development of small business enterprises. The modern economist’s small business
development as a necessary step for rapid growth. Every profit-oriented organization
is faced with three (3) major business decisions to make every day as far as finance is
concerned. Investment, financing and dividend decisions are the major decisions firms
have to tackle every day in order to survive. These decisions are greatly influenced by
assets, liabilities, expenditures and capital structure of an organization. Tax which is a
form of liability is a board area in management, and financial account, and it is
handled with care as the financial position of every business organization will definitely
be effected based on how tax matters are managed. The ability of an organization to
effectively and efficiently employ various techniques to avoid and reduce tax burden is
imperative. Considering how tax can affect the success of an organization, it is
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therefore important for financial managers and accountants to apply efficient legal tax
avoidance techniques. Reducing tax liability is similar to reducing expenses. If tax
liabilities are efficiently managed, more revenue generated by the organization will be
invested in other areas of the business to speed up growth and expand the business.
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Conceptual Framework
The Conceptual Framework was use in research to outline the problem and the
promotion need of our content. The researcher uses the Theoretical Framework of the
study as the basis of designing the conceptual framework.
Input Process Output
1. Profile of the
respondents to
describe in terms
of: The researcher Tax Compliance of
distribute a Small Scale
 Sex
questionnaires to Businesses in
 Age
the chosen Pulilan
 Type of
respondents;
Business
 Level of
Education
2. Factors affecting
small business
owners in
complying taxes.
 Lack of
Knowledge
in Taxes
 Self-
employed
Voluntarily
File and Pay
Taxes
FEEDBACK
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Statement of the problem
This study aims to determine the tax compliance of small scale businesses in Pulilan.
Specifically, this study seeks to answer the following questions:
1. What is the profile of the small scale business owners in Pulilan in terms of the
following:
 Sex
 Age
 Civil Status
 Types of Business
 Level of Education
2. Do small scale business owners have knowledge in business taxes in terms of:
 Purpose of Tax
 Tax Avoidance
 Direct and Indirect Taxes
 Importance of tax in the economy of the country
3. What are the perceptions of small business owners in paying taxes in terms of:
 Reasons why the respondents file and pay taxes
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Importance of the study
This study will be a significant endeavor in giving ideas on how to manage tax
properly. The researchers as future business owners it serves as their guide on how
we can handle our own taxes in near future. It would enable the government to do
reforms to the tax rates in supporting small business. The study will also useful to
other manufacturing companies having taxation difficulties. The study when carried
out will also be of great benefit to student researchers who have interest in
researching more into taxation. It will act like a guide to student researchers who may
find the recommendation and findings of the study when completed useful.
Importance of Taxes in Society:
Without taxes, governments would be unable to meet the demands of their
societies. Taxes are crucial because government collect this money and use it to
finance social projects. Some of these projects include:
• Health
Without taxes, government contributions to the health sector would be impossible.
Taxes go to funding health services such as social healthcare, medical research,
social security, etc.
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• Education
Education could be one of the most deserving recipients of tax money.
Governments put a lot of importance in development of human capital and education
is central in this development. Money from taxes is channeled to funding, furnishing,
and maintaining the public education system.
• Governance
Governance is a crucial component in the smooth running of country affairs. Poor
governance would have far reaching ramifications on the entire country with a heavy
toll on its economic growth. Good governance ensures that the money collected is
utilized in a manner that benefits citizens of the country. This money also goes to pay
public servants, police officers, and members of parliaments, the postal system, and
others. Indeed, with a proper and functioning form of government, there will be no
effective protection of public interest.
Scope and Limitations of the study
This research study is focused on the factors that can help to get real picture
how taxation can affect small business. Decisions of an organization, the researcher
will make use financial statement in Pulilan, Bulacan. This study was conducted to the
selected area of small enterprises in Pulilan. To know the factors that contributes to
the effectiveness of tax in small scale business by gathering information through a
survey.
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Significance of the study
The study of tax of small businesses in Pulilan is great importance to economic
growth. It will links small business with economic growth. That is the theoretical
framework lining.
The study tried to highlight the role of small business for natural development,
beside it, the study will try to provide some basic knowledge of the small business
owner the study also help to gain some information.
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Definition of terms
Abatement – A reduction in the assessment of tax, penalty or interest when it is
determined the assessment is incorrect.
Aggregation – Term used to denote the adding together of the tax payer’s income
from all sources in order to determine the applicable tax rate for income tax purposes.
Amortization –Process of writing off the cost of an intangible asset over its useful life.
Arbitration – Term used for determination of a dispute by the judgment of one or
more persons, called arbitrators, who are chosen by the parties and who normally do
not belong to a normal court of competent jurisdiction.
Alimony – regular payment made to an ex-spouse or to a legally separated spouse.
Alimony is considered income for the payee and is tax deductible for the payer.
Basis – the amount of piece of property is worth when you acquire it.
Blind – for tax purposes, a person is considered blind if they cannot see better than
20/200 with their best eye using contacts.
Efile – to electronically file tax return. To file your taxes online.
Excise Tax – a special tax on using or selling certain product or services.
Flat Tax – a tax based on the same percentage of income for all taxpayers,
regardless of income level.
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Chapter 2
Review of Related Literature
This chapter aims to present foreign and local literatures and studies that
would be of great help in the pursuit of this undertaking. This helped the researchers
to have a better understanding and a wider perspective on this investigation.
Foreign Literature
According to Oliver Wendell Holmes (2017), tax is what business owners paid
for a civilized society. Governments need sustainable funding for social programs and
public investments to promote economic growth and development. Programs
providing health, education, infrastructure and other amenities are important to
achieve a common goal of a prosperous, functional and orderly society. And they
require that governments raise revenues. This is so even in low-income economies
that often receive large amounts of external assistance to help meet their needs.
Taxation not only pays for public goods and services; it is a key ingredient of the social
contract between citizens and the economy and thus key to building an effective
government. How taxes are raised and spent shapes the legitimacy of governments
by promoting their accountability to taxpaying citizens and by encouraging effective
administration and good public financial management.
All governments need revenue, but the challenge is to carefully choose not only
the level of tax rates but also the tax base. Governments also need to design a tax
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compliance system that will not discourage taxpayers from participating. Recent firm
surveys in 147 economies show that companies consider tax rates to be among the
top 5 constraints to their business, and tax administration to be among the top 11.
Firms in economies that rank better on the ease of paying taxes tend to perceive both
tax rates and tax administration as less of an obstacle to business.
According to Bernadette Kamleitner (2014), Small business owners are
responsible for collecting as well as for remitting taxes (Christensen et al., 2001). They
are, hence, important players in a country’s tax system. Though the evidence is not
unequivocal (e.g. Hanlon et al., 2007; Rice, 1992) most research suggests that small
business owner-managers are more likely to cheat than other groups of taxpayers
(e.g. Joulfaian and Rider, 1998; Kirchler et al., 2006; Schuetze, 2002). Even the
Organisation for Economic Co-operation and Development (2004) considers small
business owners a high-risk group in terms of tax compliance. In many cases it is
impossible to prove non-compliance. For example, the US Internal Revenue Service
estimates that only half of corporate non-compliance is detected (Webley, 2004), and
that tax audits are generally a costly matter. Increasing voluntary compliance among
business owners is thus a worthwhile endeavor. In order to do so, an in-depth
understanding of the factors fostering non-compliance is essential. While paying taxes
is likely to be an important topic for small business owners, the actual experience of
paying taxes and small businesses’ tax behaviors have received surprisingly little
attention in the small business literature. For example, when searching the
International Journal of Entrepreneurial Behaviour and Research for the term “tax,”
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there are 53 hits but only two articles deal directly with tax behavior (Rothengatter,
2005; Williams, 2005). Many other hits constitute predominantly qualitative research
publications that focus on aspects of entrepreneurship other than taxpaying, for
example human resource management (Leung, 2002), the entrepreneurial experience
(Mitchell, 1997), or social processes of entrepreneurial innovation (Lowe, 1995). This
paper reviews the empirical literature on the impact of company taxes on the
allocation of foreign direct investment. We compare the outcomes of 25 empirical
studies by computing the tax rate elasticity under a uniform definition. The median
value of the tax in the foreign literature is around 3.3 (i.e. A 1%-point).
Local Literature
According to Mon Abrea (2016) taxpayers are classified as either corporate or
individuals. If you are registered as an individual taxpayer, you are either employed (or
a compensation income earner, which includes minimum wage earners) or self-
employed. As self-employed, you can register as a single proprietor or entrepreneur
(other than marginal income earners or those earning less than Php 100,000 annual
gross revenues), or as professionals.
Professionals, classified as self-employed, refer to an individual or a group,
practicing his/her or their profession or calling, with or without license under a
regulatory board or body. These exclude those who are earning purely from
compensation income (purely employees).
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Professionals with license under a regulatory board include doctors, lawyers,
certified public accountants, architects, engineers, and the like. Although freelancers
may not have professional licenses under a regulatory body, as in the case of
bloggers, web developers, graphic designers, writers and other people who provide
specialized services, they are also considered professionals.
Another is according to Michelle V. Remo (2014), The Bureau of Internal
Revenue said owners of small “sari-sari” (variety) stores, farmers, fishermen, single-
unit tricycle operators and other marginal income earners (MIEs) are still liable to pay
tax.
In one of its latest circulars, the BIR reminded concerned individuals that while
MIEs have been enjoying certain privileges under the law, they must still comply with
several tax and tax-related requirements.
Under Revenue Memorandum Circular No. 7-2014, the tax authority states that MIEs
are liable to pay the income tax, but are exempted from the value-added tax and from
the business tax.
Moreover, micro entrepreneurs are required to submit reports on earnings and
issue receipts. MIEs are defined in the circular as individuals who are self-employed
and earning not more than P100, 000 in any given 12-month period. Their incomes
are considered mainly for subsistence. Besides the ones mentioned above, MIEs may
also include owners of small carinderia or turo-turo and other micro-entrepreneurs.
They exclude licensed professionals, sales agents, brokers, artists and other
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professionals whose incomes are subject to withholding tax. The issuance of the
circular was part of the BIR’s tax campaign, under which it aims to plug leakages from
tax evasion and to boost state coffers.
In a complementary circular, No. 8-2014, the tax authority said individuals who have
claimed to have exemptions from certain taxes should secure certification from the
BIR for such exemptions. Without certification of exemption, the BIR said, concerned
individuals ought to pay their income tax dues in full.
“The tax exemption certificate or ruling must explicitly recognize the grant of
exemption, as well as the corresponding exemption from withholding tax,” the BIR said
in the circular.
“Failure of the taxpayer to present the said tax exemption certificate shall subject him
to the payment of appropriate withholding taxes due on the transaction,” the BIR
added.
The tax authority added that enterprises tasked to withhold certain taxes on
purchases by their clients ought to do so unless certification has been presented. The
BIR said those failing to withhold taxes as prescribed by the Tax Code would be
meted penalties.
The BIR, which accounts for at least 60 percent of the national government’s
revenues, is tasked to collect P1.46 trillion in taxes this year.
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In 2013, it was expected to have posted at least a 10-percent year-on-year growth in
collection although it was seen to have fallen short of its target of P1.253 trillion.
According to rough estimates, the government loses about P450 billion a year due to
tax evasion.
Claire Jiao of CNN Philippines (2018) stated that Micro, small and medium
enterprises (MSME) are the biggest winners in the government's tax reform program,
according to new research by several firms. Experts said the most important change
was the raising of the tax threshold from 1.5 million to 3 million. MSMEs with gross
sales below the threshold can opt to pay a flat tax of just 8% instead of paying the
regular income tax.
This change makes the tax system "simpler and more favorable" to entrepreneurs, a
report by Chinabank Securities read.
According to its simulation, entrepreneurs earning up to P1.5 million annually will see
their disposable incomes increase by as much as 12.7% this year.
The change is even more significant for those earning between P1.5 million and P3
million a year — the newly tax-exempt. Their disposable incomes are expected to
jump by 27-28.2%.
Even though consumer prices are expected to go up because of higher taxes on fuel
and coal, Chinabank Securities said inflation will still be outpaced by the rise in
entrepreneurs' income.
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For those earning up to P1.5 million annually, inflation will not erode their income
gains until 2021. For those earning between P1.5 million and P3 million, they have
until 2025, the bank said.
Tax consultancy Abrea Consulting Group, meanwhile, said that even if MSMEs
don't avail of the 8% flat tax, they will still benefit from the overall lowering of income
tax rates.
Under the Tax Reform for Acceleration and Inclusion (TRAIN) law, all income
P250, 000 and below will be exempt from tax. Tax rates were also lowered for most
taxpayers, except those earning P2 million and above.
In a sample case, Abrea Consulting Group showed that a typical sari-sari store
(mom and pop shop) making P500, 000 in gross sales a year would have to pay
P52,500 in taxes under the old rules. With the new rules, the store's tax bill will go
down to P25, 000 using the lower income tax or P20, 000 using the flat tax.
"They'll be saving at least half of what they're paying right now," Abrea Consulting
Group President Mon Abrea said in an interview on Monday. "So that's really good tax
relief for our small businesses." Many factors affect entrepreneurship creating the so
called ‘’Business Environment’’ or ‘’Entrepreneurial ecosystem’’. Such factors include
taxation, other government regulations rules on bankruptcy and restriction to enter
certain profession, local and global market opportunities, access to funding and
finance, the role of universities and of education and training as catalysts, the function
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of mentors, advisors and support systems, the attitude, skill and human capital of the
workforce.
Foreign Studies
In Australia, Ahmed and Braithwaite (2005) compared a sample of Australian
small business owners with employed taxpayers and found that they did not differ in
terms of the following factors: subjectively perceived deterrence from non-compliance;
subjective probability of being caught for tax evasion; preference for aggressive tax
planning; cooperation with and resistance against tax authorities; attitudes towards
equity issues; personal norms of tax honesty; tax morale; and the level of admitted tax
evasion. In line with these findings, a scenario study showed no significant differences
in terms of hypothetical tax compliance between fiscal officers, business lawyers, and
small business owners (Kirchler et al., 2003).Although there are no notable differences
in attitudinal variables, self-employed people perceive a significantly stronger
imbalance between their own tax burden and state refunds; they feel a slightly higher
subjective tax burden; and they feel they benefit much less from governmental
benefits than other groups of taxpayers (Kirchlerand Berger, 1998). Not surprisingly,
small business owners were also shown to holdless favorable fairness perceptions in
terms of distributional (e.g. Stru¨mpel, 1966) and procedural (e.g. Adams et al., 1996)
fairness. Other studies add to that picture by showing that small business owners hold
different mental representations of taxes than employed people. For the self-
employed, the stimulus word “tax” tends to elicit thoughts of tax
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complexity and the limitations that taxes impose on a business. For the employed,
“taxes” are often associated with a necessary burden and considerations of justice
(Kirchler, 1998). Although business owners were found to be less supportive of
spending tax money on education, health, unemployment, and social welfare
programs, their commitment to values associated with security for the community and
nation was even higher (Ahmed and Braithwaite, 2005).Importantly, experiences with
and competence in tax matters differed significantly between small business owners
and all other groups of taxpayers (Ahmed and Braithwaite, 2005): small business
owners reported more experiences of contested assessment, audits, and sanctions,
signaling that this group is particularly likely to be audited due to its unique exposure
to the tax system. As a consequence, small business owners may attest more power
to tax authorities and report that they lack competence and autonomy in dealing with
tax matters (Ahmed and Braithwaite, 2005)
Another related study was conducted by Sandford and Hasseldine (1992) is the
earliest comprehensive business compliance cost study conducted in a New Zealand
context. Prior to their study, the Consultative Committee on Tax Simplification (The
Waugh Committee) had proposed different ways in which the tax laws could be
simplified (Tax Simplification Consultative Committee, 1990). This led to the funding
for the study of Sandford and Hasseldine (1992) from the Inland Revenue Department
(IRD). The purpose for their study was to evaluate the compliance costs of the tax
legislation prior to any simplification changes, in order to establish a benchmark for
follow-up studies in the future. The authors used two separate mail surveys to collect
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their data on the costs of compliance. One of the surveys collected data on the costs
related to the employers, such as pay-as-you-earn (PAYE), fringe benefit tax (FBT)
and other withholding taxes on employees’ income. The other related to goods and
services tax (GST) and business income tax.
The overall compliance costs of business taxation was estimated to be
approximately $1,882 million, which was made up from 46.5 million hours of time
spent and costs of over $600 million paid for external advisers fees as well as other
various costs. Theaverage compliance cost associated with the smallest sized
business group (turnover less than $30,000) was equivalent to 13.4 per cent of the
firm’s turnover (or $3,345).
This compared to the equivalent of 0.03 per cent of turnover (or $59,404) for
the largest business group (turnover more than $50 million). Sandford and Hasseldine
(1992) found evidence to suggest that compliance costs of business taxation are
regressive, both individually to each tax and collectively for all taxes.
In 2004, the IRD commissioned Colmar Brunton to measure the compliance
burden of taxation on SMEs (Colmar Brunton, 2005). This study found that the
average amount of time a business spent per year on internal tax activities was
approximately 76.7 hours, with the most time spent complying with GST, then followed
by income tax requirements. The average combined compliance cost (internal and
external) on SMEs was $4,024.10 The compliance cost for the smallest businesses
explored in thier study (turnover of up to $19,999), was 21 per cent of the firm’s total
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turnover, when compared to the largest businesses (turnover of up to $1.3 million)
was 0.2 per cent of turnover.
Colmar Brunton’s findings show that the compliance costs were regressive; this
is not only consistent with Sandford and Hasseldine (1992), but also shows that the
regressivity had not been reduced over the 10 year period, and in fact showed an
increase. The follow-up study, Inland Revenue (2010), found that average combined
compliance costs had risen in nominal terms to $5,557.11 When compared to the
2004 study (Colmar Brunton, 2005), compliance costs actually decreased by 1.3 per
cent (adjusted for inflation), primarily as a result in the reduction in the total amount of
time spent on tax compliance activities. This finding was unexpected due to the
additional hours needed to comply with KiwiSaver, 12 and additional student loan
repayments (from an increased proportion of businesses with student loan payers). No
definitive answer could explain this decrease, but Inland Revenue’s researcher’s
hypothesis that: differences in the SME demographic characteristics, the impact of the
economic recession, or incremental changes in tax policy (either individually or
collectively) could have had an effect on the result. While there has been an overall
decrease in compliance costs, the regressivity remains.
Gupta and Sawyer (2015) conducted the most recent investigation into the
compliance burden for small businesses in New Zealand, as well as contributed to a
larger international project including Australia (Lignier& Evans, 2012) , South Africa
(Smulders, Stiglingh, Franzsen, & Fletcher, 2012), the UK (Hansford &Hasseldine,
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2012), Ireland, Canada and the US. While the parameters of the study were kept in
line with the larger international comparisons, limited comparisons can still be made
with the earlier New Zealand studies (Colmar Brunton, 2005; Inland Revenue, 2010).
Gupta and Sawyer’s study finds that the average total amount of hours spent on tax
compliance activities was 479.17 per year, with GST contributing to more than half of
the total time spent. This contributed to an average combined cost of compliance of
$31,096. This figure was comparatively larger when compared against prior studies
(Sandford&Hasseldine, 1992; Colmar Brunton, 2005; Inland Revenue, 2010). The
authors were unable to explain such a difference in the result. Furthermore, Gupta and
Sawyer (2015) reaffirm that compliance costs continue to be regressive based on
business size.
Local Studies
A study conducted by Prince Magtulis (2016), shows that 35% of Philippine
firms pay only 2% income tax. More than a third of the country's largest corporations
are paying only two percent in income tax every year despite high profits, a practice
traced from a "control" measure in the two decades-old tax law.
A total of 518 or 35 percent of 1,477 taxpayers under the Bureau of Internal
Revenue's (BIR) Large Taxpayers Service (LTS) paid only the minimum corporate
income tax (MICT) of two percent, according to the National Tax Research Center
(NTRC).
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This resulted into P3.3 billion taxes collected from them in 2014, the study titled
"Revenue Performance of the BIR Large Taxpayers Service: 2006-2015" said. Among
others, LTS includes those with annual gross sales of P1 million and net worth of at
least P300 million.
"A number of (large taxpayers) despite being classified as such reported net losses
caused by their declared (cost of sales) that almost eat up their entire net
sales/revenues leaving almost nil gross income," the study said.
"With a very low tax base (i.e. gross income), the computed tax is likewise low," it
added.
Under the National Internal Revenue Code, the two-percent MICT is paid by
corporations which have zero or negative taxable income beginning from their fourth
year of operations.
This is way below the regular corporate income tax of 30 percent.
"It was meant to ensure that corporations contribute to the government since it was
said that they are benefiting despite operating at a loss," said Lina Figueroa, tax
principal at auditing firm Punongbayan and Araullo.
"There was an observation back before the 1997 tax reform that corporations who
have been at a loss still continue to operate anyway," she said in a phone interview.
Of the 518 LTS members, NTRC said 452 incurred zero or negative taxable income in
2014, while only 66 registered positive net income.
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This was computed after all deductions were made, which the study showed 87.5
percent or 1,292 companies availed.
Of that figure, 80 declared 100 percent of their net income as cost-of-sales, leaving
none for tax base, while 510 others deducted 80 to 99 percent "leaving very minimal
gross income.”
Most deductions came from salaries and allowances, cornering 19 percent, followed
by advertising and promotions (10.5 percent), interest (7.3 percent) and rental costs
(6.5 percent).
The Philippines is not the easiest country to pay taxes in, according to a study
conducted by international audit firm PricewaterhouseCoopers (PwC).
Out of 189 economies reviewed in the report called “Paying Taxes 2015” for ease of
paying business taxes, the Philippines ranked 127.
In the country, it takes 193 hours for a business to comply with 36 required payments,
according to the PwC study. On average, a Philippine employer pays 42.5 percent in
taxes and contributions, 6 percent above the average tax rate in the Asia Pacific
region.
Sen. Francis Escudero, citing the study, said the Philippines has one of the most
tedious processes for paying taxes in the world and holds the highest income tax rate
in Asia.
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“Where else will you find a country that taxes its people severely and then makes it
hard for them to pay?” he said. Escudero further pointed out that the Philippines is
three ranks above Sierra Leone and 12 ranks ahead of Sudan.“In fact, it’s even easier
to pay taxes in Iraq, Iran and Afghanistan. What does that say about us?” he said. The
PwC study is completed annually and is included in the World Bank Group’s “Doing
Business” project. It attains its findings by assessing the length of time it takes mid-
sized companies to prepare, file, and pay its taxes; the number of taxes a business
must pay; the method of payment; and the total tax liability as a percentage of its
commercial profits.
On Monday, Oct. 19, the Malacanang said it would continue working to simplify the tax
paying process.
The government, through the Bureau of Internal Revenue, is taking measures to make
paying taxes more efficient to boost the economy, Presidential Communications
Operations Office Secretary Herminio Coloma Jr. said, according to CNN.Simplifying
taxes in the Philippines is key to sustaining the stability and growth it has attained in
the last five years, said Steve Forbes, chair and editor-in-chief of Forbes Manila,
according to InterAksyon.
Neighboring Asian nations ranked significantly higher than the Philippines,
including Hong Kong and Singapore, which ranked fourth and fifth with three and five
tax payments, respectively.
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“How can we encourage investors to come and put their money here when a third of
that will go to taxes that will be difficult to pay?” Escudero said.
The senator urged Filipinos to make tax reforms an election issue so more leaders
would back legislative efforts to amend the Tax Reform of 1997, according to
InterAksyon. “Everyone is now singing the same tune, even those who were hesitant
to support us in the past. And that’s fine. The important thing is to let this campaign for
tax reforms gather steam because it is a legitimate issue that begs to be addressed if
we want to sustain economic growth,” he said. United Arab Emirates and Qatar tied
for the top spot on the list, requiring four payments that could be completed in 12
hours and 41 hours, respectively.
Bolivia ranked last among the 189 countries, with its tax procedure requiring 42
payments that take 1,025 hours to complete.
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CHAPTER 3
METHODOLOGY
Research Methodology
This chapter contains the measure of the research used, the population, the
description of the respondents, research instruments used, the data gathering
procedures, and the statistical treatment of data.
To utilize the study, the descriptive research method was used. The
respondents of the study were the owners of small business enterprises in Pulilan
Market, who were the taxpayers. The researchers used the survey questionnaire to
gather data.
In data gathering, the researchers will personally distribute the survey
questionnaire to the respondents. It will be distributed to the business owners.
Research Method
The descriptive research method is used in gathering information to this study. This
method enables the researchers to interpret the theoretical meaning of the findings
and hypothesis development for further studies. Specifically the researchers utilize a
questionnaire type of descriptive research method which enables the researchers to
gather information to respondents, without the respondents any difficulties in
answering the questions required for the researchers to have information regarding to
the impact of taxation in small business enterprises.
27
For the researchers to be able to find out the factors affecting owners they used
a questionnaire survey and look for the majority answers that will be converted to
percentage. The result was analyzed by the researchers to see the relationship of
both variables. The researchers make a questionnaire about the factors affecting
owners in taxation, the method used by the researchers is both quantitative and
qualitative research. The researchers give some questionnaire to some participants.
The result of the students respond will be accurately computed and getting the
percentage of each.
Sampling and Sampling size
Selected entrepreneurial and small business with innovation and creativity were
test Questionnaire were administered were administered to the selected
entrepreneurial and small business owner. The entrepreneur and business owner
were sampled alone altogether for the purpose of this research work subjects were
sampled.
28
Table 1 - List of Respondents
Respondent Male Female Total
Sari-Sari Store 4 3 7
Owners
Hardware Owners 8 12 20
Drugstore Owner 1 2 3
Food Stall Owners 10 10 20
TOTAL 23 27 50
This table shows the respondents in our study. There were 25 males and 25
females with a total of 50 respondents.
Research Design
The research design that the researchers used was descriptive design. We used a
survey questionnaire as a research instruments to gathered information. The data
collection was based on the questionnaire distributed to the selected respondents.
The research study focus on the tax compliance of small scale businesses in Pulilan.
29
Chapter 4
Presentation, Analysis, and Interpretation of Data
This Chapter presents, analyzes and interprets the data gathered out of the
instruments used in the study presented according to specific problem. This is the
reproduction of research problems by way straight presentation of results in relation to
research hypothesis and research questions. The presentation of findings is based in
each of problem.
This chapter will draw upon the main themes and present the findings which
arose out of the interview process and subsequent data analysis. First and foremost, a
brief profile of each of the participants is presented.
30
Table 1
Frequency and Percent Distribution of the Respondents in Terms of Sex
Sex Frequency Percent
Male 23 46%
Female 27 54%
Total 50 100
Table 1 reveals that out of 50 respondents, 23 or 46% are male and 27 or 54% are
female. It may imply that there are more female who are owning a small business in
Pulilan than male. As we can see most of the female respondents are engaged in
putting up their own line of work or business.
31
Table 2
Frequency and Percent Distribution of the Respondents in Terms of Age
Age Frequency Percent
18 – 25 years old 2 4%
26 – 35 years old 11 22%
36 – 45 years old 28 56%
46 – 55 years old 7 14%
56 – 65 years old 2 4%
66 and above - -
Total 50 100
Table 2 shows that out of 50 respondents, 36 to 45 years old with the total of 28 or
56% of the respondents are the highest number of respondents in Pulilan who own a
small business that pays taxes followed by 26 to 35 years old with 11 or 22% of the
respondents, then 46 to 55 years old with 7 or 14 % of the respondents, and lastly
both 18 to 25 years old and 56 to 65 years old with 2 or 4% of the respondents with
the lowest number of small business owners. This implied that during the time of
distinguishing the questionnaire, businessmen ages 36 to 45 years old has the large
contribution in paying taxes among the respondents.
32
Table 3
Frequency and Percent in Distribution of the Respondents in terms of Civil
Status
Civil Status Frequency Percent
Single 12 24
Married 38 76
Total 50 100
Table 3 shows that out of 50 respondents, 38 or 76% of the respondents are married
and 12 or 24% of the respondents are single. It may imply that people who are
married have a higher number of people who own and manage small business than
people who are single.
33
Table 4
Frequency and Percent Distribution of the Respondents in terms of the
Types of Business
Types of Business Frequency Percent
Sole Proprietorship 45 90%
Partnership 5 10%
Total 50 100%
Table 4 shows that out of 50 respondents, Sole Proprietorship with 45 or 90%
respondents are the highest number of having a business followed by
Partnership with 5or 10% respondents have partners in managing their small
business.
34
Table 5
Frequency and Percent Distribution of the Respondents in terms of “Level of
Education”
Level of Education Frequency Percent
Elementary 15 30%
Secondary 28 56%
College 7 14%
Master or Higher - -
Total 50 100%
Table 5 it shows that the frequency and percentage of respondent by
educational level. The chart above represents the highest percentage which is
28 or 56% are respondents who are secondary level, next one is 15
respondents which is 30% came from elementary level, lastly 7 respondents
from college which is 14 %.
35
Table 6
Frequency and Percent Distribution of the Respondents in terms of
knowledge in purpose of taxes
“Do you have an idea

or knowledge in the Frequency Percent
purpose of taxes? “
Yes 13 26%
No 37 74%
Total 50 100%
Table 6 shows that out of 50 respondents, who own and manage small business, 13
or 26% only of small business owners, have the knowledge with the purpose of taxes
and 37 and 74% do not have enough knowledge or idea in the purpose of taxes.
36
Table 7
Frequency and Percent Distribution of the Respondents in terms of Tax
Avoidance being a Large Issue
Is Tax Avoidance a
Frequency Percent
Large issue?
Yes 16 32%
No 34 68%
Total 50 100%
Table 7 presents the frequency and percent distribution of respondents in terms of tax
avoidance being a large issue, among the 50 respondents, 34 or 68% of them thinks
that tax avoidance is not large issue while the 16 or 32% of the respondents think it is.
37
Table 8
Frequency and Percent Distribution of the Respondents in terms of their
Knowledge in the Differences of Direct and Indirect Taxes
Do you understand the

difference between direct and Frequency Percent
indirect taxes?
Yes 13 26%
No 37 74%
Total 50 100%
Table 8 presents the frequency and percent distribution of respondents in terms of
the knowledge of respondents between the differences of direct and indirect taxes. 37
or 74% of the respondents answered “No” which means they do not know the
differences between direct and indirect taxes while the 13 or 26% of the respondents
are well-informed of the differences of the two.
38
Table 9
Importance of Taxes in the Economy of the Country
“Do you think paying taxes is

important to the economy of the Frequency Percent
country?”
Agree 15 30%
Disagree 35 70%
Total 50 100%
Table 9 presents that among 50 respondents, 15 or 30% of the respondents thinks
that paying taxes is important to the economy of the business and 35 or 70% of the
respondents disagreed that taxes are important in the economy.
39
Table 10
Respondent’s Reason in Filing and Paying Taxes
“Reason why you file and pay

taxes if not, please state your Frequency Percent
reason. “
Avoid penalties 15 30%
For smooth and better transactions

3 6%
to customers
Other Reasons 36 64%
Total 50 100%
Table 10 presents that among 50 respondents, 15 or 30% of the respondent’s reason
of paying taxes is to avoid penalties and the 3 or 6% reason is for a smooth and better
transactions to customers. The 36 or 64% of the respondents stated other reasons
why they file and pay taxes: gives access to loans, you gain trust of the customers if
registered, great contribution to country’s economy while some of the respondents
stated why they do not pay taxes: business can run without tax, no benefit from tax,
paying taxes is voluntarily, and tax is just an expense.
40
Chapter 5
SUMMARY, FINDINGS, CONCLUSION, AND RECOMMENDATIONS
This chapter of the stated in concise from the findings based on the analysis
and interpretation of the data gathered out of the research instruments used and
presented according to problem in Chapter 1. Generalization in the form of conclusion
is presented and such solutions to the problem were passed on the form of
recommendations.
Summary
This study aims to determine the factors that affect the tax compliance of small
scale business owners in Pulilan. The profile of respondents in terms of age shows
that out of 50 respondents 36 to 45 years old with 28 or 56% of the respondents are
the highest number of small business owners in Pulilan, followed by 26 to 35 years old
with 11 or 22% of the respondents, and 46 to 55 years old with 7 or 14% of the
respondents, lastly 18 to 25 and 56 to 65 have 2 or 4% of the respondents. This
implies that most small business owners in Pulilan are ageing 36 to 45 years old. The
profile in terms of sex shows that there are more female in the field of business than
man. Among 50 respondents, 45 of them are sole proprietors and the remaining 5 are
in partnership business. Out of 50 respondents, 38 or 76% of the respondents are
married and 12 or 24% of the respondents are single. It may imply that people who
41
are married have a higher number of people who own and manage small business
than people who are single. The survey shows the level of education of the most
respondents is secondary or high school level with 28 or 56%. In terms of the idea or
knowledge in the purpose of tax, 13 or 26% of small business owners do not know
what the purpose of filing and paying taxes. During the time of distinguishing
questionnaire, they were asked if tax avoidance is a large issue and 34 out of 50
respondents answered no which means that some or most of the respondents are
avoiding paying their taxes. In terms of the knowledge of regarding to direct and
indirect taxes only 13 out of 50 respondents know the difference between the two. The
respondents were asked if they agree that tax compliance is important to the economy
of the country, out of 50 respondents 15 or 30% agreed that tax compliance is
important to the growth of economy in the country. The highest number of business
owners in Pulilan is ranging 36 to 45 years old and most of them are sole proprietor
that does not have an experience in Finance Sector. Out of 50 respondents, 34 think
that tax avoidance is not a large issue but this also implies that they know the
effectiveness of tax because when they were asked if they were given a chance to
relocate the tax purposes they would do it.
42
Findings
The following are the significant findings of the study
Profile of the Respondents
Majority of the respondents were 36 to 45 years old and mostly were female 27
or 54% while male are 23 or 46% owning and managing a small scale business in
Pulilan. Out of 50 respondents 45 or 90% of them are single proprietor and 38 or 76%
of them are already married.
Conclusions
The objective of the study was to determine the tax compliance of small scale
businesses in Pulilan. On the profile of respondents, among the owners of small
business most are in the age ranging 36 to 45 years old. These respondents are one
of the 16 people who think that tax avoidance is a large issue. On the other side 18 to
26 and 56 to 65 are the least in the line.
Based on the study, majority of the respondent’s educational attainment is
secondary level and do not have an experience in any finance sector. Also during the
time of distinguishing the questionnaire, 74% of the respondents lack the knowledge
about taxation. This could be the reason why businessmen in Pulilan think that tax
avoidance is not large issue.
43
Recommendations
1. Government or Pulilan Municipality may use this study as a basis on acquiring
ideas about strategy to encourage the small businessmen in Pulilan to pay
taxes
2. Non-taxpayers lack the knowledge of what is the purpose of taxes and how it
helps the economy of the country
3. This study could be a help to evaluate the relevance of tax compliance of small
scale businesses in Pulilan
4. The study shows that 68% of the respondents in Pulilan think that Tax
Avoidance is not a large issue. Conducting a seminar to educate may help the
respondents.
44
Bibliography
Doing Business (2017) Paying Taxes [online] Available from:

http://www.doingbusiness.org/data/exploretopics/paying-taxes/why-matters
[Accessed: 1st September 2018]
Bernadette Kamleitner, Christian Korunka, Erich Kirchler, (2012),"Tax compliance of

small business owners: A review", International Journal of Entrepreneurial Behaviour&
Research, Vol. 18 Iss: 3 pp. 330 - 351
CNN Philippines (2018) Small businesses are big winners in tax reform [online]
Available from: http://cnnphilippines.com/business/2018/01/08/MSMEs-tax-reform.html
[Accessed: 1st September 2018]
Entrepreneur Philippines (2016) Paying taxes: A guide for the self-e mployed and
professionals [online] Available from: https://www.entrepreneur.com.ph/run-and-
grow/paying-taxes-a-guide-for-the-self-employed-and-professionals-a1537-20160804-
lfrm [Accessed: 1st September 2018]
Inquirer.net (2014) Small stores, farmers, fishers, others should pay taxes—BIR
[online] Available from: http://business.inquirer.net/163908/small-stores-farmers-
fishers-others-should-pay-taxes-bir#ixzz5QdNHbQED [Accessed: 1st September
2018]
The Manila Times (2018)The TRAIN Law and MSMEs [online] Available from:
https://www.manilatimes.net/train-law-msmes/379507/ [Accessed: 1st September
2018]
PrinzMagtulis (2016) Study shows 35% of Philippine firms pay only 2% income tax
[online] Available from: https://www.philstar.com/business/2016/10/05/1630606/study-
shows-35-philippine-firms-pay-only-2-income-tax#KhzeD17ubr0iuaOs.99 [Accessed:
3rd September 2018]
45
APPENDIX A: SURVEY/QUESTIONNAIRE
As part of our THESIS WRITING (ENMA 4073), we students of BSE 3-2

conducted this survey to gather information regarding “TAX COMPLIANCE OF
SMALL SCALE BUSINESSES IN PULILAN”
Name (optional): __________________________________ Sex ___________
Profession: _______________________________________
1. What is your sex?

__Male __Female
2. What is your age?

__ 18 to 25 __56 to 65
__ 26 to 35 __65 and above
__ 36 to 45
__ 46 to 55
3. What is your Civil Status

__ Single
__ Married
4. What type of business do you have?

__ Single Proprietorship
__ Partnership
5. What is the highest level of education you have completed?

__ Elementary
__ Highschool
__ College
__ Masters or Higher
6. Do you have an idea or knowledge about the purpose of taxes?

__ Yes __ No
46
If yes, what do you is the best benefit of paying taxes;
__ Clean record for commencing business

__ Country Infrastructure growth
__ Social security
__ Others
7. Do you feel tax avoidance is a large issue?

__ Yes __ No
8. Do you understand the difference between direct and indirect taxes?

__ Yes __ NO
9. Do you think tax is important to the economy of the country?

__ Yes __ NO
10. Why you file and pay taxes, if not please state your reason?
__ Avoid Penalties
__ for smooth and better transactions to customer
__ Others
Reason_________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
47
APPENDIX B: FORMULA
1. The study and Percentage Distribution:
In statistics, these tables that displays the frequency or count of the
occurrences of values within a particular group or interval and in this way each
table summarizes the distribution of the value in the sample.
Frequency distributions were used for both qualitative and quantitative data.
F=n100/P
Where P = Percentage
n = number of samples or total of respondents
100= Constant
2. Percent Distribution
Is just way to present statistical data, it shows how the results are distributed in
percentages. This is probably the most common way to present data. It is a
frequency distribution in which the individual frequencies are expressed as a
percentage of the total frequency equated to 100.
P= (f/n) 100
Where f = frequency
N = number of samples or total of respondents
48
APPENDIX C: CERTIFICATION OF EDITING
Bachelor of Science in Entrepreneurship
S.Y. 2018 – 2019
CERTIFICATION
The thesis entitled
“The Effectiveness of Tax in Small Scale Business in Pulilan Market”
By
Anna Mariela A. Cruz

Jallene D. Espino
Rudy S. Maestre
Chaser Jane R. Mutas
Juliena E. Ramirez
was proofread by the undersigned.

The certification was issued on March 2018 upon the researchers’ request for
whatever legal it may serve
Prof. Mercedita Mag-isa
49
285 Sandicost.Lumbac espinojallene@yahoo.com

Pulilan, Bulacan, PH (0955) 429-2204
Jallene D. Espino
OBJECTIVES To be part of your company, apply my knowledge, skills

and attitude, and compete as your asset
QUALIFICATION Able to adjust in a variety of working environment. Efficient,

hardworking, and have a strong determination to learn
more and to be successful in the chosen field.
EXPERIENCE June 5 – July 18 Municipality of Pulilan
 (Special Program for

Employment of Students)
EDUCATION
Tertiary Polytechnic University of the

Philippines
2016 – Present Bachelor of Science in
Entrepreneurship
Poblacion, Pulilan, Bulacan
2012 – 2014 Bulacan State University

Bachelor of Science in Information Technology
Malolos, Bulacan
50
Secondary St. Dominic Academy

2008 – 2012 Poblacion, Pulilan, Bulacan
Elementary St. Gabriel Academy of Pulilan

2002 – 2008 Paltao, Pulilan, Bulacan
AWARDS Polytechnic University of the Philippines

Academic Excellence
PERSONAL DATA
Birth Date: November 15, 1995
Place of Birth: Pulilan, Bulacan
Age: 21 years old
Civil Status: Single
Religious Affiliation: Roman Catholic
Citizenship: Filipino
Height: 5 ft. and 2 inches
Weight: 49 kilograms
Mother’s Name: Arlyn Espino
Father’s Name: John Ronald Cunanan
CHARACTER Mr. Reynaldo Barrera

REFRENCE/S Professor
P.U.P Sta. Mesa, Manila
(0935) 201 1932
I HEREBY CERTIFY that the above information herein are true and
correct to the best of my knowledge and belief.
Jallene D. Espino
51
Anna Mariela Cruz

Address : 424 Angeles Street, Pulilan, Bulacan
Email Address : annamariela99@yahoo.com
Contact No. : 09051637631
OBJECTIVE
To be able to utilize my skills for personal growth and to render a good service and
at the same time to broaden my knowledge and experience for further career
improvement.
QUALIFICATIONS
 Dedicated and hardworking individual

 Willing to learn
 Exposed and interacted with a variety of personality
PERSONAL DATA
Age : 19 years old

Birth date : March 17, 1999
Birth place : Sta.Peregrina, Pulilan, Bulacan
Gender : Female
Height : 5’1”
Weight : 52 lbs
Citizenship : Filipino
Civil Status : Single
Father : Edgardo Cruz
Mother : Cecilia Cruz
Religion : Roman Catholic
52
EDUCATIONAL ATTAINMENT
TERTIARY Polytechnic University of The Philippines

National Road Pulilan, Bulacan
2016 – PRESENT
SECONDARY Sta. Peregrina High School

Balatong B. Pulilan, Bulacan
2008 – 2012
PRIMARY Balatong Elementary School

Balatong A. Pulilan, Bulacan
2002 – 2008
CHARACTER REFERENCES
Mr. Reynaldo T. Barerra

Professor
09352011932
I hereby certify that the above information herein are true and correct to the best of
my knowledge and belief.
Anna Mariela A. Cruz
53
Juliena E. Ramirez
Address : Tramo Taal, Pulilan, Bulacan
Email Address : julienaeramirez@yahoo.com
Contact No. : 09558742733
OBJECTIVE
To pursue a career that allows me to contribute and use my service, strengths, and
skills in my efficient way possible.
PERSONAL DATA
Age : 22 years old

Birth date : March 15, 1996
Birth place : Sto.Cristo, Pulilan, Bulacan
Gender : Female
Height : 5’1”
Weight : 52 lbs
Father : Mariano Reyes Ramirez
Mother : Nilda Espiritu Ramirez
54

2016 – PRESENT
SECONDARY Bajet – Castillo High School

Longos Pulilan, Bulacan
2008 – 2012
ELEMENTARY Sto.Cristo Elementary School

Sto. Cristo Pulilan, Bulacan
2002 – 2008
Mr. Emman L. Del Rosario Mr. Reynaldo T. Barerra

Call Center Agent Professor
Pulilan, Bulacan PUP Sta. Mesa, Manila
09777872440 09352011932
my knowledge and belief
Juliena E. Ramirez
55

Address : 102 Mabini St. Poblacion Pulilan, Bulacan
Email Address: Chasermutas@yahoo.com
Contact No. :09753646220
OBJECTIVE
To be able to utilize my skills for personal growth and to render a good service and
at the same time to broaden my knowledge and experience for further career
improvement.
QUALIFICATIONS

PERSONAL DATA
Age : 20 years old

Birth date : August 31, 1998
Birth place : Poblacion Pulilan, Bulacan
Gender : Female
Height : 5’2”
Weight : 53 lbs
Father : Crisanto A. San Pedro
Mother : Erna M. Castro
56

2016 – PRESENT
SECONDARY St. Dominic Academy

Poblacion Pulilan, Bulacan
2010 – 2015
PRIMARY Pulilan Central Elementary School

San Francisco Street Poblacion, Pulilan, Bulacan
2004 – 2010
Ms. Melina Rose Nones Mr. Reynaldo T. Barerra

Redbucks Owner Professor
Pulilan, Bulacan PUP Sta. Mesa, Manila
09234758303 09352011932
57
Rudy S. Maestre
Address : 294 Rizal Street. Pulilan, Bulacan
Email Address : rudymaestre@yahoo.com
Contact No. : 09051637631
OBJECTIVE
To attain a position wherein I can apply my full potential and knowledge, my

willingness to learn and passion to grow in my field of specialization for continuous
career improvement.
QUALIFICATIONS

PERSONAL DATA
Age : 21 years old

Birth date : November 02, 1997
Birth place : Oras, Eastern Samar Leyte
Gender : Male
Height : 5’3”
Weight : 54 lbs
Father : Antonio Maestre
Mother : Lydia Maestre
58
Background Education

2016 – PRESENT
SECONDARY St. Dominic Academy

2010-2015
Elementary Pulilan Central School

2007-2010
CHARACTER REFERENCE/S
Mr. Reynaldo T. Barerra

Professor
09352011932
Rudy S. Maestre
59
60

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POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

PROBLEM AND ITS BACKGROUND

This chapter present the introduction, background of the study, conceptual

scope and limitation.

interest costing it a lot of money.

Taxation is the imposition of a mandatory levy on the citizens of a

or by a self-employed individual. In the case of a small, owner managed company, for

proprietors choose to take their remuneration.

may also be placed at a competitive disadvantage compared with larger firms by

Economic growth in every country is defined by the performance of its

production sector. In many highly developed countries a great share of production is

manufactured by small enterprises an important part of their market economies.

The development of small enterprises is greatly affected by the level of

Background of the study

the viewpoint of providing employment opportunities, self-reliance in basic food and

development for many developing countries is to devote a lot of energy to the

development of small business enterprises. The modern economist’s small business

development as a necessary step for rapid growth. Every profit-oriented organization

assets, liabilities, expenditures and capital structure of an organization. Tax which is a

form of liability is a board area in management, and financial account, and it is

imperative. Considering how tax can affect the success of an organization, it is

avoidance techniques. Reducing tax liability is similar to reducing expenses. If tax

study as the basis of designing the conceptual framework.

Input Process Output

Statement of the problem

Specifically, this study seeks to answer the following questions:

 Direct and Indirect Taxes

 Importance of tax in the economy of the country

 Reasons why the respondents file and pay taxes

Importance of the study

Importance of Taxes in Society:

Without taxes, governments would be unable to meet the demands of their

finance social projects. Some of these projects include:

Without taxes, government contributions to the health sector would be impossible.

Taxes go to funding health services such as social healthcare, medical research,

social security, etc.

Education could be one of the most deserving recipients of tax money.

Governments put a lot of importance in development of human capital and education

is central in this development. Money from taxes is channeled to funding, furnishing,

and maintaining the public education system.

Governance is a crucial component in the smooth running of country affairs. Poor

effective protection of public interest.

Scope and Limitations of the study

the effectiveness of tax in small scale business by gathering information through a

Significance of the study

The study of tax of small businesses in Pulilan is great importance to economic

owner the study also help to gain some information.

Abatement – A reduction in the assessment of tax, penalty or interest when it is

determined the assessment is incorrect.

Arbitration – Term used for determination of a dispute by the judgment of one or

not belong to a normal court of competent jurisdiction.

Alimony – regular payment made to an ex-spouse or to a legally separated spouse.

20/200 with their best eye using contacts.

Efile – to electronically file tax return. To file your taxes online.

Excise Tax – a special tax on using or selling certain product or services.

regardless of income level.

Review of Related Literature

to have a better understanding and a wider perspective on this investigation.

public investments to promote economic growth and development. Programs

providing health, education, infrastructure and other amenities are important to

require that governments raise revenues. This is so even in low-income economies

by promoting their accountability to taxpaying citizens and by encouraging effective

administration and good public financial management.