7 August 2014
The Commissioner of Internal Revenue (“CIR”) has issued Revenue Regulations (“RR”) No. 5-2014 dated 30 July 2014 to amend Revenue Regulations No. 17-2013 on the preservation of books of accounts and other accounting records.
The salient portions of the RR are as follows:
1. Taxpayers are required to preserve their books of accounts for a period of ten (10) years, which shall be reckoned from the day following the deadline in filing the return, or if filed after deadline, from the date of filing of the return, for the taxable year when the last entry was made in the books of accounts. Within the first five (5) years thereof, taxpayers are required to retain hardcopies. Thereafter, taxpayers may retain only an electronic copy thereof provided that the same is stored via an Electronic Storage System (“ESS”).
2. The independent CPA who audited the records and certified the financial statements of the taxpayer is also required to maintain and preserve electronic copies of the audited and certified financial statements and their audit working papers for 10 years from due date of filing of the annual income tax return or the actual date of filing thereof, whichever comes later.
3. Taxpayers and independent CPAs who use an ESS must completely transfer images of the hardcopies of above documents. They should have reasonable controls to ensure the integrity, accuracy, and reliability of their ESS.
4. The Revenue District Office who has jurisdiction over the taxpayer may periodically initiate tests of the ESS.
This RR is effective fifteen (15) days after its publication in at least two (2) newspapers of general circulation. It was published on 1 August 2014.