INCOME TAXATION

Preservation of book of accounts All the books of accounts, including the subsidiary books and other accounting records of corporations, partnerships or persons shall be preserved by them within 3 years (except in case of a false or fraudulent return) from the Last entry in each book and for which period the commissioner is authorized to make an assessment Exception: 1. Fraud, irregularity or mistakes as determined by the commissioner; 2. The taxpayer request reinvestigation; 3. Verification or compliance with withholding tax laws and regulation; and 4. In the exercise of the commissioners power to obtain information from other persons, in which case, another or separate examination and inspection may be made Keeping of book accounts All corporations, companies, partnerships or persons required by law to pay internal revenue taxes shall keep a journal and a ledger, or their equivalents. 1. Those whose gross quarterly sales, earning receipts or output do not exceed fifty thousand pesos (50,000) shall keep and use a simplified set of bookkeeping records duly authorized by the secretary of finance wherein all transaction and results of operation are shown. 2. Those whose gross quarterly sales, earnings receipts or output exceed one hundred fifty thousand pesos (150,000) shall have their books of accounts audited and examined yearly by independent certified public accountant and their income tax returns accompanied with a duly accomplishment account information form (AIF).

Electronic Record Keeping Requirements Electronic Record use to established tax compliance shall contain sufficient transaction-level detail information. Miller, Owner or Dealer of Molasses Every miller, owner or dealer of molasses shall maintain an official register book (ORB) wherein all molasses produced and removed shall be recorded likewise, for every removal of molasses, an official delivery invoice (ODI) shall be issued to cover the shipment. Registration Requirements Per revenue regulations 11-2008, every person subject to any internal revenue tax, which is expected to be paid periodically, shall register with appropriate revenue district officer: 1. Employees, within ten (10) days from the date of employment 2. Self employed individuals, professionals, estate and trusts and their branches, if any; branches of corporation: on or before the commencement of business 3. Corporations, (whether taxable or no taxable): before payment of any tax due 4. Partnership, associations, cooperatives, government agencies and instrumentalities (GAIs), GOCCs, Local government units (LGU): before or upon filing a return, statement or declaration as required by the NIRC. Annual registration fee an annual registration fee of 500 for every separate or distinct establishment or place of business The following shall be exempt from the imposition of annual registration fee: 1. Cooperatives duly registered with the cooperative development authority (CDA) 2. Individuals earning purely compensation income whether locally or abroad; 3. Overseas workers; 4. GAIs, in the discharge of their government function; 5. Marginal income earners; 6. LGUs, in the discharge of their government function

7. Tax exempt persons such as those enumerated under section 30 of the code, as amended, in pursuance of tax exempt activities; 8. Non-stock/non profit organizations not engaged in business; 9. Persons subject to tax under one-time transaction; and 10. Facilities where no sales transaction occur Registration of each type of internal revenue tax every person who is required to register with the BIR shall register each type of internal revenue tax for which he is obligated Transfer of registration in case a registered person decides to transfer his registered address, or business address of his head office or branches. It shall be his duty to inform the RDO where he is registered by filing the prescribed BIR from specifying therein the complete address where he intends to transfer Other Updates any person registered shall update his registration information with the revenue district office where is registered, specifying therein any change in tax type and other taxpayer details Cancellation of registration the registration of any person who cases to be liable to a certain tax shall be cancelled upon filing with the revenue district officer where he is registered, an application for registration information update in a form prescribed there for Taxpayer Identification Number (TIN) this is the reference index number issued and assigned by the BIR to each and every person registered in its database The following are the person required to secure TIN: 1. Every person subject to national internal revenue taxes; 2. Person required withholding taxes on account of his income payments made to taxable individuals or entities; 3. Any person required under the code to make, render or file a return, statement or other document whereby it is required to indicate his TIN in such return, statement or document filed with the BIR for his proper identification for tax purposes;

4. Applications to open bank account and application for loan with banks, financial institutions and other financial intermediaries; 5. Application for mayors permit; 6. Application for business license with the department of trade and industry (DTI); 7. Other documents as specified in the regulations. Issuance of Receipts, Sales Invoice or Commercial invoice Issue duly registered receipts, sales invoice or commercial invoice, prepared at least in duplicate, showing the date of transaction, quality unit cost and description of merchandise or nature of service. The BIR permits use of cash register and point-of-sale (POS) machine. The permit shall be issued only to proprietors, owner or operators of any of the following lines of business and other similar establishments: 1. supermarket 2. department stores 3. drugstores 4. bookstores 5. groceries 6. restaurants, bars, refreshments parlors, and other eating places etc., Computerized Accounting System is defined as the integration of different component systems to produced computerized books of accounts and computergenerated accounting records and documents. The following are its components: 1. General journal and other subsidiary record 2. Sales, purchases, accounts receivables, accounts payables and inventory books; payroll ledger, subsidiary ledger and other accounting records.

3. Any application system which generates a subsidiary ledger and is part of official accounting documents, such as official receipts, sales and cash invoices, cash vouchers, journal vouchers, billing statements, sales tickets, etc.; 4. Any application system which generates reports requirements by the BIR; and 5. Point-of-sale machine/cash register machine connected to a network or linked to a CAS. Common CAS Application 1. Point-of-Sale (POS) - terminal is a computerized replacement for a cash register 2. Cash Register Machine (CRM) uses a firmware, which is installed on a chip called electronic programmable read-only memory (EPROM). 3. Electronic Invoicing System (e-Invoicing) refers to the system developed and maintained by the eBuyer or e-Seller or both in issuing invoice electronically through the internet 4. Responsibility of External Auditors 5. Starting 2005, only financial statements audited by external auditors accredited by the BIR shall be accepted, except as provided under Section 232 of the NIRC (RR 13-06, Apr. 3, 2006). 6. Unless a longer period of retention is required under the Tax Code or other relevant laws (e.g., The Accountancy Law, etc.), the independent CPA who audited the records and certified the financial statements of the taxpayer, equally as the taxpayer, has the responsibility to maintain and preserve copies of the audited and certified financial statements for a period of three (3) years from the due date of filing the annual income tax return or the actual date of filing thereof, whichever comes later. This is in addition to all other responsibilities of the independent CPA under other pertinent provisions of the Tax Code and implementing regulations, including generally accepted auditing standards, and applicable jurisprudence (RR 21-02, Sept. 18, 2002).

Statement of Managements Responsibility The Annual Income Tax Return is primarily the responsibility of the management of the taxpayer. All taxpayers required to file annual income tax return under the NIRC, as amended, shall be required to submit a statement of management's responsibility as follows: Statement of Management's Responsibility for Annual Income Tax Return The Management of the taxpayer is responsible for all information and representations contained in the Annual Income Tax Return for the year ended. The Management is responsible for all information and representations contained in all the other tax returns filed for the reporting period, including, but not limited, to the value added tax and/or percentage tax returns, withholding tax returns, documentary stamp tax returns, and any and all other tax returns Management affirms that: 1. The Annual Income Tax Return has been prepared in accordance with the provisions of the NIRC, as amended, and pertinent tax regulations and other issuances of the Department of Finance and the Bureau of Internal Revenue; 2. Any disparity of figures in the submitted reports arising from the preparation of financial statements pursuant to financial accounting standards and the preparation of the income tax return pursuance to tax accounting rules has been reported as reconciling items and maintained in the company's books and records in accordance with the requirements of Revenue Regulations No. 8-2007 and other relevant issuances; 3. The taxpayer has filed all applicable tax returns, reports and statements required to be filed under Philippine tax laws for the reporting period, and all taxes and other impositions shown thereon to be due and payable have been paid for the reporting period, except those contested in good faith. Accreditation of tax practitioners and agents Tax practitioners and agents (TAPs) are persons who are engaged in tax practice and thus are required to apply for accreditation with the BIR, they are as follows:

1. Those who are engaged in the regular preparation, certification, audit and filing of tax returns 2. Those who are engaged in the regular preparation of request for ruling, petitions for reinvestigation, protests, requests for refund or tax credit certificates 3. Those who are regularly appear in meetings, conferences, and hearings The following individuals are allowed to appear and practice before the BIR without undergoing accreditation proceedings:

individual-tax payers acting on their own behalf, provided they present satisfactory identification. Members of the Philippine Bar not suffering from suspension/disbarment. However, they may at their option, apply accreditation. other individuals presenting satisfactory proof of identification or authority in any one of the following circumstances of limited practice or special appearances:

1. An individual representing a member of his or her immediate family. 2. A regular full-time employee representing an individual employer. 3. A bona fide officer or a regular full-time employee; 4. A trustee, receiver, guardian, administrator, executor or regular full-time employee. 5. An officer or a regular employee of a government unit and agency.