QuestionsQuestions (BIR REVENUE REGULATIONS NO. 17-2013)
All books, registers, records, vouchers, and other supporting documents must be preserved intact, unaltered, and unmutilated, and kept at all times in the place of business of the taxpayer, ready to be produced upon demand.
The regulations are issued pursuant to Section 244, in relation to Sections 5, 6, 203, 235, and 222 of the National Internal Revenue Code of 1997 (NIRC), as amended.
Under Section 235, the books and subsidiary records must be preserved from the last entry in each book until the last day prescribed by Section 203 within which the Commissioner is authorized to make an assessment.
Internal revenue taxes shall be assessed within three (3) years after the last day prescribed by law for the filing of the return (or counted from the day the return was filed if filed beyond the period prescribed).
In cases of false/fraudulent returns with intent to evade tax or failure to file, assessment may be made at any time within ten (10) years after discovery of the falsity, fraud, or omission; thus records must be preserved beyond the usual 3-year period.
If before the expiration of the Section 203 period, both the Commissioner and the taxpayer agree in writing to assess after such time, the tax may be assessed within the agreed period; records must be retained for the extended/waived period.
All taxpayers must preserve books of accounts, including subsidiary books and other accounting records, for ten (10) years.
It is reckoned from the day following the deadline in filing a return, or if filed after the deadline, from the date of filing of the return for the taxable year when the last entry was made in the books.
It includes corresponding invoices, receipts, vouchers and returns, and other source documents supporting the entries in the books of accounts.
“Last entry” refers to the particular business transaction or item thereof that is entered or posted last/latest in the books when closed; it determines when the retention period for related records is counted.
If the taxpayer has a pending protest or claim for tax credit/refund and the books/records concerned are material to the case, the taxpayer must preserve those records until the case is finally resolved.
The independent CPA who audited and certified financial statements must also maintain and preserve copies for ten (10) years from the due date of filing the annual income tax return or the actual filing date, whichever comes later.
They must be kept at all times at the taxpayer’s place of business, subject to inspection by internal revenue officers; upon demand they must be immediately produced for inspection.
For regular or extraordinary audits, for requests for exchange of information by foreign tax authorities under Sections 6 and 71 of the NIRC, and under the Commissioner’s information-gathering power under Section 5 of the NIRC, among others.
Violations are subject to penalties provided in Sections 266, 275, and other pertinent provisions of the NIRC, and Section 6 of Republic Act No. 10021 (Exchange of Information on Tax Matters Act of 2009).
It takes effect fifteen (15) days after its publication in at least two (2) newspapers of general circulation.