Bookkeeping Requirements
- All covered entities must keep a journal and a ledger or their equivalents to record financial transactions.
- Entities with gross quarterly sales, earnings, receipts, or output not exceeding ₱5,000 can maintain a simplified set of bookkeeping records.
- The simplified bookkeeping system must be officially authorized by the Secretary of Finance.
- These records must reflect all transactions and operational results to enable accurate and timely tax assessment.
Audit Requirements for Larger Entities
- Entities with gross quarterly sales, earnings, receipts, or output exceeding ₱25,000 must have their books of accounts audited and examined annually.
- Audit must be performed by Independent Certified Public Accountants (CPAs).
- Income tax returns of these entities should be submitted alongside certified financial statements including:
- Balance sheets
- Profit and loss statements
- Schedules listing income-producing properties and corresponding incomes
- Other relevant statements necessary for tax assessment.
Legal Effectivity
- The amendment is effective immediately upon approval, setting binding bookkeeping and audit standards from that date.
Key Legal Concepts
- Clarification of bookkeeping duties differentiates between small and large taxpayers based on quarterly gross revenue.
- Emphasizes government oversight of tax compliance through mandated audits and detailed financial disclosures for larger taxpayers.
- Establishes authority of the Secretary of Finance in regulating simplified bookkeeping systems.
- Facilitates accurate taxation by ensuring transparency and verifiability of financial records for all taxable entities.