Key Definitions
- Database Management System: software that manages data accessibility.
- Electronic Data Interchange (EDI): structured computer-to-computer business transactions.
- Electronic Record: electronic format information, excluding paper-based or storage-only imaging.
- Electronically Readable Form: non-proprietary, compatible, useable electronic copy.
- Storage-only Imaging System: hardware/software for storing paper source documents without data manipulation.
- Taxpayer: entities required to keep books for tax liability determination.
- Electronic Record Keeping: electronic systems to create, process, store financial records.
- Media: physical form of stored information (paper, disks, tapes).
- CD-R/DVD-R: write-once optical storage media.
General Electronic Recordkeeping Requirements
- Taxpayers must maintain all records for accurate tax liability determination.
- Records held in both electronic and hard-copy must be made available electronically upon request.
- Compliance demonstration via hard-copy documents is allowed but does not exempt electronic record obligations.
Requirements for Large Taxpayers
- Large Taxpayers must maintain CAS with books in electronic format.
- Manual book maintainers must register CAS by December 31, 2009.
- Software deficiencies do not exempt recordkeeping responsibilities.
Electronic Records Specific Requirements
- Records must contain detailed transaction-level information for tax verification.
- Records must be retrievable and convertible to standard format per RR No. 16-2006.
- Records are to be created only in the ordinary course of business; no construction of records otherwise required.
EDI Requirements
- Records from EDI must equal detail level of paper records.
- Codes used for data elements must be convertible to auditable formats.
- Original EDI documents need not be retained if an audit trail and required information are preserved.
Electronic Data Processing System Requirements
- Electronic accounting systems must provide detailed audit trails linking source documents to financial accounts.
- Taxpayers must retain source documents supporting electronic records.
Business Process Information
- Taxpayers must provide descriptions of business processes generating records upon BIR request.
- Must demonstrate system controls, data flow, and anti-tampering measures.
- Documentation includes record layouts, field definitions, file descriptions, and account charts.
- Certain mandatory fields required for key accounting journals and books.
Transaction Integrity and Security Controls
- Access control limiting user permissions.
- Input/output controls ensuring accuracy and security.
- Processing controls maintaining information integrity.
- Backup controls for recovery and preservation.
- Modification of records allowed only via documented journal entries with full details.
Changes to Business Systems
- Access to historical data must be preserved during system changes.
- Detailed documentation of changes required and must be reported before implementation.
- New systems must maintain adequate detail, audit trails, internal controls, data export capability, backup procedures, and BIR access.
Electronic Records Maintenance and Storage Location
- Extraction and conversion capabilities per RR No. 16-2006 are required.
- Backup media must follow manufacturer guidelines, stored safely away from hazards.
- Taxpayers must ensure proper archiving and backup effectiveness.
- Backup procedures require labeling, logging, software/version info, periodic testing.
- Records must be stored primarily in the Philippines or designated places; foreign-held records can comply if copies accessible locally.
- Backup copies to be stored locally for disaster recovery.
- Internet-hosted businesses must maintain records within the Philippines.
- Third-party custodians require prior BIR notification; taxpayer remains liable.
Access and Submission of Electronic Records
- Access to records can be through provision of equipment and personnel by taxpayer or third-parties.
- Records may be submitted in standard record format on agreed media with original files.
- Alternative methods may be agreed upon.
Alternative Storage Media
- Conversion of hardcopies to microfilm, microfiche, or storage-only imaging is allowed with conditions.
- Documentation of conversion procedures and quality assurance required.
- Secure storage, clear labeling, and authorized destruction protocols must be observed.
- Legibility and readability standards mandated.
- BIR may require facilities for document reproduction.
- Prior BIR approval needed before use.
Effect on Hard-Copy Records
- Requirement to retain paper originals remains, unless no hard-copy produced in ordinary business.
- Credit/debit card transaction printouts must be kept unless equivalent details are electronically retained.
- Temporary computer printouts need not be retained.
- BIR may request hard-copy substitutes during audits.
Retention Period
- Records to be retained pursuant to Section 235 of NIRC unless BIR states otherwise.
Registration
- All computerized books, electronic systems must be registered per RMO No. 29-2002 and related issuances.
Penalties
- Violations subject taxpayer to prosecution per Section 255 NIRC penalties plus others applicable.
Repealing Provisions
- Inconsistent prior regulations revoked or amended.
- Partial invalidity of provisions does not affect others.
Effectivity
- Regulations effective 15 days post-publication in a general circulation newspaper.