Preservation of Books of Accounts

All books of accounts, subsidiary books, and accounting records shall be preserved from the last entry until the expiration of the assessment period.
Assessment period generally three (3) years after the last day for filing tax returns (Section 203).
Records must be kept longer if investigations relate to fraud, falsity, omission, or if there is a waiver of the statute of limitations (Section 222).
The retention period is effectively ten (10) years to cover possible extended assessments or audits.

Normal limitation for assessment and collection of taxes is three (3) years after filing deadline.
If returns are filed late, the three-year period starts on the filing date.
In cases of fraud or failure to file, taxes may be assessed within ten (10) years after discovery of the fraud or omission.
The Commissioner and taxpayer may agree in writing to extend the assessment period.
Pending tax cases requiring the books as evidence must maintain records until final resolution.

Subject to examination regardless of exemption to ensure compliance with conditions for tax incentives.
Their tax liabilities may still be assessed based on examination findings.

Certified Public Accountants who audited and certified financial statements must preserve copies of audited statements for ten (10) years from the due date or date of filing of the income tax return.

Books and all supporting documents must be kept at the place of business and submitted immediately upon demand.
Inspection may occur onsite at the taxpayer’s place of business or at BIR offices.
Inspections may be part of regular or extraordinary audits, exchange of information with foreign tax authorities, or other official inquiries by the Commissioner.

Violations of these regulations will be penalized under Sections 266, 275, and other relevant provisions of the NIRC.
Penalties may also be imposed under the Exchange of Information on Tax Matters Act of 2009 (RA 10021).

Previous inconsistent internal revenue issuances and rulings are amended or revoked.
Regulations become effective fifteen (15) days after publication in two (2) newspapers of general circulation.