Inventory Reporting and Penalties Circular

Applies to taxpayers maintaining inventories of stock-in-trade, raw materials, goods in process, supplies, and other goods.
Covers sectors including manufacturing, wholesaling, distributing/retailing, real estate dealings/development, and service companies such as construction firms.
Requires reconciliation of the submitted inventory schedules and lists with financial statements and annual income tax returns.

Taxpayers with tangible asset-rich balance sheets must submit, alongside the annual inventory list, additional prescribed schedules/lists.
Formats specified for manufacturing/merchandising or retail companies, real estate companies, and construction industries, as provided in various annexes.
Other industries to adopt the format applicable to their existing inventory.
Submissions include both hard and soft copies; soft copies to be stored in DVD-R, properly labeled.
A notarized certification must accompany submissions, certifying accuracy and truthfulness of the data.
Initial filing deadline was September 30, 2015, for inventory ending December 31, 2014, with subsequent filings due every 30 days after the taxable year end per Bookkeeping Regulations (Section 13 of Revenue Regulations No. V-1).
Submission to be made to the relevant Revenue District Office or Large Taxpayers Service offices depending on taxpayer classification.
Non-conforming submissions will be considered not received, potentially leading to penalties.

Persons liable for internal revenue taxes must keep an inventory book detailing quantity, description, unit, and total cost of all stocks.
Initial inventory to be filed within 10 days after business start or securing privilege tax receipts.
Annual inventories must be filed within 30 days after calendar or accounting year end.
Extensions may be granted for meritorious cases by the Commissioner.

Violations punishable under Sections 250 and 255 of the National Internal Revenue Code (NIRC) of 1997, as amended.
Penalties for failure to file information returns, schedules, reports, or keep records: PhP 1,000 per item, with an aggregate cap of PhP 25,000 annually.
More severe penalties including fines (not less than PhP 10,000) and imprisonment (1 to 10 years) for failure to file or supply correct information as required.
Penalty amounts adjusted based on gross sales, earnings or receipts, gross estate, or gift values.

Circular takes effect immediately upon issuance.
Internal revenue officials and concerned parties directed to widely disseminate the Circular's provisions for compliance and awareness.