ReSA - THE REVIEW SCHOOL OF ACCOUNTANCY

CPA Review Batch 45  May 2023 CPA Licensure Examination

TAX-1402
TAXATION A. TAMAYO  E. BUEN  G. CAIGA  C. LIM  K. MANUEL

COMPLIANCE REQUIREMENTS
A. Compliance Requirements
a. BIR registration Every person subject to any internal revenue tax shall register once with the appropriate Revenue
District Officer:
(1) Within ten (10) days from date of employment, or
(2) On or before the commencement of business, or
(3) Before payment of any tax due, or
(4) Upon filing of a return, statement or declaration as required in this Code.
The registration shall contain the taxpayer's name, style, place of residence, business and such
other information as may be required by the Commissioner in the form prescribed therefor.
A person maintaining a head office, branch or facility shall register with the Revenue District
Officer having jurisdiction over the head office, brand or facility. For purposes of this Section, the
term "facility" may include but not be limited to sales outlets, places of production, warehouses or
storage places.
b. Issuance of receipts All persons subject to an internal revenue tax shall, for each sale or transfer of merchandise or for
services rendered valued at One hundred pesos (P100.00) or more, issue duly registered receipts
or sales or commercial invoices, prepared at least in duplicate, showing the date of transaction,
quantity, unit cost and description of merchandise or nature of service.
Where the receipt is issued to cover payment made as rentals, commissions, compensations or
fees, receipts or invoices shall be issued which shall show the name, business style, if any, and
address of the purchaser, customer or client.
Where the purchaser is a VAT-registered person, in addition to the information herein required,
the invoice or receipt shall further show the Taxpayer Identification Number (TIN) of the
purchaser.
c. Electronic Sales
Within five (5) years from the effectivity of this Act and upon the establishment of a system
Reporting System
capable of storing and processing the required data, the Bureau shall require taxpayers
engaged in the export of goods and services, and taxpayers under the jurisdiction of the
Large Taxpayers Service to electronically report their sales data to the Bureau through the use
of electronic point of sales systems, subject to rules and regulations to be issued by the
Secretary of Finance as recommended by the Commissioner of Internal Revenue:
The machines, fiscal devices, and fiscal memory devices shall be at the expense of the
taxpayers.
The data processing of sales and purchase data shall comply with the provisions of Republic Act
No. 10173, otherwise known as the “Data Privacy Act” and Section 270 of the NIRC, as
amended, on unlawful divulgence of taxpayer information and such other laws relating to the
confidentiality of information.
The Bureau shall also establish policies, risk management approaches, actions, trainings, and
technologies to protect the cyber environment, organization, and data in compliance with
Republic Act No. 10175 or the “Cybercrime Prevention Act of 2012.”
c. Printing of receipts All persons who are engaged in business shall secure from the Bureau of Internal Revenue an
authority to print receipts or sales or commercial invoices before a printer can print the same.
No authority to print receipts or sales or commercial invoices shall be granted unless the receipts
or invoices to be printed are serially numbered and shall show, among other things, the name,
business style, Taxpayer Identification Number (TIN) and business address of the person or entity
to use the same, and such other information that may be required by rules and regulations to be
promulgated by the Secretary of Finance, upon recommendation of the Commissioner.
All persons who print receipt or sales or commercial invoices shall maintain a logbook/register of
taxpayers who availed of their printing services. The logbook/register shall contain the following
information:
(1) Names, Taxpayer Identification Numbers of the persons or entities for whom the receipts or
sales or commercial invoices were printed; and
(2) Number of booklets, number of sets per booklet, number of copies per set and the
serial numbers of the receipts or invoices in each booklet.
d. Keeping of books of All corporations, companies, partnerships or persons required by law to pay internal revenue
accounts and records taxes shall keep a journal and a ledger or their equivalents.
including report of
Corporations, companies, partnerships or persons whose gross quarterly sales, earnings, receipts
inventories
or output exceed One hundred fifty thousand pesos (P150,000) shall have their books of accounts
audited and examined yearly by independent Certified Public Accountants and their income tax
returns accompanied with a duly accomplished Account Information Form (AIF) which shall
contain, among others, information lifted from certified balance sheets, profit and loss statements,
schedules listing income-producing properties and the corresponding income therefrom and other
relevant statements.

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ReSA – THE REVIEW SCHOOL OF ACCOUNTANCY
COMPLIANCE REQUIREMENTS TAX-1402
Under the TRAIN, corporations, companies, partnerships or persons whose gross annual sales,
earnings, receipts or output exceed Three million pesos (P3,000,000), shall have their
books of accounts audited and examined yearly by independent Certified Public Accountants and
their income tax returns accompanied with a duly accomplished Account Information Form
(AIF) which shall contain, among others, information lifted from certified balance sheets,
profit and loss statements, schedules listing income-producing properties and the corresponding
income therefrom and other relevant statements.

Corporations, companies, partnerships or persons shall keep the books or records in native
language, English or Spanish.

B. Prescriptive period of maintaining books of accounts and other accounting records (R.R. No. 5-2014)
Retention period 1) All taxpayers are required to preserve their books of accounts, including subsidiary books and
other accounting records, for a period of ten (10) years reckoned from the day following the
deadline in filing a return, or if filed after the deadline, from the date of the filing of the
return, for the taxable year when the last entry was made in the books of accounts.
2) The taxpayer shall retain hardcopies of the books of accounts, including subsidiary books and
other accounting records within the first five (5) years reckoned from the day following the
deadline in filing a return, or if filed after the deadline, from the date of the filing of the
return, for the taxable year when the last entry was made in the books of accounts.
3) Thereafter, the taxpayer may retain only an electronic copy of the hardcopy (paper) of the
books of accounts, subsidiary books and other accounting records in an electronic storage
system which complies with the requirements set forth under the Regulations.
Meaning of accounting The term “other accounting records” includes the corresponding invoices, receipts, vouchers and
records returns, and other source documents supporting the entries in the book of accounts.
Meaning of last entry The term “last entry” refers to a particular business transaction or an item thereof that is entered
or posted last or latest in the books of accounts when the same was closed.
Taxpayer with pending If the taxpayer has any pending protest or claim for tax credit/refund of taxes, and the books and
protest of claim records concerned are material to the case, the taxpayer is required to preserve his/her/its books
of accounts and other accounting records until the case is finally resolved
Responsibility of a CPA Unless a longer period of retention is required under the NIRC or other relevant laws, the
independent Certified Public Accountant (CPA) who audited the records and certified the financial
statements of the taxpayer, equally as the taxpayer, has the responsibility to maintain and
preserve electronic copies of the audited and certified financial statements including the audit
working papers for a period of ten (10) years from the due date of filing the annual income tax
return or the actual date of filing thereof, whichever comes later.
BIR examination and For income tax purposes, examination and inspection shall be made only once in a taxable year,
inspection of books except in the following cases:
(a) Fraud, irregularity or mistakes, as determined by the Commissioner;
(b) The taxpayer requests reinvestigation;
(c) Verification of compliance with withholding tax laws and regulations;
(d) Verification of capital gains tax liabilities; and
(e) In the exercise of the Commissioner's power to obtain information from other persons in
which case, another or separate examination and inspection may be made.

C. Forms, statements and information to accompany the Income Tax Return

Under the TRAIN
1. Keeping of relevant All corporations, companies, partnerships or persons required by law to pay internal revenue
and appropriate set taxes shall keep and use relevant and appropriate set of bookkeeping records duly authorized
of bookkeeping by the Secretary of Finance wherein all transactions and results of operations are shown and
records from which all taxes due the Government may readily and accurately be ascertained and
determined any time of the year:
2. Audit and Corporations, companies, partnerships or persons whose gross annual sales, earnings, receipts
examination by or output exceed Three million pesos (P3,000,000), shall have their books of accounts
independent CPA audited and examined yearly by independent Certified Public Accountants and their income tax
returns accompanied with a duly accomplished Account Information Form (AIF) which shall
contain, among others, information lifted from:
a. certified balance sheets,
b. profit and loss statements,
c. schedules listing income-producing properties and the corresponding income therefrom
and
d. other relevant statements.
END

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