RMO No. 40-2009: Prescribes the guidelines and procedures in the observation of inventory taking of goods for purposes of determining the 2009 ending inventory

Key points

1. Selecting taxpayers. Each Revenue District Officer lists taxpayers whose peso value of ending inventory is 50% or more of declared sales for taxable year 2008, based on their Financial Statements and Inventory Lists. Dealers of automobiles, excise taxpayers and taxpayers with fast-moving items such as drugstores, supermarkets and groceries are excluded, and the Regional Director approves the list.
2. Notice and schedule. The taxpayer is told that BIR representatives must witness the inventory taking. The taxpayer gives the schedule and addresses of all branches, warehouses, bodegas and facilities at least twenty (20) days before. Discrepancies against RDO registration records are reconciled within five (5) days from notification.
3. Other RDOs. If inventories are kept outside the Home RDO’s jurisdiction, the Home RDO informs the RDO covering that place and requests its participation.
4. What revenue officials do. Under a Mission Order signed by the Regional Director, they get a list of accountable forms, physically count them and set a cut-off. They verify that the valuation method conforms to the 1997 NIRC, as amended, check that inventory books are registered, and get copies of the inventory lists.
5. Witnessing the count. Officials observe the actual count, with attention to inventories material in value. The taxpayer’s representative and the official print their names and sign every page of each inventory list with date and time, and discrepancies are noted on the list.
6. Report. The revenue official reports to the Revenue District Officer within fifteen (15) days after the inventory taking ends. If another RDO witnessed it, a copy with attachments goes to the Home RDO within five (5) days from the report’s submission.

Who is affected

• Taxpayers whose ending inventory is 50% or more of declared sales
• Revenue District Officers and revenue officials

Deadlines and effectivity

• Schedule given to BIR at least 20 days before inventory taking
• Report due within 15 days after inventory taking
• Taxable year 2009 covers calendar year 2009 and fiscal years ending January 31 to June 30, 2010
• Activity concludes in July 2010