RMO No. 36-2010: Prescribes the guidelines and procedures for the conduct of the Conglomerate Audit Program for taxable year 2009

Key points

1. Selection of conglomerates. The Large Taxpayers Service (LTS) and Enforcement Service (ES) identify conglomerates of parent companies, affiliates and subsidiaries. The respective Assistant Commissioners submit to the Commissioner a list of four (4) big and four (4) small conglomerates.
2. Audit teams. Special audit teams are formed from examiners of the eight (8) LTS audit divisions and the ES, through the National Investigation Division. Each LTS audit division audits one (1) big and one (1) small conglomerate, and the teams examine the books of related companies simultaneously, jointly and in a coordinated way.
3. Returns and Letters of Authority. Revenue District Officers, through Regional Directors, send the Office of the Commissioner the tax returns of the identified taxpayers within fifteen (15) days from receipt of notification. LAs are signed by the Commissioner under the LA Monitoring System, and an LA already issued by a Regional Office is automatically invalidated.
4. Audit conduct and assessments. The Audit Manual procedures apply, and Computer-Assisted Audit Tools and Techniques are limited to data gathering, summarizing and discrepancy reports. Preliminary findings are reviewed by the Assistant Commissioner before a Conference Letter issues, conferences and Assessment Notices (ANs) for the group are done simultaneously, and the Commissioner signs all ANs.
5. Deadlines. Investigations are completed and reported not later than 6 months from the issuance of the LA. Unpaid ANs go to the collection units within 15 days from date of delinquency. Within 30 days from completion, each team recommends guidelines for the audit and tax treatment of related parties and inter-company transactions.
6. Credit for collections. Collections are credited to the Revenue District Offices with jurisdiction over the taxpayers. For KPI measurement, they are credited as performance of the concerned Revenue Officers in the LTS and ES.

Who is affected

• Large Taxpayers Service and Enforcement Service
• Conglomerates of interrelated companies selected for audit
• Revenue District Offices and Regional Directors

Deadlines and effectivity

• Applies to taxable year 2009
• Returns transmitted within fifteen (15) days from receipt of notification
• Investigations completed not later than 6 months from issuance of the LA
• Recommended guidelines due within 30 days from completion