RR No. 5-2014: Amends RR No. 17-2013, which deals with the “Preservation of Books of Accounts and Other Accounting Records”

Key points

1. 10-year retention. All taxpayers keep books of accounts, subsidiary books and other accounting records for 10 years. The period runs from the day after the filing deadline, or from the actual filing date if filed late, for the taxable year of the last entry.
2. Hardcopy then electronic. Hardcopies are kept for the first five (5) years of that period. After that, the taxpayer may keep only an electronic copy in an electronic storage system that meets Section 2-A of the Regulations.
3. Pending cases. If a protest or claim for tax credit or refund is pending and the books are material to the case, the taxpayer must keep them until the case is finally resolved.
4. Independent CPA. Unless the NIRC or other laws require longer, the independent CPA who audited the records must also keep electronic copies of the audited financial statements and audit working papers for 10 years. The period runs from the due date of the annual Income Tax return or the actual filing date, whichever is later.
5. Electronic storage system. The system must transfer images accurately and completely, and index, store, preserve, retrieve and reproduce them. It needs integrity controls, protection against unauthorized changes, quality assurance checks, an indexing system, and the ability to reproduce legible hardcopies. Taxpayers must keep and provide complete descriptions of the system and its indexing.
6. Testing and appeal. The RDO with jurisdiction may test a taxpayer’s system. The authorized Revenue Officer informs the taxpayer of results within 3 days after the test, and the taxpayer may appeal adverse findings to the Regional Director within 10 days, to be resolved within 30 days. A system that fails the requirements means the original hardcopies must be kept.

Who is affected

• All taxpayers
• Independent CPAs who audited and certified the financial statements

Deadlines and effectivity

• Issued July 30, 2014
• 10 years of retention, with hardcopies for the first 5 years
• Appeal within 10 days; Regional Director resolves within 30 days