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RR No. 21-2002: Prescribes the manner of compliance with any documentary and/or procedural requirements in connection with the preparation and submission of financial statements accompanying the tax returns

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Summary

RR No. 21-2002 prescribes how to comply with documentary and procedural requirements for the financial statements that accompany tax returns.

Key points

  1. Descriptive, specific accounts. Financial Statements with the Auditor’s Certificate attached to the Annual Income Tax Return, or the Annual Information Return for tax-exempt persons, must state accounts descriptively so the nature of transactions is known. Account titles must be specific, fully enumerated, not control accounts, and in line with the rules of the regulatory agencies over them.
  2. Accounts used by individuals. The accounts in reports required by the SEC, Bangko Sentral ng Pilipinas, Insurance Commission and other regulatory bodies are also used by individuals in business or profession. Accounts peculiar to corporations and other juridical persons are excepted.
  3. Income statement breakdown. The Profit and Loss Statement shows separately by segment, with breakdown of specific accounts: Cost of Goods Sold or Cost of Services, Selling and Administrative Expenses, Financial Expenses, Special Deductions, and Deductions under Special Laws. The last three apply if any.
  4. Required statements. The Financial Statements are mandatory even with no income or retained earnings. They consist of the Balance Sheet, Income Statement, Statement of Retained Earnings, Statement of Changes in Financial Position, and attached Schedules.
  5. Comparative figures. All financial statements filed with the auditor’s certificate show comparative figures of the current year and the previous year.

Who is affected

  • Filers of annual income tax returns with financial statements and auditor’s certificate
  • Tax-exempt persons filing the Annual Information Return
  • Individuals engaged in business or profession

Summary by Tax Resources PH. It is not a substitute for the full text of the issuance or professional advice.

Related issuances

Cited byRR No. 15-2010RR No. 34-2020RR No. 7-2007

Copies of BIR issuances are hosted here for reference. For the official version, check bir.gov.ph. Summaries by Tax Resources PH are not a substitute for the full text or professional advice.