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High-tech BIR examination

High-tech BIR examination

by Arnold P. Supilanas

 

Taxpayers that have adopted computerized accounting systems (CAS) should brace up for high-tech conduct of BIR audit.

The Bureau of Internal Revenue (BIR) has recently issued Revenue Regulations (RR) No. 16-2006 signalling a more extensive utilization of computer technology in conducting audit and examination of the books and accounting records of taxpayers with CAS. 

The regulations will govern taxpayers’ submission of books of accounts and other accounting records to the BIR in electronic format during examination.

Under the regulations, computerized accounting books/records required for submission to the BIR will be stored in recordable compact discs (CD-R), digital video discs (DVD-R) or other optical media, depending on the volume of the transactions or size of the business, and in a format that is readable by the BIR audit tools, as specified in the letter request for submission of data, e.g. dBase, delimited or flat file format.

Submission of these records will be required within five days from the receipt of the documents authorizing the investigation such as Letter of Authority, Audit Notice, etc., the same deadline imposed under manual tax examination.

These computerized books of accounts and other accounting records in electronic format that are required to be submitted to the BIR upon audit/investigation are the same records that are submitted and registered with the concerned BIR office within 30 days from the close of the taxable year pursuant to Revenue Memorandum Order (RMO) No. 29-2002. 

The BIR however is not precluded from requesting other transaction files which may contain information or transactions that occurred during the particular taxable year covered by the examination, that were not included in the original data submitted.

It may be recalled that pursuant to RMO 29-2002 in relation to Republic Act (R.A.) No. 8792 also known as the Electronic Commerce Act of 2000, the BIR repealed the requirement for binding and stamping of computerized books of accounts and/or receipts and invoices generated by a duly approved CAS.  Instead, a soft copy of the computerized books of accounts and other accounting records/documents in text file format will be submitted.

Will it now be a paperless tax examination? Will the tax authority employ a completely no-contact-audit approach?

The regulations provide that the taxpayer is still required to present the documents supporting the entries made in the CAS during verification process. 

Likewise, if there are discrepancies found upon tax audit that result to tax assessments, the Revenue Officers/Examiners may request for certified true copies, in hard copy and/or electronic format, of the portion of the accounting books and pertinent accounting records that would serve as evidence or proof of the audit findings.

Furthermore, as a rule, the tax examination should be done at the taxpayer’s premises.  With these regulations, BIR examiners may perform their audit procedures outside of the taxpayer’s place, such as in the BIR offices or even in their homes.

Certainly, this exercise will improve BIR audit efficiency that would translate to an increase in revenue collection and reduce graft and corruption. 

On the other hand, it is claimed that the process will also somehow unburden taxpayers. The process will require less of the time of the taxpayers as contact between the taxpayer and the examiner is minimized.

Many taxpayers, however, are seeking for more reassurance that the confidentiality of their files will be strictly protected.

(The author is a tax manager at the Cebu branch of Punongbayan & Araullo, member of Grant Thornton International.  For comments and inquiries, please e-mail the author or call 032-231-6090.)