Tax planners urge review of 10-year rule for records

THE REVENUE issuances of the previous government requiring a 10-year archive of taxpayers’ books and records should be reviewed by the Bureau of Internal Revenue (BIR), according to the Tax Management Association of the Philippines (TMAP).

“We have submitted that in our request for the BIR to revisit and reconsider that,” said TMAP President Benedict Tugonon in a phone interview with Businessworld last week.

“Taxpayers under the Tax Code are supposed to be examined within a limited period of three years, this assumes no tax fraud,” he added. “Because we presume here that (taxpayer) is in good faith and not engaged in some kind of fraud.”

“Unfortunately, during the time of (former BIR commissioner) Kim Henares, she extended it to 10 years.”

He added that the measure would be costly to taxpayers, especially to those who would have to avail of extra storage space for their records.

“It’s onerous because it’s more costly because you have to rent storage, and it’s not really a reasonable amount of the time because the tax code only allows the BIR to revisit and examine the record of taxpayers within the first three years.”

Revenue Regulation (RR) 17-2013, issued by former Revenue commissioner Kim S. Jacinto-Henares required taxpayers to preserve books of accounts and records for a period of 10 years from the date of filing of the annual income tax return.

She anchored this issuance on a provision on the Tax Code that allows the BIR, in cases of fraud, to assess or proceed in court for the collection of taxes that have been filed without assessment for a period of 10 years upon the discovery of falsity, fraud or omission.

In a subsequent issuance, RR 5-2014, Ms. Henares allowed for the storage of digital copies of records five years upon filing instead of keeping a hard copy for the 10-year period.

Sought for comment, Lina P. Figueroa, principal with the Tax Advisory & Compliance Division of Punongbayan & Araullo, said that this is still costly to taxpayers.

“There is a leeway to store them in digital copies after the fifth year but, again, scanning takes many hours,” she said in an e-mail to Business-World. “You also pay for storage capacity in your servers.”

Taxpayers should be given the freedom to determine how long they should retain files depending on their assessment of potential tax fraud issues in the company,” she added. “If they believe their compliance is high, there may be no risk of fraud assessment.”

At the start of his term, Revenue Commissioner Caesar R. Dulay called for the review of previous issuances by Ms. Henares.

Mr. Dulay also suspended all revenue issuances filed by his predecessor during her last month of office. —