TITLE IX

COMPLIANCE REQUIREMENTS
(As amended by RA Nos. 9337 & 10021)

CHAPTER I

KEEPING OF BOOKS OF ACCOUNTS AND RECORDS

SEC. 232. Keeping of Books of Accounts. -

(A) Corporations, Companies, Partnerships or Persons Required to Keep Books of

Accounts. - All corporations, companies, partnerships or persons required by law to pay internal
revenue taxes shall keep a journal and a ledger or their equivalents: Provided, however, That
those whose quarterly sales, earnings, receipts, or output do not exceed Fifty thousand pesos
(P50,000) shall keep and use simplified set of bookkeeping records duly authorized by the
Secretary of Finance where in all transactions and results of operations are shown and from
which all taxes due the Government may readily and accurately be ascertained and determined
any time of the year: Provided, further, That corporations, companies, partnerships or persons
whose gross quarterly sales, earnings, receipts or output exceed One hundred fifty thousand
pesos (P150,000) shall have their books of accounts audited and examined yearly by independent
Certified Public Accountants and their income tax returns accompanied with a duly
accomplished Account Information Form (AIF) which shall contain, among others, information
lifted from certified balance sheets, profit and loss statements, schedules listing income-
producing properties and the corresponding income therefrom and other relevant statements.

(B) Independent Certified Public Accountant Defined. - The term 'Independent Certified
Public Accountant', as used in the preceding paragraph, means an accountant who possesses the
independence as defined in the rules and regulations of the Board of Accountancy promulgated
pursuant to Presidential Decree No. 692, otherwise known as the Revised Accountancy Law.

SEC. 233. Subsidiary Books. - All corporations, companies, partnerships or persons keeping the
books of accounts mentioned in the preceding Section may, at their option, keep subsidiary
books as the needs of their business may require: Provided, That were such subsidiaries are kept,
they shall form part of the accounting system of the taxpayer and shall be subject to the same
rules and regulations as to their keeping, translation, production and inspection as are applicable
to the journal and the ledger.

SEC. 234. Language in which Books are to be Kept; Translation. - All such corporations,
companies, partnerships or persons shall keep the books or records mentioned in Section 232
hereof in native language, English or Spanish: Provided, however, That if in addition to said
books or records the taxpayer keeps other books or records in a language other than a native
language, English or Spanish, he shall make a true and complete translation of all the entries in
suck other books or records into a native language; English or Spanish, and the said translation
must be made by the bookkeeper, or such taxpayer, or in his absence, by his manager and must
be certified under oath as to its correctness by the said bookkeeper or manager, and shall form an
integral part of the aforesaid books of accounts. The keeping of such books or records in any
language other than a native language, English or Spanish, is hereby prohibited.

SEC. 235. Preservation of Books and Accounts and Other Accounting Records. - All the
books of accounts, including the subsidiary books and other accounting records of corporations,
partnerships, or persons, shall be preserved by them for a period beginning from the last entry in
each book until the last day prescribed by Section 203 within which the Commissioner is
authorized to make an assessment. The said books and records shall be subject to examination
and inspection by internal revenue officers: Provided, That for income tax purposes, such
examination and inspection shall be made only once in a taxable year, except in the following
cases:

(a) Fraud, irregularity or mistakes, as determined by the Commissioner;

(b) The taxpayer requests reinvestigation;

(c) Verification of compliance with withholding tax laws and regulations;

(d) Verification of capital gains tax liabilities; and

(e) In the exercise of the Commissioner's power under Section 5(B) to obtain information from
other persons in which case, another or separate examination and inspection may be made.
Examination and inspection of books of accounts and other accounting records shall be done in
the taxpayer's office or place of business or in the office of the Bureau of Internal Revenue. All
corporations, partnerships or persons that retire from business shall, within ten (10) days from
the date of retirement or within such period of time as may be allowed by the Commissioner in
special cases, submit their books of accounts, including the subsidiary books and other
accounting records to the Commissioner or any of his deputies for examination, after which they
shall be returned. Corporations and partnerships contemplating dissolution must notify the
Commissioner and shall not be dissolved until cleared of any tax liability.

Any provision of existing general or special law to the contrary notwithstanding, the books of
accounts and other pertinent records of tax-exempt organizations or grantees of tax incentives
shall be subject to examination by the Bureau of Internal Revenue for purposes of ascertaining
compliance with the conditions under which they have been granted tax exemptions or tax
incentives, and their tax liability, if any.