Many businesses have computerised their accounting books, records, and reports to make their accounting processes more efficient and streamline client transactions. Additional benefits such as an enhanced office workflow, overall record consistency, and further insight into business finances and data are other incentives for a business to digitize its accounting procedures and records.
However, to implement this transition to digitized accounting, enterprises must utilize several programs such as the Computerized Accounting System (CAS), Computerized Books of Accounts (CBA), any component of CAS or CBA, Middleware, Electronic Storage Systems (ESS), and any other similar electronic systems that can process applications for Permit to Use (PTU).
But to use these programs, enterprises need to adhere to certain guidelines mandated by the Bureau of Internal Revenue (BIR) through the Revenue Memorandum Order No. 9-2021, which was issued on February 19, 2021.
Affected businesses entities
These simplified guidelines and procedures are applicable to the following entities:
A.) All Large Taxpayers (LTs) who are required to use CAS.
B.) All Non-Large Taxpayers (Non-LTs) engaged in business using any of the following:
- The components of CAS or CBA, including;
- Any system/software that generates General Journal and Other Subsidiary Books / Records, utilized for recording Sales, Purchases, Accounts Receivable, Accounts Payable, Inventory, and Payroll, used to generate Subsidiary Ledgers and Other Accounting Records), or those that generate reports as required by the BIR, such as Void Report, Senior Citizen (SC), and/or Person With Disability (PWD)and the National Athletes and Coaches Discount Summary/Report, Summary List of Sales and Purchases, etc.…
- Cash Register Machines (CRMs), Point-of-Sale (POS) Systems or any sales receipting/invoicing system/software connected through a network or linked to CAS/CBA.
C.) Taxpayers in businesses using Electronic Storage System (ESS), Middleware, and Other Similar Systems.
Guidelines and Policies
Registering a “System”
The RMO first stated the following guidelines for registering a “System”:
1.) All taxpayers using CAS, CBA, and/or its Components,] and other similar systems (referred to as “System”) must inform the Revenue District Office (RDO)/LT Office where it is registered of its intention to use such a system by submitting the requirements stated on the Checklist of Documentary Requirements (CDR) (Annex A). The system to be adopted must follow the Standard Functional and Technical Requirements set under Annex B of the Order.
2.) Every document referring to the applications for the Registration of “System”, must be submitted manually or through e-mail. The Sworn Statement with attached Summary of System Description, Commercial Invoices/Receipts, Records and Reports Specification and the accomplished Standard Functional and Technical Requirements are passed to the RDO/LT Office where the Head Office of the taxpayer is registered, except under the following circumstances:
Once the Branch Office of the taxpayer adopts “System” ahead of its Head Office (HO), the application for registration will be filed to the RDO where the Branch Office is registered with a Certification from the RDO where the HO is registered that hasn’t used the system/software.
If a Head Office subsequently adopts the same “System”, already used by the Branch Office duly registered with the RDO where the said branch was registered, any new registration documents must be submitted by the HO to its RDO where the branch was registered. Afterwards, a new Acknowledgement Certificate (AC – Annex) is then issued to the Head Office. Lastly, the Annex of the AC must indicate all branches using the already adopted system/software.
- When a taxpayer’s branch office adopts a “System”, from other Branch Offices and its own HO, applications for registrations must be filed at the RDO where the Branch Office was registered, additionally, an AC for the Branch Office shall be subsequently issued.
3.) Concerned RDO/LT Offices shall issue an AC, with an attached Annex D, upon the receipt of the complete documentary requirements prescribed herein. The AC will then be issued after three (3) working days from receipt of complete documentary requirements.
This AC is taken as valid unless revoked by the BIR if proven to be non-compliant with the Order’s provisions and other related revenue issuances during the conduct of post-evaluation.
4.) Affiliated companies, sister companies, franchisees, closely held corporations, and other similar companies related to a parent company shall register the “System” they will use with the RDOs/LT Office where these companies are registered. This is applicable regardless of if these companies are sharing servers and using the same “System” being used by the parent company or other related companies.
5.) System demonstrations and pre-evaluations will not be conducted as a condition for the Registration of “System”. But the RDO can explain features indicated on the Sworn Statement, and then have the option to request an amendment of the Sworn Statement if anything needs to be included or clarified in the Sworn Statement.
6.) Taxpayers availing the services of Tax Service Providers (TSPs) or third-party software providers using a system/software, must register that system with the BIR before their contract comes into effect with the TSPs or third-party software provider.
A Joint Sworn Statement with attached Summary of System Description, Commercial Invoices/Receipts/Document Description, Forms/Records and Reports Specification will be executed by the taxpayer and the TSP or third-party software provider.
Both parties need to include in their Joint Sworn Statement that the system has no facility that may suppress sales or other technical schemes affecting the correctness of the sales for purposes of taxation.
Furthermore, Taxpayers availing of TSP services need to maintain all accounting records and other relevant financial data for a mandatory period of ten (10) years in their principal place of business. The records must be available to the BIR during the audit and other enforcement activities that will be conducted by the authorized Revenue Officer of the BIR.
If the contract is terminated, the taxpayer who availed of the services of TSP must notify the RDO with jurisdiction over their place of business before the termination of their contract with the developer. The “System” registration will be cancelled after the contract is terminated.
7.) Taxpayers with an application for Accreditation of Cash Register Machines (CRMs)/ Point-of-Sale (POS) System (bundled or software only) and to other sales receipting system/software linked to a duly registered “System”, must be processed by adhering to the provisions on the accreditation and subsequent registration of the CRMs/POS Machines and other sales receipting system/software based on existing revenue issuances.
Note that the registration of the CRMs/POS Machines and other sales receipting systems/software will be different from the “System’s” registration. Because of this, all important details of the CRMs/POS Machines and other sales receipting system/software that will be linked to any “System” must be declared by the taxpayer in the Annexes of the Sworn Statement at the time of the registration of such System, with the following information:
- POS Server / Machine Details, i.e., Brand, Model, and/or Serial Number; Software Details, i.e., Software Name and Version Number with Release Number if applicable; Machine Identification Number (MIN) and Permit To Use (PTU) Number
- Terminal Details – Machine Details, i.e., Brand, Model and/or Serial Number.
8.) The guidelines mandate affected taxpayers to submit an update of registration regarding the provisions of filing a new application if major system enhancement occurs, such as but not limited to any of the following:
- Change in the functionalities of the system.
- Addition or Removal of modules or sub-modules within the system that will have a direct impact on the financial aspect of the system.
- Change in the system Version or Release Number that will have enhancements on the financial aspect of the system.
- All other enhancements that will be deemed as a major system enhancement based on the recommendation of the technical evaluators of the BIR.
9.) If it is proven that a taxpayer had used an enhanced/upgraded “System” without informing the BIR, they will be handed an applicable penalty under existing revenue issuances. If it was a minor system enhancement, such as user interface modification, bug fixes, performance improvements, etc., the taxpayer must submit a written notification to the RDO/LT Office where it is registered, explaining the specific minor enhancements placed on the system.
The guidelines then clarify how taxpayers are intended to use receipts/invoices by sharing the following steps:
1.) Taxpayers using a registered “System”, without system-generated principal and/or supplementary receipts/invoices, must apply for Authority to Print (ATP) such receipts based on existing revenue issuances.
Taxpayers registering their “Systems” using system-generated supplementary receipts/invoices but with manual BIR approved principal receipts/invoices (with ATP), are declared in the Sworn Statement and in its Annexes.
2.) During system downtime, taxpayers with duly registered “System”, who are using computer-generated principal and/or supplementary receipts/invoices with system/software/application that has no redundancy or automatic switchover, shall be allowed to issue manual principal and/or supplementary receipts/invoices.
However, manually pre-printed, and pre-numbered principal and/or supplementary receipts/invoices with approved ATP reserved or set aside for use during systems downtime should not exceed one thousand (1,000) sets at a time.
But the RMO notes that any system-generated principal and/or supplementary receipts/invoices must comply with the mandatory information required under Section 5 of RR No. 10-2015, as amended by RR No. 16-2018, except for the following which is applicable only to a CRM/POS Machine:
- Machine Identification Number (MIN).
- Serial Number of the CRM/POS Machine.
- Accreditation Details of the CRM/POS Supplier.
On books of accounts
Guidelines on using books of accounts state that:
1.) Large and non-large taxpayers must use books of accounts depending on their business requirements. However, these books of accounts accounting records must comply with bookkeeping requirements and information prescribed in RR No. 9-2009.
2.) All soft copies of the Computerized Books of Accounts and Other Accounting Records must be registered with the RDO/LT Office where the HO/Branch is registered within thirty (30) calendar days from the close of the taxable year.
It shall be in Standard Audit File (SAF) and saved in a Universal Serial Bus (USB) Drive or other electronic storage devices, properly labelled with the name of the taxpayer and the taxable year.
Taxpayers must also prepare and submit a transmittal letter showing the detailed content of the USB Drive label, and must be stamped registered and signed at the RDO/LT Office having jurisdiction over the Head Office and/or Branch Office/s. If a taxpayer registers unaudited Books of Accounts and Other Accounting Records, then the Auditor’s Adjustments shall be submitted in soft copy.
Additionally, the RMO requests that all electronically archived information in the books of accounts and other accounting records/documents must be retained pursuant to existing revenue issuances.
The final portion of the RMO explains that every taxpayer with pending applications for PTU CAS, CBA, and its Components, filed with the National Accreditation Board (NAB) and pending with NAB as of February 23, 2020, will be processed under Revenue Memorandum Circular No.10-2020. All applications filed afterwards will be processed using this RMO’s provisions.
Lastly, it explains that every taxpayer with a duly approved PTU will remain valid until revoked/expired or when the system gets enhanced without complying to the requirements provided by the RMO.
The RMO still contains details not covered in this piece, for more information and to determine if it applies to you or your business, please check the full document below.