BIR Ruling

August 19, 1971 Ambrosio Padilla Law Offices 5th Floor, Manufacturers Bldg. Plaza Sta. Cruz, Manila Attention: Mr . Celso ED . F . Unson Gentlemen : This refers to your letter dated July 26, 1971 stating the following: acd "Our client, X Company is a foreign corporation engaged in business in the Philippines. It will have to engage on various projects such as oil well surveying. Its projects are under the charge of several men each directly responsible to the home office based in London, England. Each man has no knowledge whatsoever of what is happening in each other's projects. Each of them reports directly to the home office in London which will keep books of accounts for its projects and after the year is ended, it will prepare a consolidated income tax return. In case of verification of the income tax return filed, our client, X company is will to send here facsimiles of pertinent portions of all the books and papers necessary to ascertain the correct taxes to be paid by the said company in the Philippines." Under the foregoing circumstances, you now want to know whether your client is required to keep books of accounts. In reply, I have the honor to inform you that since your client, X Company, is subject to internal revenue taxes, it is required to keep books of accounts and other accounting records, as required by Section 334 of the Tax Code. Pursuant to Section 20 of the Revenue Regulations No. V-1, otherwise known as the Bookkeeping Regulations, all books, registers and other records, and vouchers and other supporting papers required by the regulations shall be kept at all times at the place of business of the taxpayer (corporation, partnership or person), subject to inspection any internal revenue officer, and upon demand, the same must be immediately produced and submitted for inspection. Furthermore, pursuant to Section 337 of the Tax Code, as amended by Republic Act No. 6110, examination and inspection of books of accounts and other accounting records shall be done only in the taxpayer's office or place of business or in the office of the Bureau of Internal Revenue. Under these provisions of the law and regulations, the original copies of the books of accounts of your client should be kept in its place of business in the Philippines and not abroad, and available for inspection by internal revenue officer. The submission of facsimiles of pertinent portions of said books and records cannot, therefore, constitute compliance with the said requirements. Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue