Riego de Dios & Padre-Isip

February 22, 2008 BIR RULING [DA-107-08] Secs. 46 & 47; DA-404-2000; DA-110-2007 Riego de Dios & Padre-Isip Attorneys At Law GF-A, The Cordova Condominium 138 Valero cor. Sedeo Streets Salcedo Village, Makati City Attention: Maria Rachel V. Riego de Dios Gentlemen : This refers to your letter dated December 10, 2007, requesting on behalf of your client, Consolidated Industrial Gases, Inc. (CIGI, for short), for authority to change the accounting period from the current fiscal year (FY) ending September 30 to calendar year (CY) ending December 31. It is represented that CIGI is a domestic corporation duly registered with the Securities and Exchange Commission engaged in the manufacture, production and sale of various industrial gases and chemicals; that it is registered with the Bureau of Internal Revenue as a large taxpayer with Taxpayer Identification No. 000-053-829-000; that CIGI has been employing the fiscal year ending September 30; and that in order to align the CIGI's accounting period with its foreign parent company, and thus facilitate the consolidation process of its financial transactions with the foreign parent company, CIGI would change its accounting period from fiscal year ending September 30 to calendar year ending December 31. In reply, please be informed that your request is hereby granted, provided, you comply with the provision of Sections 46 and 47 of the Tax Code of 1997 which states: aTEHIC "SEC. 46. Change of Accounting Period. If a taxpayer, other than an individual, changes his accounting period from fiscal year to calendar year, from calendar year to fiscal year or from fiscal year to another, the net income shall, with the approval of the Commissioner, be computed on the basis of such new accounting period, subject to the provisions of Section 47. "SEC. 47. Final or Adjustment Returns for a Period of less than Twelve (12) Months . "(A) Returns for Short Period Resulting from Change of Accounting Period . If a taxpayer other than an individual, with the approval of the Commissioner, changes the basis of computing net income from fiscal year; to calendar year, a separate final or adjustment return shall be made for the period between the close of the last fiscal year for which return was made and the following December 31. If the change is from calendar year to fiscal year, a separate final or adjustment return shall be made for the period between the close of the last calendar year for which return was made and the date designated as the close of the fiscal year. If the change is from one fiscal year to another fiscal year, a separate final or adjustment return shall be made for the period between the close of the former fiscal year and the date designated as the close of the new fiscal year. "(B) Income Computed on Basis of Short Period. Where a separate final or adjustment return is made under Subsection (A) on account of a change in the accounting period, and in all other cases where a separate final or adjustment return is required or permitted by rules and regulations prescribed by the Secretary of Finance, upon recommendation of the Commissioner, to be made for a fractional part of a year, then the income shall be computed on the basis of the period for which separate final or adjustment return is made." Accordingly, CIGI should file a separate final or adjustment return for the period between the close of the former fiscal year and the following December 31 (October 1-December 31, 2007) on or before April 15, 2008 and the tax due thereon, if any, be paid at the time of filing. (BIR Ruling No. DA-110-2007 dated February 19, 2007) This will serve as your authority to change your accounting period from fiscal year to calendar year upon your compliance with the requirement of filing a short period return. (BIR Ruling No. DA-491-98 citing BIR Ruling No. 060-96 dated May 22, 1996) cAEaSC Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service