BIR Ruling [DA-215-00]

April 10, 2000 BIR RULING [DA-215-00] 46 & 47 (A) (B); DA-176-99; DA-215-2000 Quiason Makalintal Barot Torres & Ibarra 21st Floor, Robinsons-PCIBank Tower ADB Avenue cor. Pedro Poveda Road Ortigas Center, Pasig City Attention: Atty . Eileen C . Pangalangan Gentlemen : This refers to your letter dated December 15, 1999 requesting on behalf of your client, First Philippine Industrial Corporation (FPIC) for an authority to change its accounting period from fiscal year basis ending June 30 to calendar year ending December 31; and that FPIC intends to change its accounting period to coincide its fiscal year with its parent company, First Philippine Industrial Corporation. In reply, please be informed that your request is hereby granted, provided, they comply with the provisions of Sections 46 and 47 of the Tax Code of 1997 which states: "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 one 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. prcd "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 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 return 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 and 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, FPIC should file a separate final or adjustment return for the period corresponding to July 1 and December 31, 1999, which is the period between the close of the fiscal year for which a return was made and the date designated as the close of the calendar year. This will serve as your authority to change their accounting period from fiscal year to calendar year upon their compliance with the requirement of filing a short period return. Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)