BIR Ruling [DA-404-00]

November 27, 2000 BIR RULING [DA-404-00] Secs. 46 & 47 DA-491-98 Edward Keller (Philippines), Inc. 2723 Chino Roces, 1231 Makati Metro Manila Attention: Mr . Daniel Seiler Senior Vice-President Gentlemen : This refers to your letter dated April 10, 2000 requesting permission to change your accounting period from fiscal year basis ending June 30 to calendar year basis in accordance with Section 172 of the Income Tax Regulations and Section 46 of the Tax Code of 1997. It is represented that Edward Keller (Philippines), Inc. (EKI) is a domestic corporation duly organized and existing under the laws of the Republic of the Philippines; that EKI has been employing the fiscal year basis stating July 1 and ending June 30 of the following year; that in order to synchronize EKI's accounting period with its Head Office, Edward Keller Holding, Ltd., EKI would charge its accounting period from fiscal year ending June 30 to calendar year, effective 2001. cDaEAS In reply, please be informed that your request is hereby granted, provided, you 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. "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, EKI should file a separate final or adjustment return for the period corresponding to July 1 and December 31, 2000, 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 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, 1993). AHCaED Very truly yours, Commissioner of Internal Revenue By: (SGD.) LILIAN B. HEFTI Deputy Commissioner Legal & Inspection Group