SyCip Gorres Velayo & Co.

September 16, 2008 BIR RULING [DA-(TAR-003) 227-08] RR V-1 SyCip Gorres Velayo & Co. 6760 Ayala Avenue Makati City Attention: Atty. E.C. Alcantara Tax Division Gentlemen : This refers to your letter dated June 3, 2008 requesting on behalf of your client, Bureau Veritas SA-Philippine Branch (BV-PB), for confirmation that the station office being maintained by BV-PB in Cebu, Philippines is not required to maintain BIR-registered books of accounts and subsidiary books in the said premises, separate from that already registered by BV-PB. The facts as represented are as follows: BV-PB is the local branch office of Bureau Veritas SA, a foreign corporation, engaged in the inspection, checking, valuation, expert surveying, measurement, and analysis of the functioning, quality, conformity, and safety of production of products, items of equipment and built structures. In order to provide an area for BV-PB's employees working on the field in Cebu, BV-PB decided to establish a station office in Cebu Business Park, Cebu City. The aforesaid station office of BV-PB in Cebu does not engage in any sales or any business transactions nor involve itself with disbursing or advancing any funds to its employees, as well as payment for any fees to any of BV-PB's contractor of goods and/or services. In short, all business transactions and sales are entered into at BV-PB's head office in the City of Manila. All disbursements and funds are acted upon and released at BV-PB's head office in Manila. In reply, please be informed that Revenue Regulations No. V-1 (Bookkeeping Regulations), provides that places of operation which do not effect or have any sales are not required to maintain set of books of accounts, as well as subsidiary books, within the said premises of the establishment, viz.: "4(7). No Transactions Made in the Main Establishment. Where no sales are effected in the main establishment, no books of accounts and other accounting records needs be kept and used by said establishment. On the other hand, where sales are made in both the main and branch establishments, all should keep and use books of accounts and accounting records." Accordingly, since the station office being maintained by BV-PB in Cebu does not enter into any sales or business transactions nor does it involve in the distribution or disbursement of funds, this Office hereby opines that said office is not required to keep a separate set of books of accounts (registered or unregistered) apart from that of its head office in Manila. DACcIH This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered as null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service