Simplified Policies on the Application for Registration of CAS, CBA, including the ESS, Middleware and Other Similar Systems

December 28, 2020 REVENUE MEMORANDUM CIRCULAR NO. 005-21 SUBJECT : Simplified Policies on the Application for Registration of Computerized Accounting System (CAS), Computerized Books of Accounts (CBA) and/or its Components, including the Electronic Storage System (ESS), Middleware and Other Similar Systems TO : All Business Establishments, Internal Revenue Officials, Employees and Others Concerned In compliance with the provisions of Republic Act (RA) No. 11032 , also known as the " Ease of Doing Business and Efficient Government Service Act of 2018 " and in relation to Sections 232 to 235 of the National Internal Revenue Code (NIRC), as amended by RA No. 10963 or the " Tax Reform for Acceleration and Inclusion (TRAIN) ," this Circular is hereby issued to provide the simplified policies on the Application for Registration of Computerized Accounting System (CAS), Computerized Books of Accounts (CBA) and/or its Components, including the Electronic Storage System (ESS), Middleware and Other Similar Systems (hereby collectively known as "System") and hereby supersedes the provisions of Revenue Memorandum Circular (RMC) No. 10-2020 Suspends the requirement for Permit to Use (PTU) Computerized Accounting System (CAS), Computerized Books of Accounts (CBA) and/or Component(s) thereof and allows their use subject to compliance requirement and certain portions of Revenue Memorandum Order (RMO) No. 29-2002 Revised Procedures in the Processing and Approval of Applications for Permit to Adopt Computerized Accounting System (CAS) or Components Thereof Amending RMO 21-2000 that are inconsistent with the provisions of this RMC. All taxpayers intending to use CAS, CBA and/or its Components, including the ESS, Middleware and Other Similar Systems shall not be required to secure PTU, instead, shall be registered subject to the following policies: 1. Register the "System" by submitting the documentary requirements stated on the "Checklist of Documentary Requirements" (CDR) (Annex "A") to the Revenue District Office (RDO) where the taxpayer is registered. BIR Form No. 1900 Application for Authority to Use Computerized Accounting System or Components thereof/Loose-Leaf Books of Accounts shall no longer be required for the submission of application for registration of the "System." 2. The "System" shall comply with the standards set forth under Annex "B" hereof; otherwise, when discovered to have violated the said standards during post-evaluation or audit, the taxpayer-user shall be subject to penalties provided under RMO No. 7-2015 and other existing revenue issuances. 3. Upon submission of complete documentary requirements, an Acknowledgement Certificate (AC) (Annex "C") shall be issued within three (3) working days from receipt of the complete documents by the RDO where the taxpayer-user of the system is registered. Hence, Permit to Use CAS, CBA and/or Components shall no longer be required for the use and registration of the "System" upon approval of this Circular. 4. System demonstration or pre-evaluation shall not be required prior to the use of the "System." However, post-evaluation shall be conducted by the concerned RDO to determine compliance of the "System" registered with the Bureau to the standards set forth in Annex "B". 5. All taxpayers with existing Permit To Use (PTU) CAS, CBA and/or its Components shall NOT be required to apply for registration. The approved PTU previously issued by the Bureau shall still be valid, except for the following circumstances: a. PTU was revoked upon discovery of its non-compliance with existing revenue issuances during the conduct of authorized audit activity, Tax Compliance Verification Drive (TCVD) or Post-Evaluation. b. Existence of major system enhancement or upgrade, which will require the filing of a new application for registration of the "System." 6. Taxpayer must submit a new application for registration in case of major system enhancement, such as but not limited to any of the following: a. Change in the functionalities of the system particularly on enhancements that will have a direct effect on the financial aspect of the system that includes modified computations and other financial-related issues that were considered: b. Addition or removal of modules or submodules within the system that will have a direct impact on the financial aspect of the system; c. Change in the system/software Version or Release Number that will have enhancements on the financial aspect of the system; and d. All other enhancements that will be deemed as major system enhancement based on the recommendation of the technical evaluators after the comparative functionalities of the old and upgraded "system" were presented by the taxpayer. In case a taxpayer is found to have used an enhanced/upgraded system/software/application without registering with BIR prior to the use of such enhanced "system," the PTU originally issued shall be automatically revoked or registration shall have no effect from the time the enhanced/upgraded system/software/application is adopted by the taxpayer and may still be subjected to applicable penalty under existing revenue issuances. 7. In case of any minor system enhancement, e.g. , user interface modification, bug fixes, performance improvements, etc., the taxpayer must submit a written notification to their registered RDO/LT Office stating the specific minor enhancements on the system. The detailed guidelines and procedures shall be provided regarding the registration of the "System" in a separate revenue issuance. This Circular shall take effect immediately. (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue ANNEX A Checklist of Documentary Requirements (CDR) ANNEX A-1 SWORN STATEMENT Republic of the Philippines Province of ____________________ City/Municipality of _____________ I, ________________________, (Name of Authorized Representative) ____________, (Nationality) of legal age, designated as __________ (Position) duly representing ___________________________, (Registered Name of Company/Corporation) with business address located at ______________________ do hereby voluntarily depose and say that: The software/system to be adopted has the functional and technical features/description as shown in Annex "A-3" hereof; The subject <Computerized Accounting System (CAS)/Computerized Books of Accounts (CBA) and/or its Component(s)/Middleware/Electronic Storage System (ESS)> complies with the applicable requirements prescribed under existing revenue issuances and as declared in Annex "B" hereof; The <CAS/CBA and/or its Component(s)/Middleware/ESS >; can produce audit trails/activity logs that can be generated and printed any time showing information such as stamped date and time, user/s who created and/or updated the data, activity performed, and values of data involved; can provide archive/restore procedures; can provide comprehensive systems documentation. The <CAS/CBA and/or its Component(s)/Middleware/ESS> is integrated with effective security controls; (specify security controls) There is no suppression of sale/income and/or other technical scheme within the system that may affect the correctness of the sales for purposes of taxation; The target system implementation date shall be on <Month-Day-Year>; The system application and database backup shall be preserved for a mandatory period of ten (10) years pursuant to Revenue Regulations (RR) No. 17-2013, as amended by RR No. 5-2014; The system application can be accessed and viewed by Revenue Officers of the BIR for purposes of authorized audit activity, Post Evaluation or Tax Compliance Verification Drive (TCVD); The company as a user of the software/system shall be responsible to provide the BIR with sales and other financial data from the software/system relevant and necessary in the conduct of the audit, Post Evaluation or TCVD and shall require its software provider to assist in extracting the required data, as deemed necessary. In case of violation of existing rules and regulations, I hereby undertake to face any legal sanctions and pay corresponding penalties thereof as provided for under the National Internal Revenue Code of 1997, as amended, and relevant revenue issuances. I HEREBY DECLARE UNDER THE PENALTIES OF PERJURY THAT THE FOREGOING ATTESTATIONS ARE TRUE AND CORRECT. ______________________ Authorized Representative (Signature over Printed Name) TIN: ____________________ SUBSCRIBED and sworn to before me, in the City/Municipality of _________________________, this day of ____________, 20__ by __________________ with Residence Certificate No. ________________ issued at on, __________________ 20___. NOTARY PUBLIC Doc. No. _______ Page No. _______ Book No. _______ Series of _______. ANNEX A-2 JOINT SWORN STATEMENT (System/software will be outsourced) Republic of the Philippines Province of ______________ City/Municipality of _______ I, __________________ (Name of Affiant) ___________, (Nationality) of legal age designated as ____________, (Position) duly representing ________________________, (Name of Company/Corporation) the user of the Computerized Accounting System and/or its Components thereof, with business address located at _____________________, engaged in ____________ (Line of Business) and existing under _____________, (Business Name) with __________________ (VAT/Non-VAT Registered) TIN _______________ referred hereto as "Taxpayer/Client." -and- I, _____________________, (Name of Affiant) ___________, (Nationality) of legal age designated as ____________, (Position) duly representing ________________________, (Name of Company/Corporation) the developer/provider of the Computerized Accounting System (CAS) and/or its Components thereof, with business address located at _________________________, engaged in ________________ (Line of Business) and existing under ___________________, (Business Name) with ________________ (VAT/Non-VAT Registered) TIN ___________________ referred hereto as the "Service Provider." Do hereby voluntarily depose and say that: As Taxpayer/Client: Shall be responsible to have the system be registered with BIR prior to its use; (Name of User) contracted the services of (Name of Developer/Service Provider) for the (indicate service to be rendered to the taxpayer) and will use the (CAS/CBA and/or its Components/Middleware/ESS) owned/developed by the latter; Shall maintain all accounting records and other relevant financial data which can be accessed and will be made readily available to BIR as requested during audit, Post-Evaluation and Tax Compliance Verification Drive (TCVD); The system/software has no suppression of sales/income and/or other technical scheme within the system that may affect the correctness of the sales for purposes of taxation; That all reports, accounting records and other relevant financial data shall be retained for 10-year period pursuant to Revenue Regulations (RR) No. 17-2013, as amended by RR No. 5-2014; and Shall notify the RDO having jurisdiction over our place of business prior to the expiration/termination of contract with the developer/provider. The expiration/termination of contract shall be tantamount to the cancellation of the registration of CAS. As the Service Provider: Shall provide the service to (Name of User) for the (indicate service to be rendered to the taxpayer) and will use the (CAS/CBA and/or its Components/Middleware/ESS) with its functional and technical features or description as shown on Annex "A-3" hereof; The system/software complies with the applicable requirements prescribed under existing revenue issuances; Shall not in any way allow the system/software to have sales/income suppression and/or other technical scheme within the system that may affect the correctness of the sales for purposes of taxation; The (CAS/CBA and/or its Components/Middleware/ESS) can : o Produce audit trails/activity logs with substantive compliance; o Produce standard audit file o Provide archive/restore procedures; and o Provide comprehensive systems documentation; The (CAS/CBA and/or its Components/Middleware/ESS) is integrated with effective security controls; (specify security controls) As developer/provider we shall provide the taxpayer-client the access to its books of accounts and other accounting records any time during business hours, except when the contract is terminated; The system/software database backup shall be preserved for a mandatory period of ten (10) years pursuant to Revenue Regulations (RR) No. 17-2013, as amended by RR No. 5-2014; and Authorized Revenue Officers of the BIR shall be provided with access to view and provide data/records that may be requested for purposes of authorized audit, Post-Evaluation or TCVD. Both of Us (Taxpayer/Client and Service Provider); Shall be responsible to assist the BIR in the extraction of sales and other financial data from the software/system that is relevant and necessary in the conduct of the audit, Post-Evaluation or TCVD; Shall not make any change, upgrade or enhancement on the original system/software without prior written notification to the concerned RDO; Shall be presumed to have knowledge in the event that sales/income suppression shall be found in the system/software during audit, Post-Evaluation or TCVD; and Shall face any legal sanctions and pay corresponding penalties thereof as provided for under the National Internal Revenue Code of 1997, as amended, and other relevant issuances in case of violations thereof. WE HEREBY DECLARE UNDER PENALTIES OF PERJURY THAT THE FOREGOING ATTESTATIONS ARE TRUE AND CORRECT TO THE BEST OF MY KNOWLEDGE. ___________________________ (Signature over Printed Name) Taxpayer/User ___________________________ (Signature over Printed Name) System/Software Developer/Provider TIN: ___________________________ TIN: ___________________________ SUBSCRIBED and sworn to before me, in the City/Municipality of _________________________, this day of _____________, 20____ by ________________________ and ___________________with Residence Certificate Nos. ______________________ and _________________, respectively, issued at _________________ on __________________, 20____ and ____________________, 20___. NOTARY PUBLIC Doc. No. _____ Page No. _____ Book No. _____ Series of _____ ANNEX A-3 Summary of System Description, Commercial Invoice/Receipts/Document Description, Forms/Records and Reports Specification ANNEX B Standard Functional and Technical Requirements on the Use of Computerized Accounting System (CAS), Computerized Books of Accounts (CBA) and/or Its Components, Including the Electronic Storage System (ESS), Middleware and Other Similar Systems ANNEX C Acknowledgement Certificate