Regulations Providing for the Policies, Guidelines and Procedures on the Application for Change in Accounting Period Under Section 46 of the National Internal Revenue Code (NIRC) of 1997, as Amended

March 7, 2011 REVENUE REGULATIONS NO. 03-11 SUBJECT : Regulations Providing for the Policies, Guidelines and Procedures on the Application for Change in Accounting Period Under Section 46 of the National Internal Revenue Code (NIRC) of 1997, as Amended TO : All Revenue Officials and Others Concerned SECTION 1 . Objective. These Regulations are hereby promulgated to provide the guidelines and prescribe the documentary requirements on the application for change in accounting period. It is also issued to streamline the processing of applications for approval of changes in accounting period to improve the efficiency and service to the taxpayers. SECTION 2 . Change of Accounting Period. Pursuant to Section 46 of the NIRC of 1997, as amended, 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 Bureau of Internal Revenue (BIR), be computed on the basis of such new accounting period. Whenever a taxpayer changes its accounting period, the taxpayer is required to file with the BIR a separate final or adjustment return for the period between the close of the original accounting period and the date designated as the close of the new accounting period. SECTION 3 . Documentary Requirements. The following are the documentary requirements which must be submitted when seeking approval for change in accounting period: 1. Letter Request addressed to the Revenue District Officer having jurisdiction over the place of business of the taxpayer, indicating: a. The original accounting period and the proposed new accounting period to be adopted; and b. The reasons for desiring to change the accounting period. 2. Duly filled-up BIR Form No. 1905; 3. Certified true copy of the Securities and Exchange Commission approved Amended By-Laws showing the change in accounting period; 4. Sworn certification of "non-forum shopping" stating that such request has not been filed or previously acted upon by the BIR National Office, signed by the taxpayer or duly authorized representative; and aCASEH 5. A sworn undertaking by a responsible officer of the taxpayer, such as a partner, president, general manager, branch manager, treasurer or officer-in-charge, to file a separate final or adjustment return for the period between the close of the original accounting period and the date designated as the close of the new accounting period on or before the 15th day of the fourth month following the end of the period covered by the final/adjustment return. The undertaking shall include a clause stating that failure to comply with such undertaking will result to the invalidation of the approval of the change in accounting period, and will subject the taxpayer to criminal offense for failure to file return, supply correct and accurate information punishable under Section 255 of the NIRC of 1997, as amended. The pro-forma endorsement is attached hereto as Annex "A". SECTION 4 . When to File. The request for approval of the change in accounting period should be filed at anytime not less than sixty (60) days prior to the beginning of the proposed new accounting period. SECTION 5 . Processing of Request for Issuance of Certificate Granting Change in Accounting Period. A. Application and Pre-Evaluation by the Revenue District Office 1. The requesting corporation shall submit all the documentary requirements for the processing of its Certificate of Change in Accounting Period. 2. The Officer of the Day in the concerned RDO shall pre-evaluate the application if it satisfactorily complies with the herein prescribed guidelines using the Action Sheet-Checklist of Requirements (Annex "B"). a. If found complete and in order, he shall then forward the application together with the supporting documents to the Revenue District Officer who, in turn, shall thoroughly evaluate the same. Otherwise, a Notice to Comply (Annex "C") shall be issued by the Revenue District Officer to the representative of the applicant corporation. b. If after the lapse of the period given in the Notice to Comply, the applicant fails to submit documents required, a Notice of Archiving (Annex "D") shall be issued by the Revenue District Officer. 3. The Revenue District Officer shall prepare an endorsement letter addressed to the Chief, Legal Division of the Revenue Region having jurisdiction over the RDO. The pro-forma endorsement is attached hereto as Annex "E". The Revenue District Officer, within five (5) days from receipt of the application together with complete documentary requirements, shall then transmit his endorsement letter together with complete set of documents to the Legal Division of the Revenue Region for evaluation. B. Evaluation and Preparation of Certificates of Granting Change in Accounting Period 1. Upon receipt by the Chief, Legal Division of the Regional Office of applications for approval of change in accounting period, he shall assign the same to an action officer for evaluation and the appropriate action. If in order, the Chief, Legal Division shall sign a Memorandum Indorsement for the Regional Director's issuance of Certificate Granting the Change in Accounting Period, otherwise, the same shall be returned to the RDO concerned with a memorandum of their review findings and evaluation. 2. The Certificate Granting the Change in Accounting Period shall follow the format hereto attached as Annex "F", which have been made an integral part of this Revenue Regulations. C. Approval of Change in Accounting Period and Issuance of Certificates by the Regional Director STHAID 1. The application for the issuance of Certificate Granting the Change in Accounting Period shall be signed by the Regional Director if he finds the same to be in order. Otherwise, the same shall be returned to the Legal Division/RDO with a memorandum of his review findings and evaluation. 2. Only applications which strictly comply with the legal and documentary requirements prescribed herein shall be approved by the Regional Director. D. Numbering and Releasing of Certificates 1. Immediately after the Certificate Granting the Change in Accounting Period has been approved and signed by the Regional Director, the same shall be numbered in the upper right portion of the Certificate. 2. The Certification shall adopt the following numbering code: "BIR CGCAP No. RR 01-RDO 001-00001-2011 " where: a. RR 01 stands for the issuing Revenue Region; b. RDO 001 refers to the RDO No. where the organization is registered; c. 00001 indicates that this is the first certificate issued for the year in the Regional Office concerned; and d. 2011 represents the year the CGCAP was issued. 3. The Legal Division of the Revenue Region shall prepare the Certificates in three (3) copies to be issued and distributed as follows: Original taxpayer's copy Duplicate copy to be attached to the docket Triplicate copy to the ACIR, Legal Service a. The Legal Division must ensure that the original copy of the signed Certificate must bear the official dry seal of the Bureau before their release to taxpayers to avoid invalidation of the same. b. The Legal Division shall maintain a permanent record book where the Certificate Granting the Change in Accounting Period Number, Applicant Corporation, and the Date of Issue. SECTION 6 . Period Within which to Issue the Certification. The certification approving the adoption of a new accounting period must be released within thirty (30) working days from the date of receipt of the complete documentary requirements. SECTION 7 . Repealing Clause. Any revenue issuances or parts thereof inconsistent with this Regulation is considered revoked, repealed or modified accordingly. SECTION 8 . Effectivity. These Regulations shall take effect after fifteen (15) days from date of publication in a newspaper of general circulation. IHSTDE (SGD.) CESAR V. PURISIMA Secretary of Finance Recommending Approval: (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue ANNEX A [Undertaking in Application for Change in Accounting Period] REPUBLIC OF THE PHILIPPINES ) _____________________________ ) S.S. Undertaking to File a Separate Final/Adjustment Return I, [Name of Authorized Officer] , of legal age, Filipino, with address at [Address] , being the incumbent [Position] of [Name of the Corporation] , a corporation duly organized and existing under the laws of the Philippines, with office address at [Address of the Corporation] , and its duly authorized representative, after having been duly sworn in accordance with law, do hereby certify that: 1. The Corporation amended its By-Laws to effect the change of its accounting period from ______________ to ___________; 2. On _____________, I caused the filing of the application with the Bureau of Internal Revenue for the approval of the change in accounting period to be used as the basis upon which the net income of the Corporation will be computed; 3. I am aware that under Section 27 of the National Internal Revenue Code of 1997, as amended, a taxpayer that changes the basis of computing net income from one accounting period to another has the duty to file a separate final or adjustment return for the period between the close of the original accounting period and the date designated as the close of the new accounting period; and 4. After securing the approval of the change in accounting period from the Bureau of Internal Revenue, the Corporation undertakes to subsequently file a separate final or adjustment return for the period between the close of the original accounting period and the date designated as the close of the new accounting period on or before the 15th day of the fourth month following the end of the period covered by the final/adjustment return; and 5. I fully understand that failure to comply with this undertaking will result to the invalidation of the approval of the change in accounting period, and will subject the Corporation to a fine of Ten Thousand Pesos (P10,000.00) and result to a criminal offense for failure to supply correct and accurate information punishable under Section 255 of the National Internal Revenue Code of 1997, as amended. IN WITNESS WHEREOF, I have hereunto set my hand on this ____ day of ___________ at __________, Philippines. [Signature over Printed Name] SUBSCRIBED AND SWORN to before me this ___ day of __________ at _____________, Philippines, affiant who is personally known to me, exhibiting the following: DHacTC Competent Evidence of Identity Community Tax Certificate Type of ID ID Number and Expiry Number Date/Place Issued Date (if applicable) Affiant _________ ________________ _________ ______________ _________ ________________ _________ ______________ NOTARY PUBLIC Doc. No. _____; Page No. _____; Book No. _____; Series of ______. ANNEX B Case Officer: ____________ RDO Control No: _________________ Checklist of Requirements for Application to Change Accounting Period Pursuant to RR No. ___-2011 Name of taxpayer: ____________________________________________________ Date Request was filed at the RDO: ______________________________________ [/] SUBMITTED/[X] NOT SUBMITTED 1. Letter application for approval of the Change in Accounting Period, specifying ____________ a. The original accounting period and the proposed new accounting period to be adopted; and ____________ b. The reasons for desiring to change the current accounting period. ____________ 2. Duly filled-up BIR Form No. 1905; ____________ 3. Certified copy of the Securities and Exchange Commission approved Amended By-Laws showing the change in accounting period; ____________ 4. Sworn certification of "non-forum shopping" stating that such request has not been filed or previously acted upon by the BIR, signed by the taxpayer or its duly authorized representative; ____________ 5. A sworn undertaking by a responsible officer of the taxpayer, such as a partner, president, general manager, branch manager, treasurer or officer-in-charge, stating that: ____________ a. I will file a separate final or adjustment return for the period between the close of the original accounting period and the date designated as the close of the new accounting period on or before the 15th day of the fourth month following the end of the period covered by the final/adjustment return; and ____________ b. Failure to comply with the undertaking will result to the invalidation of the approval of the change in accounting period, and will subject the taxpayer to a fine of P10,000.00 and result to a criminal offense for failure to supply correct and accurate information punishable under Section 255 of the NIRC. ____________ Other documents submitted: ____________ Additional Notes: ____________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ ANNEX C Notice to Comply [Date] [Name of Corporation] [Address] Attention : [Name of Signatory to Application] Gentlemen/Ladies: This is to acknowledge receipt of your letter dated [____________], requesting for the issuance of Certificate of Granting Change in Accounting Period under Section 46 of the NIRC of 1997, as amended, and Revenue Regulations No. _______. ASaTCE To facilitate the processing of the above application, please submit the following documents: 1. [List of Missing Documents] Should you fail to submit the aforementioned documents within 10 working days from receipt of this notice, we shall consider to archive your request letter, without prejudice to your filing of a new request. Very truly yours, [Name of Signatory] Revenue District Officer RDO _____ OFFICE CODE ANNEX D Notice of Archiving [Date] [Name of Corporation] [Address] Attention : [Name of Signatory to Application] Gentlemen/Ladies: This is to acknowledge receipt of your letter dated [__________], requesting for the issuance of Certificate Granting Change in Accounting Period under Section 46 of the NIRC of 1997, as amended, and Revenue Regulations No. ________. In our letter dated [date of notice for submission of requirements] , you were given [date of RDO's deadline to taxpayer] to comply with the submission of documents in order for your application to be processed. However, to date we have not received all the documents necessary for the processing of your application. In view thereof, we have already closed your file without prejudice to your filing of a new application with complete documentary requirements. Very truly yours, [Name of Signatory] Revenue District Officer RDO _____ OFFICE CODE ANNEX E Republic of the Philippines Department of Finance Bureau of Internal Revenue Revenue District Office No. ____ Revenue Region. ____ 1st Endorsement (Date) Respectfully forwarded to Regional Director (Name of Director) , Revenue Region No. (RR number) , (Municipality/City) , the attached application for approval of the change in accounting period of (Name of Requesting Corporation) , with principal office address at (Complete address) , bearing the herein recommendation for the issuance of the Certificate Granting the Change in Accounting Period to the requesting corporation which has satisfactorily complied with the legal as well as documentary requirements prescribed under Revenue Regulations No. _____, for appropriate action. HTCSDE ______________________ Revenue District Officer ANNEX F BIR CGCAP No. RR 01-RDO 001-00001-2011 Certificate Granting the Change in Accounting Period This is to certify that [Name of the Corporation] , a corporation duly organized and existing under the laws of the Philippines, with office address at [Address of the Corporation] , and a duly registered taxpayer of Revenue District Office No. _______ under Tax Identification No. __________, is hereby granted the authority to effect its requested change in accounting period. The Corporation's new accounting period is revised from [Old Accounting Period] to [New Accounting Period] effective [Beginning of New Accounting Period] . This approval of the adoption of a new accounting period shall be valid until a later application for change of accounting period is granted by this Office, a law is passed requiring a specific accounting period for corporations belonging a particular classification, or upon violation of the undertaking to file a separate/final adjustment return as required under Section 47 of the National Internal Revenue Code of 1997, as amended. In Testimony Whereof, I have hereunto set my hand at ______________ this ____ day of ___________ 2011. [Signature over Printed Name] REVENUE DISTRICT OFFICER [Office Code] Published in Manila Bulletin on March 9, 2011.