Prescribing Additional Requirements for Certification by Independent Certified Public Accountants (CPAs) for Internal Revenue Tax Purposes.

May 31, 1990 REVENUE REGULATIONS NO. 03-90 SUBJECT : Prescribing Additional Requirements for Certification by Independent Certified Public Accountants (CPAs) for Internal Revenue Tax Purposes TO : All Internal Revenue Officers, Independent Certified Public Accountants (CPAs) and Others Concerned SECTION 1 . Scope and Objective . Pursuant to the provisions of Sections 245 and 16(h), in relation to Section 232 of the National Internal Revenue Code (NIRC), as amended, these regulations are hereby promulgated to govern the additional requirements for certification by independent certified public accountants for internal revenue tax purposes. cdt These regulations are being issued to ensure proper and full compliance with the additional requirements for certification which shall be utilized as an effective means in plugging loopholes that cause tax revenue losses. The independent CPA is responsible for performing a verification of the extent of compliance of the taxpayer-client on the requirements prescribed in Section 2 in accordance with professional standards. On the other hand, the taxpayer-client is primarily responsible for compliance with these requirements. SECTION 2 . Additional Requirements . In certifying as to the compliance of taxpayer-client with these requirements, the independent CPAs shall review the tax returns and perform the necessary procedures to determine the correct tax obligation of the taxpayer-client. In this respect, the independent CPAs shall certify to the following: i) That, substantially, the withholding taxes due on income payments, whether final or creditable, except on salaries and wages, have been withheld, reconciled with the financial statements attached to the return, and remit to the Bureau of Internal Revenue; ii) That inventories of VAT-registered taxpayers at the end of the taxable year are recorded in the books of accounts net of input taxes; iii) That input taxes for value-added tax (VAT) purposes are duly covered by VAT invoices from VAT-registered suppliers; and iv) That items of income, deductions and exemptions reflected in the income tax returns are substantially in accordance with existing revenue laws, rules and regulations. aisa dc In the event that an independent CPA discovers any substantial deviation by the taxpayer-client from the applicable rules and regulations pertaining to the above items, he shall qualify his opinion or make a general statement to this effect. The foregoing information shall be contained in one certification to be called Certification of Taxpayer Compliance (CTC) separate from the standard certification being issued by independent CPAs. In addition to the above, the information prescribed in Section 8-A(2) of the Bookkeeping Regulations, as amended, shall henceforth be included in the CTC. This certification shall be addressed to the Commissioner of Internal Revenue. SECTION 3 . Where and When to File Certification . The independent CPA shall file the certification together with the taxpayer's return with the BIR Office where the corresponding tax return of the taxpayer-client will be filed. SECTION 4 . Priority in Investigation . Subject to certain exceptions as determined by the Commissioner of Internal Revenue, taxpayer's returns accompanied by an independent CPA's certification as required under these regulations shall be given last priority in the audit of tax returns. SECTION 5 . Penal Provision . Any independent Certified Public Accountant who issues an unqualified Certification of Taxpayer Compliance (CTC) with the full knowledge of the fact that the taxpayer-client withheld, omitted or presented misleading information, shall be held liable to penalties prescribed under Sections 232(C), 256 and 274 of the Tax Code. cdt SECTION 6 . Effectivity . These regulations shall take effect immediately and apply to VAT returns covering months of 1990 and all subsequent years; withholding tax returns for the calendar year 1990 and all subsequent years; and income tax returns for the taxable year ending December 31, 1990 and all subsequent years. (SGD.) JESUS D. ESTANISLAO Secretary of Finance Recommended by: (SGD.) JOSE U. ONG Commissioner of Internal Revenue