Philippines: Scanned copies of expenses do not satisfy tax deductibility requirements

The Bureau of Internal Revenue issued a ruling on scanned copies of receipts/bills evidencing business expenses

Scanned copies of expenses do not satisfy tax deductibility requirements

The Bureau of Internal Revenue (BIR) issued a ruling that scanned copies of receipts/bills evidencing business expenses did not satisfy the substantiation and record-keeping requirements for deductibility of expenses under Sections 34(A)(1)(b) and 237 of the Tax Code.

In its ruling, the BIR took into consideration Revenue Regulations (RR) No. 17-2013, RR No. 09-2009, and Republic Act No. 8792, otherwise known as the Electronic Commerce Act of the Philippines (e-Commerce Act).

  • RR No. 17-2013 provides that taxpayers must retain copies of the books of accounts, including subsidiary books and other accounting records for 10 years, and taxpayers are required to retain the hard copies for the first five years. Thereafter, the taxpayer has the option for the remaining five years to retain the documents as electronic copies in an electronic storage system (compliant with the requirements under Section 2-A of RR No. 17-2013) or as hard copies. The term “other accounting records” includes the corresponding invoices, receipts, vouchers and returns, and other source documents supporting the entries in the book of accounts.
  • RR No. 09-2009 outlines the requirements, obligations, and responsibilities imposed on taxpayers for electronic record keeping and maintenance of electronic books of accounts and electronic records. Under Section 8.2 of the RR, a taxpayer intending to store its records in microfilm, microfiche and other storage-only imaging systems must secure a permit from the BIR prior to adopting this system.
  • The e-Commerce Act provides that a scanned document alone cannot prove the integrity of a document if the original document from which the scanned document was based on does not exist anymore.

Read an August 2023 report prepared by the KPMG member firm in the Philippines


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