REVENUE MEMORANDUM CIRCULAR NO. 22-2004 issued on April 14, 2004 defines the rule relative to the accounting methods to be used by taxpayers for internal revenue tax purposes.

     All returns required to be filed by the Tax Code shall be prepared always in conformity with the provisions of the Tax Code, and the rules and regulations issued implementing the Tax Code. Taxability of income and deductibility of expenses shall also be determined strictly in accordance with the provisions of the Tax Code and the rules and regulations issued implementing the Tax Code. In case of difference between the provisions of the Tax Code and its implementing rules and regulations, on one hand, and the generally accepted accounting principles (GAAP) and the generally accepted auditing standards (GAAS), on the other hand, the provisions of the Tax Code and its implementing rules and regulations shall prevail.