
1
REVENUE REGULATIONS NO. 8-2007 issued on August 1, 2007 prescribes the
additional compliance requirements from taxpayers mandated to adopt the Philippine
Financial Reporting Standards (PFRS) in recording business transactions and preparing
financial statements.
The Philippines has adopted the International Financial Reporting Standards (IFRS)
as the PFRS that should be observed by big corporate taxpayers in the recording of their
business transactions and preparation of Financial Statements starting year 2005. Under the
PFRS, the recording and the recognition of business transactions for financial accounting
purposes, in a majority of situations, differ from the application of tax rules on the same
transactions resulting to disparity of reports for financial accounting vis-a-vis tax accounting.
Hence, there is a need to reconcile the disparity in a systematic and clear manner to avoid
irritants between the taxpayers and the tax enforcer.
Accordingly, concerned taxpayers are mandated to maintain books and records that
would reflect the reconciling items between Financial Statements figures and/or data with
those reflected/presented in the filed Income Tax Return (ITR). The recording and
presentation of the reconciling items in such books and records shall be done in such a
manner that would facilitate the understanding by the examiners/auditors of the Bureau of
Internal Revenue tasked to undertake audit/ investigation functions, providing in sufficient
detail the computation of the differences and the reasons therefore aimed at bringing into
agreement the PFRS and ITR figures.
The keeping of books and records for the reconciling items referred to in the
Regulations shall start for taxable year 2007. For this purpose ‘taxable year 2007’ shall mean
calendar year ending December 31, 2007 and all fiscal years ending not later than June 30,
2008.