Do I need an Audited Financial Statement (AFS)?
AFS is now only required for those earning more than Php 3 Million / year
Written by EJ Arboleda
You read that right -- AFS is now only required for entities earning more than Php 3 Million/year.
Here is what the relevant section in our Tax Code Used to say:
SEC. 232. Keeping of Books of Accounts. -
(A) Corporations, Companies, Partnerships or Persons Required to Keep Books of Accounts. - All corporations, companies, partnerships or persons required by law to pay internal revenue taxes shall keep a journal and a ledger or their equivalents: Provided, however, That those whose quarterly sales, earnings, receipts, or output do not exceed Fifty thousand pesos (P50,000) shall keep and use simplified set of bookkeeping records duly authorized by the Secretary of Finance where in all transactions and results of operations are shown and from which all taxes due the Government may readily and accurately be ascertained and determined any time of the year: Provided, further, That corporations, companies, partnerships or persons whose gross quarterly sales, earnings, receipts or output exceed One hundred fifty thousand pesos (P150,000) shall have their books of accounts audited and examined yearly by independent Certified Public Accountants and their income tax returns accompanied with a duly accomplished Account Information Form (AIF) which shall contain, among others, information lifted from certified balance sheets, profit and loss statements, schedules listing income-producing properties and the corresponding income therefrom and other relevant statements.
Now this is what it says (updated by RA 10963 aka TRAIN Law):
You'll see that the updated law now shows that the AIF and books of accounts need to be audited by an independent CPA if the gross annual sales exceeds Php 3 Million, versus the previous threshold of Php 150 Thousand.
If your annual sales do exceed Php 3 Million, the question now is:
I thought I was supposed to provide Audited Financial Statements? What's this AIF?
That question is answered here: AIF or AFS?
If you do need an AFS, do get in touch with us. This has to be done by an independent auditor -- we can endorse you to our CPA contacts.
P.S. We've heard that some RDO's seem to not be updated yet with this change brought by TRAIN. First, I believe that it is well within you're right to tell them that this is no longer required because of a law signed by the president! Second, of course, if you want to comply, we can endorse you to a CPA who can create that for you.
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