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REPUBLIKA NG PILIPINAS
KAGAWARAN NG PANANALAPI
KAWANIHAN NG RENTAS INTERNAS
Quezon City


REVENUE REGULATIONS NO. 9-2009



_______December 23, 2009______
(Date)

SUBJECT : Maintenance, Retention, and Submission of Electronic Records

TO : All Internal RevenueOfficers and Others Concerned



SECTION 1. PURPOSE

1.1 The purpose of theseregulations are to define the requirements, obligations and
responsibilities imposed on taxpayers for electronic record keeping and maintenance
of electronic books of accounts, electronic records, and other sources of information
under the National Internal Revenue Code of the Philippines (NIRC), as amended.
1.2 It is also the purpose of these regulations to address the requirements for retention of
records thru various processes and systems, including but not limited to, computer
electronic and imaging processes.
1.3 These regulations also provide the requirements for the access and submission of
electronic records to the BIR.
1.4 The regulations shall make it mandatory for Large Taxpayers classified under
Revenue Regulations No. 1-98 to maintain and/or adopt a Computerized Accounting
Systems (CAS).


SECTION 2. DEFINITIONS

2.1 For purposes of this regulation, these terms shall be defined as follows:

2.1.1 Database Management System means a software system that controls,
relates, retrieves, and provides accessibility to data stored in a database.
2.1.2 Electronic data interchange or EDI technology means the computer-to-
computer exchange of business transactions in a standardized structured electronic
format.
2.1.3 Hard copy means any documents, records, reports or other data printed on
paper.
2.1.4 Electronic record means a collection of related information in an
electronically readableformat. Electronic records do not include hard-copy records
that are created or recorded on paper or stored in or by an imaging system such as
microfilm, micro-fiche, or storage-only imaging systems.
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2.1.5 Electronically readable format means information supported by a system
capable of producing an accessible and useable copy.

(a) Accessible copy means that the taxpayer must provide an acceptable
copy of the electronic records in an electronically readable and
useable format to Bureau of Internal Revenue Tax Auditors
(examiners/investigators) to permit them to process and analyze the
electronic records on BIR equipment.
(b) A copy is useable if the electronic records can be processed and
analyzed with BIR audit software.
(c) The useable copy must be in a non-proprietary, commonly used data
interchange format that is compatible with BIR software.
(d) Electronic files retained in an encrypted or proprietary backup
format must be able to be restored at a later date to an accessible and
useable state to meet BIR requirements.

2.1.6 Storage-only imaging system means a system of computer hardware and
software that provides for the storage, retention and retrieval of documents originally
created on paper. It does not include any system, or part of a system, that
manipulates or processes any information or data contained on the document in any
manner other than to reproduce the document in hardcopy or as an optical image.
2.1.7 Taxpayer as used in this regulation means Corporations, Companies,
Partnerships or Persons required to Keep Books of Accounts necessary to a
determination of tax liability.
2.1.8 Electronic record keeping means those electronic business systems that
create, process, store, maintain and provide access to the financial records of a
person, including but not limited to custom and commercial accounting software,
Point of Sale systems and Internet-based electronic commerce business systems.
2.1.9 Media refers to the physical forms of recorded information. This includes
paper, film, computer disks, computer tapes, and any other materials on which
information can be recorded.
2.1.10 CD-R (Compact Disc-Recordable) means an optical data storage written
and read using lasers that can be read or viewed only but cannot be modified, deleted,
or written over with new data. Recordable CDs are WORM (Write Once, Read
Multiple).
2.1.11 DVD-R (Digital Video Disc- Recordable) refers to a new generation of
optical disc storage technology which holds more data than the CD-R.




SECTION 3. ELECTRONIC RECORDKEEPING REQUIREMENTS - GENERAL

3.1 A taxpayer shall maintain all records that are necessary for the determination of the
correct tax liability under Section 232 of the NIRC. All required records must be made
available on request by the Commissioner of Internal Revenue or its authorized
representatives.

3.2 If a taxpayer retains records required to be kept under this regulation in both
electronic and hard-copy formats, the taxpayer shall make the records available to the Bureau
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of Internal Revenuein electronic format upon request of the Commissioner or its authorized
representative.

3.3 Nothing in this regulation shall be construed to prohibit a taxpayer from
demonstrating tax compliance with traditional hard-copy documents or reproductions
thereof, in whole or in part, whether or not such taxpayer also has retained or has the
capability to retain records on electronic or other storage media in accordance with this
regulation. However, this subsection shall not relieve the taxpayer of the obligation to
comply with subsection 3.2 of this regulation.


SECTION 4. ELECTRONIC RECORDKEEPING REQUIREMENTS FOR LARGE TAXPAYERS

4.1 All Large Taxpayers classified under Revenue Regulations No. 1-98 are required to
maintain Computerized Accounting Systems (CAS) or components thereof. Accordingly, all
books of accounts and accounting records shall be in electronic formats.

4.2 All Large Taxpayers who are currently maintaining their books of accounts and
accounting records in manual form are required to register their Computerized Accounting
Systems not later than December 31, 2009.

4.3 A Large Taxpayer using commercial and/or customized software to keep books and
records electronically is not relieved of the responsibility to keep adequate electronic records
because of deficiencies in the software.


SECTION 5. ELECTRONIC RECORDKEEPING REQUIREMENTS - ELECTRONIC RECORDS

5.1 General Requirements

5.1.1 Electronic records used to establish tax compliance shall contain sufficient
transaction-level detail information so that the details underlying the electronic
records can be identified and made available to the Bureau of Internal Revenue upon
request. A taxpayer has discretion to discard duplicated records and redundant
information provided its responsibilities under this regulation are met.

5.1.2 At the time of an examination, the retained records must be capable of being
retrieved and convertedto a standard record format in accordance with Revenue
Regulations No. 16-2006.

5.1.3 Taxpayers are not required to construct electronic recordsother than those
created in the ordinary course of business. A taxpayer who does not create the
electronic equivalent of a traditional paper document in the ordinary course of
business is not required to construct such a record for tax purposes.

5.2 Electronic Data Interchange Requirements

5.2.1 Where a taxpayer uses electronic data interchange processes and technology,
the level of record detail, in combination with other records related to the
transactions, must be equivalent to that contained in an acceptable paper record. For
example, the retained records should contain such information as vendor name,
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invoice date, product description, quantity purchased, price, amount of tax,
indication of tax status, shipping detail, etc. Codes may beused to identify some or
all of the data elements, provided that the taxpayer shall provide a method which
would allow the Bureau of Internal Revenueto convert the coded information into an
auditable data.

5.2.2 The taxpayer may capture the information necessary to satisfy section 5.2.1at
any level within the accounting system and need not retain the original EDI trans-
action records provided the audit trail, authenticity, and integrity of the retained
records can be established. For example, a taxpayer using electronic data
interchange technology receives electronic invoices from its suppliers. The taxpayer
decides to retain the invoice data from completed and verified EDI transactions in its
accounts payable system rather than to retain the EDI transactions themselves. Since
neither the EDI transaction nor the accounts payable system captures information
from the invoice pertaining to product description and vendor name (i.e., they
contain only codes for that information), the taxpayer also retains other records, such
as its vendor master file and product code description lists and makes them available
to theBureau of Internal Revenue. In this example, the taxpayer need not retain its
EDI transaction for tax purposes.

5.3 Electronic Data Processing Systems Requirements

5.3.1 The requirements for an electronic data processing accounting system should
be similar to that of a manual accounting system, in that an adequately designed
accounting system should incorporate methods and records that will satisfy the
requirements of this regulation.

5.3.2 The information that is required to re-create a sequence of events related to a
business transaction, must include sufficient detail to substantiate summarized
information. The electronic records must show an audit trail from the source
document(s), whether paper or electronic, to the summarized financial accounts. In
addition the trail may also include a number of links to other associated processes
and events such as front-end systems (e-commerce, Point of Sale), receipts,
payments, and stock inventories, all of which may have their own system audit trails.
For example, in Internet based e-commerce transactions, other records such as web
logs, emails when used as part of the transaction (e.g., invoice and confirmations) or
security measures such as digital signatures could be an important part of the audit
trail. Transactions covered by a trading partner agreement of electronic data
interchange (EDI), the electronic record(s) including functional acknowledgments
have to be kept. It is the taxpayers responsibility to ensure the reliability and
readability of these transaction records.

5.3.3 Taxpayers keeping electronic records must also retain source documents. A
source document includes items such as sales invoices, purchase invoices, cash
register receipts, formal written contracts, credit card receipts, delivery slips, deposit
slips, work orders, dockets, cheques, bank statements, tax returns, and could also
include emails, and other general correspondence where relevant for tax purposes.

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5.4 Business Process Information

5.4.1 Upon the request of the Commissioner of Internal Revenueor its authorized
representative, the taxpayer shall provide a description of the business process that
created the retainedrecords. Such description shall include the relationship between
the records and the tax documents prepared by the taxpayer and the measures
employed to ensure the integrity of the records.

5.4.2 The taxpayer shall be capable of demonstrating, among others, the following:

(a) the functions being performed as they relate to the flow of data through
the system;
(b) the internal controls used to ensure accurate and reliable processing; and
(c) the internal controls used to prevent unauthorized addition, alteration,
or deletion of retained records

5.4.3 The documentation required for electronic records retained shall, among
others, include the following:

(a) record formats or layouts;
(b) field definitions (including the meaning of all codes used to represent
information);
(c) file descriptions (e.g., dataset name); and
(d) detailed charts of accounts and account descriptions.

5.4.4 The following fields are mandatory for the following:

A. General Ledger
a. Date
b. Reference
c. Brief Description/Explanation
d. Account Title (Or Account Code if Chart of Accounts Master
file
1
is available)
e. Debits
f. Credits
B. General Journal
a. Date
b. Reference
c. Brief Description/Explanation
d. Account Title (Or Account Code if Chart of Accounts Master file
is available)
e. Debits
f. Credits
C. Sales Journal
a. Date
b. Customers TIN
c. Customers Name (Or Customer Code if Customer Master file
2
is
available)
d. Address (Not necessary if Customer Master fileis available)
e. Description
f. Reference/Document No./Sales Invoice

1
Contains fields such as Account Code, Account Title or Name, etc
2
Contains Code, TIN, Name, Address, etc
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g. Amount
h. Discount
i. VAT Amount (Output tax)
j. Net Sales

D. Purchase Journal
a. Date
b. Suppliers TIN
c. Vendors Name (Or Vendor s Code if Vendor Master file
3
is
available)
d. Address (Not necessary if Vendors Master file is available)
e. Description
f. Reference/Document No./Sales Invoice
g. Amount
h. Discount
i. VAT Amount (Input tax)
j. Net Purchases
E. Inventory Book
a. Date
b. Product Name (Or Product Code if Product Description Master
file is available)
c. Description
d. Unit
e. Price per unit
f. Amount

The Commissioner of Internal Revenue, or its authorized representative, can
prescribe additional fields when needed.

5.5 Transactionintegrity and security systems controls

5.5.1 A taxpayer carrying on a business with an electronic business system must
ensure that adequate controls are in place, which safeguards the accuracy, security,
and integrityof the electronic records processedand kept in that system. These can
include:

(a) access controls to ensure that only authorized users can have access
to a computer system to process data;
(b) input and output controls that ensure the accuracy and security of
the information created, received and transmitted;
(c) processing controls that protect and ensure the integrity of the
information processed by the system;
(d) back-up controls that guarantee the retention of back-up copies of
electronic records, computer programs, system documentation and
the recovery of electronic records in case of system failure;
(e) and controls to ensure there is no accidental or intentional editing or
deletion of recorded or completed transactions. Changes to any
recorded transaction must be made by journal entry, be adequately
documented, and include the following:
(a) person making modifications;

3
Contains Code, TIN, Name, Address, etc
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(b) dateof change;
(c) previous transaction details;
(d) current transaction details; and
(e) reason for the change or deletion

5.6 Changes to Business Systems

5.6.1 If changes to the operating and/or electronic business system occur the
capability to access and retrieve data must be preserved. The changes must not result
in a loss, destruction, or alteration of information and data relevant to the
determination of taxes payable, collected, or withheld. Adequate documentation
must be retained to preserve an accurate chronological record of the changes
including any changes to software or systems and the format of the files. These
changesmust be reported to the BIR before implementation of such changes.

5.6.2 Before implementing a new business system the taxpayer must ensure that:

(a) sufficient detail will be captured and produced to ensure proper
determination of internal revenue taxes administered by the BIR;
(b) the audit trail of each transaction will be preserved toallow BIR
auditors to verify accuracy of internal revenue taxesdetermined by
the taxpayer;
(c) adequate internal controls are incorporated in the system to ensure
that all transactions are being recordedaccurately and completely;
(d) the system ensures transaction integrity and security;
(e) the system will capture and save in a readable format the
information required by the BIR;
(f) BIR auditors will have access to all information produced by the
system and required by the BIR to verify the filed returns;
(g) adequate back-up and restore procedures will be in place to
safeguard information required by the BIR; and
(h) the system will continue to offer the capacity to export the required
information into a commonly used non-proprietary format.

SECTION 6. ELECTRONIC RECORDS MAINTENANCE AND LOCATION REQUIREMENTS

6.1 Maintenance.

6.1.1 The taxpayers computer hardware or software shall accommodate the
extraction and conversion of retained electronic records in accordance with Revenue
Regulations No. 16-2006.

6.1.2 Records that are retained by copying or backing up the data to another
medium must be done so in accordance with the media manufacturers suggested
procedures with particular attention given to the suggested shelf life of themedium.
Information recorded on rewritable media such as computer hard disks must be
backed up on CD-R /DVD-R, tape or other suitable medium to avoid accidental loss,
deletion, or erasure of the recorded information. The media containing the recorded
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information must be stored in an environment free from hazards that could affect the
media, such as magnetic fields, direct light, excessive moisture, and temperature
extremes.

6.1.3 It is the taxpayers responsibility to ensure that current and/or prior period
data files have been archived or backed up properly and adequately to meet books
and recordkeeping obligations.

6.1.4 When backups of electronic files are being used as a method of record
retention, procedures must be put in place to:

(a) Ensure that the backed up data files can be restored in a format that
will be accessible and useable by the BIR.
(b) Ensure that the intended data is actually being written to the
medium being used.
(c) Ensure that the backup procedure does not overwrite prior period
backupsor logs, destroying them.
(d) Ensure that the medium is uniquely labeled in a readily identifiable
manner.
(e) Ensure that a log is prepared to identify what records and data have
been recorded on such medium.
(f) Ensure that the log states how long this medium is to be retained
before it can be overwritten or discarded.
(g) Ensure that the name of the software and the version number used
to create the records are noted on the medium label and in the log.
(h) Ensure that the proper electronic business system software and
operating system are available to restore the backed up files to their
original environment.
(i) Ensure that there is periodic testing of backed up records to verify
that the backed up records can be restored into anelectronically
readable format.

6.2 Location

6.2.1 Records must be kept at the taxpayers place of business in the Philippines or
another place designated by the Commissioner of Internal Revenue and must, upon
request, be made available to Revenue Officers of the BIR for audit purposes during
business hours. Records kept outside the Philippines and accessed electronically
from the Philippines are not considered to be records in the Philippines. However,
where records are maintained electronically in a location outside the Philippines, the
BIR may accept a copy of the records, provided these are made available in the
Philippines in an electronically readable and useable format for BIR officials and they
contain adequate details to support the tax returns filed with the BIR.

6.2.2 All retained records must be clearly labeled and stored in a secure
environment in the Philippines. Authorization to maintain records elsewhere may be
granted, subject to such terms and conditions as the Commissioner of Internal
Revenue may specify in writing. These terms and conditions which are identical to
records maintained in the Philippines and which apply to electronic records, specify
that records stored outside the Philippines are to be made available to officials of the
BIR for audit purposes during business hours in accordance with the provision of
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National Internal Revenue Code as amended and this Revenue Regulations. The
authorization may be obtained by writing to Office of the Commissioner of Internal
Revenue or its authorized representative.

6.2.3 Normally a back-up of the electronic records are stored at a site other than
the business location for security and precautionary purposes (in case of fire, flood,
theft, or other cause), the BIR requires this business practice and back-up copies
must be maintained at a location within the Philippines.

6.2.4 It is the taxpayers responsibility to produce the records for inspection no
matter where those records are located.

6.2.5 Businesses that operate via the Internet and are hosted on a server located
outside of the Philippines should be cognizant of their responsibility to maintain
their records within the Philippines. Internet based businesses have the same
responsibilities related to record retention as all other business operations.

6.3 Use of Third-Party for Electronic Records maintenance

6.3.1 A taxpayer may engage the services of a third-partyto provide custodial
and/or management services of the records and shall notify the BIR prior to such
arrangement . Such utilization of a third-party shall not relieve the taxpayer of its
obligations under these regulations.


SECTION 7. ACCESS AND SUBMISSION OF ELECTRONIC RECORDS

7.1 The manner in which the BIR is provided access to electronic records as required in
subsection 3.2 of this regulation may be satisfied through a variety of means that shall take
into account taxpayers facts and circumstances through consultation with the taxpayer.

7.2 Such access will be provided in one or more of the following manners:

7.2.1 The taxpayer may arrange to provide the BIR with the hardware, software
and personnel resources to access the electronic records.

7.2.2 The taxpayer may arrange for a third-party to provide the hardware,
software and personnel resources necessary to access the electronic records.

7.2.3 The taxpayer may convert theelectronic recordsto astandard record format
specified by Revenue Regulations No. 16-2006, including copies of files, on a
magnetic medium that is agreed to by the BIR. The original files (unconverted
format or files in its native format) should also be submitted along with the copies of
the converted files.

7.2.4 The taxpayer and the BIR may agree on other means of providing access to
theelectronic records.

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SECTION 8. ALTERNATIVE STORAGE MEDIA

8.1 For purposes of storage and retention, taxpayers may convert hardcopy documents
received or produced in the normal course of business and required tobe retained under this
regulation tomicrofilm, microfiche or other storage-only imaging systems and may discard
the original hard-copy documents, provided the conditions hereunder enumerated are met.
Documents which may be storedon these media include, but are not limited to general books
of account, journals, voucher registers, general and subsidiary ledgers, and supporting records
of details, such as sales invoices, purchase invoices, exemption certificates, and credit
memoranda.

8.2 Microfilm, microfiche and other storage-only imaging systems shall comply, among
others, with the following requirements:

8.2.1 Documentation establ ishing the procedures for converting the hard-copy
documents to micro-film, microfiche or other storage-only imaging system must be
maintained and made available on request. Such documentation shall, at a minimum,
contain a sufficient description to allow an original document to be followed through
the conversion system as well as internal procedures established for inspection and
quality assurance.

8.2.2 Procedures must be established for the effective identification, processing,
storage, and preservation of the stored documents and for making them availablefor
the period they are requiredto be retained under section 10.

8.2.3 A person in authority within the organization has confirmed in writing that
the program will be part of the usual and ordinaryactivity of the organizations
business. Said person must execute a sworn statement that the original source
documents have been converted strictly in accordance with the standards and
verified to insure its integrity and completeness.

8.2.4 Upon request by the Commissioner of Internal Revenue or its duly Authorized
Representative, a taxpayer must providefacilities and equipment for reading, locating,
and reproducing any documents maintained on microfilm, microfiche or other
storage-only imaging system.

8.2.5 When displayed on such equipment or reproduced on paper, the documents
must exhibit a high degree of legibility and readability. For this purpose, legibility is
defined as the quality of a letter or numeral that enables the observer to identify it
positively and quickly to the exclusion of all other letters or numerals. Readability is
defined as the quality of a group of letters or numerals being recognizable as words or
complete numbers.

8.2.6 All data stored on microfilm, microfiche or other storage-only imaging
systems must be maintained and arranged in a manner that permits the location of
any particular record.

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8.2.7 A logbook shall be maintained to include, among others, the following
information:

(a) the date of the imaging;
(b) the signatures of the persons authorizing and performing the
imaging
(c) a description of the records imaged; and
(d) whether source documents are destroyed or disposed of after
imaging, and the date a source document was
destroyed or disposed of;

8.2.8 There is no substantial evidence that the microfilm, microfiche or other
storage-only imaging system lacks authenticity or integrity otherwise, such
converted documents may be wholly or partially disregarded by the BIR during tax
audits/investigations and shall resort to other evidence best obtainable to establish
the correct tax liabilities of the taxpayer.

8.3 Prior permit from the BIR is required before use of Microfilm, microfiche and other
storage-only imaging systems


SECTION 9. EFFECT ON HARD-COPY RECORDKEEPING REQUIREMENTS

9.1 Except as otherwise provided in this section, the provisions of this regulation donot
relieve taxpayers of the responsibility to retain hard-copy records that are created or received
in the ordinary course of business as required by existing law and regulations. Hard-copy
records may be retained on a recordkeeping medium as provided in section 8of this
regulation.

9.2 If hard-copy records are not produced or received in the ordinary course of
transacting business (e.g., when the taxpayer uses electronic data interchange technology),
such hard-copy records need not be created.

9.3 Hard-copy records generated at the time of a transaction using a credit or debit card
must be retained unless all the details necessary to determine correct tax liability relating to
the transaction are subsequently received and retained by the taxpayer in accordance with
this regulation. Such details include those listed in subsection 5.2.1.

9.4 Computer printouts that are created for validation, control, or other tempor ary
purposes need not be retained.

9.5 Nothing in this section shall prevent theBIR fromrequesting hard-copy printouts in
lieu of retained electronic records at thetimeof examination.


SECTION 10. ELECTRONIC RECORDS RETENTION - TIME PERIOD

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10.1All records required to be retained under this regulation shall be preserved pursuant to
Section235 of theNIRC unless the BIR has provided in writing that the records are no longer
required.


SECTION 11. REGISTRATION REQUIREMENTS

11.1 All computerized books of accounts, electronic record keeping, electronic business
systems and components thereof shall be registered with the Bureau of Internal Revenue in
accordance with Revenue Memorandum Order No. 29-2002 and all other pertinent
issuances.


SECTION 12. PENALTY CLAUSE

12.1 Any violation of the provisions of these Regulations may result to prosecution of the
taxpayer by the Bureau of Internal Revenue. Upon conviction, the taxpayer shall be held
liable to the penalties provided under Section 255 of the NIRC, in addition to any other
penaltiesotherwise payable.

SECTION 13. REPEALING CLAUSE

13.1 All existing revenue regulations and other issuances or portions thereof that are
inconsistent herewith are hereby revoked, repealed or amended accordingly. Provided that if
any provision or section of this regulationis held invalid, the other provisions or sections
shall not be affected thereby.


SECTION 14. EFFECTIVITY CLAUSE

14.1 TheseRegulations shall take effect after fifteen (15) days following its publication in
any newspaper of general circulation.



(Original Signed)
MARGARITO B. TEVES
Secretary of Finance


RECOMMENDING APPROVAL:

(Original Signed)
JOEL TAN-TORRES
Commissioner of Internal Revenue