In ‘CAS’ you missed it!

Remember the time when you went out from your house and then suddenly your instincts tell you that you missed something? Probably, one of the things you missed was an update on the rules and regulations on the registration of Computerized Accounting System or “CAS”.

Last year, before the pandemic hit the Philippines, the Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular (RMC) 10-2020. This caused a seismic change to the then tedious and long process of registering CAS with the BIR by suspending the issuance of the Permit to Use (PTU) CAS. Of course, the implementation of RMC 10-2020 was a welcome development to taxpayers as the timeline of registration of CAS was drastically cut to three working days from what seemed like a forever timeframe. Also, the number of general documentary requirements was considerably reduced to three documents as compared to the previous requirements that your fingers cannot count.

As RMC 10-2020 gained steam from its implementation last year, the BIR released RMC 5-2021, dated Dec. 28, 2020, which simplified the policies on the application for registration of CAS, Computerized Books of Accounts (CBA) and/or its components, including the Electronic Storage System (ESS), middleware and other similar systems (collectively called as “CAS”). Unlike RMC 10-2020, RMC 5-2021 did not only suspend the requirement for the issuance of PTU CAS. Instead, it categorically removed the need to secure a PTU CAS.

So, what is the catch here? Can taxpayers use CAS outright without going through any CAS registration process? The answer is – NO. While RMC 5-2021 dispenses the requirement for the issuance of PTU CAS, it still requires the registration of the “system”. RMC 5-2021 does not define the term “system”, but it can be gleaned from this RMC that “system” refers to the collective term CAS.

When RMC 10-2020 is still the prevailing policy, there were questions like “Is there still a need to submit the BIR form 1900 (CAS application form)?” or “Is the BIR still required to conduct a systems demonstration before the taxpayer can actually use the CAS?” These were both answered in RMC 5-2021, which specifically dispensed the submission of the BIR form 1900 and the conduct of systems demonstration. In lieu of the systems demonstration, the post-evaluation or audit will be conducted by the BIR to check compliance of the registered CAS to standards set under existing rules.

Another interesting guideline introduced in RMC 5-2021 is the checklist of standards set by the BIR for a registered CAS to be considered compliant under the rules. Before, there was a dilemma among the CAS applicants if they can submit the required documents under RMC 10-2020 without first validating whether their CAS are already tax-compliant. With the checklist provided in Annex B of RMC 5-2021, CAS applicants will be able to evaluate whether its CAS will be able to comply with the standards set forth. In case of post-evaluation or audit and the BIR will find out that the CAS is non-compliant, the taxpayer using the CAS can be penalized under Revenue Memorandum Order 7-2015 and other existing revenue issuances.

Taxpayers with existing PTU CAS shall not be required to apply for registration under RMC 5-2021, except for the following circumstances: (1) PTU was revoked due to non-compliance with existing revenue issuances during the conduct of authorized audit activity or post-evaluation. And, (2) existence of major systems enhancement or upgrade. In case of minor modifications to CAS, the taxpayer is only required to submit a written notification to their registered Revenue District Offices/Large Tax Office stating the specific minor enhancements on the system.

Indeed, RMC 5-2021 is another welcome development from the BIR as the simplified policies regarding the registration of CAS align with our government’s efforts to improve the ease of doing business in the Philippines. While the detailed guidelines and procedure regarding registration of the CAS is still underway, it just shows that the rules and regulations on the registration of CAS are still evolving. So, stay tuned just in “CAS” you miss it again.

Raynan A. Larosa is a manager from the tax group of KPMG R.G. Manabat & Co. (KPMG RGM&Co.), the Philippine member firm of KPMG International. KPMG RGM&Co. has been recognized as a Tier 1 tax practice and Tier 1 transfer pricing practice by the International Tax Review.

This article is for general information purposes only and should not be considered as professional advice to a specific issue or entity.

The views and opinions expressed herein are those of the author and do not necessarily represent the views and opinions of KPMG International or KPMG RGM&Co. For comments or inquiries, please email [email protected] or [email protected].