Ensuring compliance: Preservation and examination of books of accounts

Businesses are required to maintain and preserve books of accounts for a certain period in compliance with tax laws and regulations.

- CARLA MEA RAVELO

This practice helps to ensure that businesses accurately report their financial activities and meet their obligations under tax and accounting standards.

By keeping detailed and organized records, businesses can effectively respond to audits, resolve disputes and demonstrate their commitment to transparency and legal compliance.

Under Section 235 of the Tax Code, as amended by the Ease of Paying Taxes Act (Republic Act 11976), taxpayers—corporations, companies, partnerships or individuals—are required to maintain and preserve all books of accounts, including the subsidiary books and other accounting records, for a period of five years reckoned from the day following the deadline in filing a return, or if filed after the deadline, from the date of filing of the return, for the taxable year when the last entry was made in the books of accounts.