On February 10, NordCham Philippines held a meeting with officials from the Bureau of Internal Revenue to discuss the current Computerized Accounting System (CAS) accreditation process.
NordCham raised three main challenges in the current CAS accreditation process:
*BIR’s requirements on CAS requirements are not 100% clearly defined: experience dictates that requirements has a tendency to change along the evaluation process. E.g. certificate of ownership in the case of multinationals and conglomerates (wherein the software licences are often owned by the parent company rather than the entity using the software) and cloud-based software.
*Duration of CAS accreditation process (i.e. from application to evaluation and accreditation) takes way too long. In some cases, a single application has taken two years. During this period, the applicant may not use their computerized accounting system as it is technically non-compliant, which is an issue for foreign business.
*New technology, such as the cloud and other applications speed up the release of newer versions and/or additional options each year. In fact, new releases are old news, typically softwares are now updated online on a monthly basis. The issue at hand is for BIR to manage expertise across platforms in fast-paced times. Also, the legal framework and BIR CAS accreditation process does respond well to the cycle of quarterly software updates, triggering continuous accreditation processes for companies to comply.
In response, BIR is currently drafting a revenue regulation that seeks to address issues in the process. Under the proposed revenue regulation, BIR is eyeing the accreditation of software and its vendor to replace the current practice of accrediting each company.
The draft regulation also proposes the transfer of authority to issue the permit-to-use back to the Revenue District Office (RDO) level. Furthermore, BIR is looking into finding common ground between the terms in the Country’s Tax Code and the Multinational Software License (ie. the terms “Sales Invoice” and “Tax Invoice” are now acceptable terms when it comes to CAS) through a table of equivalence that aims to match terms in the system with the Philippines Tax Code.
Recommendations by NordCham:
*Create a technical working group composed of the BIR and major accounting software vendors that will draft a technical document that clearly outline requirements and process of the CAS application.
*Revisit the legal definition of the software license and ownership, and provide applicants with a specific guideline that will assist them in complying with BIR’s rules (Current solution of BIR: Issuance of Sworn Statement of Software Ownership)
*Instead of accrediting individual companies, accredit the accounting packages and their suppliers, akin to what is being done for POS. Making it the suppliers’ responsibility to implement and ensure compliance to BIR rather than their customers
*Include guidelines on cloud-based accounting software.