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BIR Issues Another Advisory on Claims for Typhoon Losses

October 27, 2009

The Bureau of Internal Revenue (BIR) has issued another directive to business taxpayers to fully guide them in claiming deductions due to losses brought about by typhoons Ondoy and Pepeng. 


REVENUE MEMORANDUM ORDER (RMO) No. 31-2009 gives the policies and guidelines governing the declaration of losses or destruction of business property resulting from an identifiable event of a sudden or unexpected, or unusual nature – otherwise known in taxation as “casualty losses.” 

The RMO as issued stresses the need for business taxpayers to file with their respective BIR Offices a Sworn Declaration of Loss Arising from Casualty and other support documents deemed necessary to substantiate their proof of loss, within forty-five (45) days after the date of the event. 

The Sworn Declaration must be supported by the taxpayer’s Financial Statement for the year immediately preceding the event and copies of the Insurance Policy(ies), if any, for the concerned properties. 

Proof of the elements of the loss(es) claimed include, but not limited to, photographs of the properties taken before and after the typhoon with the latter showing the extent of the damage sustained, documentary evidence for determining the cost or valuation of the damaged properties such as but not limited to cancelled checks, vouchers, receipts, and other evidence of costs, insurance policy for the properties concerned, and police report in cases of robbery/theft during the typhoon and/or as a consequence of looting. 

The requisites of deductibility for income tax purposes, as discussed in the RMO focus on properties actually used in the business enterprise and properly recorded in the accounting records and financial statements as part of the taxpayer’s assets. 

The recovery of casualty losses through insurance claims is still governed by Revenue Regulations (RR) No. 12-77 and must be properly recorded and recognized in the taxpayer’s books of accounts. Moreover, the amount of loss compensated by insurance coverage should not be claimed as a deductible loss. 

A revised format of the Sworn Declaration is included in the subject RMO and may be downloaded from the BIR Website at www.bir.gov.ph.

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                              (original signed)

Please refer to: REYMARIE T. DE LA CRUZ, Chief, TIED, 9243245        

                                        (original signed)

Approved for Release: AIDA S. SIMBORIO, OIC-ACIR, Taxpayer Assistance Service    

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