Calendar Year vs Fiscal Year

Did you know that there are taxpayers who are REQUIRED to adopt the calendar year accounting period? --- In general, the taxable income shall be computed upon the basis of the taxpayer's annual accounting period – fiscal year or calendar year, as the case may be.

WHAT’s THE DIFFERENCE?

The calendar year accounting period, of course, follows the calendar period which is 12 consecutive months beginning January 1 and ending December 31.

Fiscal year, on the other hand, is ANY 12 consecutive months ending on the last day of ANY month other than December.

WHO ARE REQUIRED TO ADOPT THE CALENDAR YEAR? a. Taxpayers whose annual accounting period is other than a fiscal year; b. Taxpayers who have no annual accounting period; c. Taxpayers who do not keep books; and d. Individual taxpayers.

CAN I CHANGE FROM CALENDAR YEAR TO FISCAL YEAR AND VICE VERSA? Yes, if you are not one of the above-mentioned taxpayers, you can opt to change your accounting period to a fiscal year. The documentary requirements for submission are enumerated under Revenue Regulations (RR) No. 3-2011.

Also, note that whenever a taxpayer changes its accounting period, he/she is required to file with the BIR a separate final or adjustment return for the period between the close of the original accounting period and the date designated as the close of the new accounting period.

As the year rolls to its end, we hope we were able to help you improve your tax knowledge about this topic.

See you next calendar year!

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