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    Date: 2023-10-12 10:02:50.398379

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Clarification on the P3M gross annual sales threshold requiring CPA audit

Requested from BIR by A. O. at 10:02 AM on Oct 12, 2023.
Purpose: Personal reference
Date of Coverage: 10/12/2023 - 10/12/2023
Tracking no: #BIR-867233687909

O. 10:02 AM, Oct 12, 2023 

Hello!

Greetings. 

This is to request assistance on the interpretation of Sec 232 provisions of the NIRC. 

The provision says that a person who has P3M or more worth of annual sales/earnings/receipts will require a CPA audit.

Questions please:
1. If I am a mixed earner (compensation+ business), will the P3M include my salary or not?
2. If I have 2 types of businesses, say a car wash and a barber shop, will the 3 million include the total of both types?
3. If I have 1 type of business with 2 or more branches, will the 3 million include the total of all the branches?

Thank you.


October 13, 2023

Dear Ms. Ann:

Greetings!

Thank you for your request dated Oct 12, 2023 under Executive Order No. 2 (s. 2016) on Freedom of Information in the Executive Branch.

Your request

You asked for Clarification on the P3M gross annual sales threshold requiring CPA audit.

Response to your request

In reply, please be informed of the following:

Q1. If I am a Mixed Earner (compensation + business) , will the 3M include my salary or not?

A1. Yes, the 3M threshold shall be comprised of all sources of income.

Q2. If I have 2 types of businesses, say a car wash and a barber shop, will the 3M include the total of both types?

A2. Yes, a single proprietor shall be taxed based on the consolidated income from all businesses.

Q3. If I have 1 type of business with 2 or more branches, will the 3M include the total of all the branches?

A3. Yes, provided that the business bears the same TIN with Different Branch Codes and is a Single Proprietor.

Thank you.

FOI Receiving Officer
Public Information and Education Division

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