Basis for depreciation of property, plant and equipment

(Revenue Memorandum Circular No. 70-2010, August 09, 2010)


The BIR, in the recently issued Revenue Memorandum Circular (RMC) No. 70-2010,  clarified that the concept of depreciation as a mere recovery of cost has not changed from the old Tax Code to the present. Hence, taxpayers using the reappraised value as basis for computing depreciation of property, plant and equipment for tax purposes may consider amending its previously filed income tax returns if no letter of authority for tax audit has been issued by the BIR.

Under the said circular, the BIR has ordered all revenue officers to disallow claims for depreciation based on the appraised increase of property, plant and equipment, and to assess corresponding deficiency against the concerned taxpayers. 
 
This circular also revoked  previously issued BIR Ruling Nos. DA-413-04 (July 30, 2004) and DA-436-04 (August 24, 2004). 

Please click the link below to access the complete text of the circular.

ftp://ftp.bir.gov.ph/webadmin1/pdf/52833RMC%20No%2070-2010.pdf