Audit Guidelines and Procedures in the Examination of Interrelated Group of Companies

July 7, 1998REVENUE AUDIT MEMORANDUM ORDER NO. 1-98SUBJECT:Audit Guidelines and Procedures in the Examination of Interrelated Group of Companies   TO:All Revenue Officers Concerned  This RAMO is issued as a basic guideline for the joint and coordinated examination of interrelated group of companies under Revenue Memorandum Order No. 61-98. prLL1. BACKGROUND1.1 The remarkable decrease in collection from interrelated group of companies has seriously affected the collection efforts of the Bureau. Statistics showed that while 'inter-related transaction' accounts for a big percentage of the transfer of goods and services in the country, the revenue collection from related-party groups continue to go on a downtrend.1.2 The magnitude of revenue lost has become so alarming that there is a need to immediately address this problem. It is a fact that, because these companies are more interested in their net income as a whole (rather than as individual corporations) there is a desire to minimize tax payments by taking advantage of the loopholes in our tax system and by making use of schemes that allow them to move around the...