BIR Inventory List Compliance for Philippine Businesses: A Complete Guide

For online sellers, retailers, and manufacturers in the Philippines, year-end closing isn’t just about sales reports—it’s also about complying with a critical Bureau of Internal Revenue (BIR) requirement: the Annual Inventory List. Failing to submit this list correctly and on time can result in fines, penalties, and other legal complications. Understanding the rules and following the proper steps is essential for keeping your business compliant and avoiding unnecessary risks.

What is a BIR Inventory List?

A BIR Inventory List is a comprehensive record of all goods and materials held by a business at the end of its financial year. This list is a key document used for tax reporting, ensuring transparency and accuracy in a company’s declared assets. Submission deadlines depend on whether the business follows a calendar or fiscal year, making it crucial to know your specific reporting period.

Why Compliance Matters

Compliance with the BIR Inventory List requirement is more than a bureaucratic obligation—it supports good financial management. Accurate reporting:

• Prevents legal issues and penalties from the BIR
• Maintains credibility with investors, auditors, and financial institutions
• Supports proper inventory management and cost analysis
• Facilitates strategic business planning for growth

BIR Inventory List Requirements

Businesses are required to prepare a detailed inventory report including the following:

1. Description of goods or inventories
2. Quantity on hand
3. Type of inventory (raw materials, work-in-progress, finished goods)
4. Unit of measure
5. Total cost of all items at year-end

Recent Updates (RMC No. 8-2023)

The BIR has modernized inventory submissions, updating guidelines initially set in RMC No. 57-2015. Key changes include:

• Digital Submission Only: Hard copies are no longer required.
• Use of USB Drives: Inventory lists can now be submitted via properly labeled USB flash drives.
• Supporting Documents: Include a notarized Sworn Declaration signed by the business representative. If another person submits on your behalf, provide a Special Power of Attorney, Secretary’s Certificate, or Board Resolution.

Step-by-Step Submission Process

Follow these steps to ensure proper compliance:

Step 1: Gather Year-End Inventory Data
Count and record all raw materials, work-in-progress, and finished goods.

Step 2: Format Your Inventory List
Use the official BIR format or create a file with required fields: Description, Quantity, Type, Unit, and Cost.

Here are the templates for the documents that you need to submit.

Instructions: To make a copy of the files so you can edit, click on FILE then Make a copy.

Step 3: Name Your File Correctly
For example: CompanyName_InventoryList_FY2026.xlsx.

Step 4: Prepare Notarized Documents
Prepare the Sworn Declaration and any Special Power of Attorney if someone else will submit on your behalf.

Step 5: Transfer Files to USB Drive
Label the USB clearly with your company name and year. Include the inventory list and supporting schedules.

Step 6: Submit to the Correct BIR Office
Submit the USB drive to the Revenue District Office (RDO) where your business is registered. Confirm submission requirements with your local RDO.

Related Documents and Schedules

In addition to the main inventory list, the BIR may require:

• Schedule of Raw Materials
• Schedule of Work-in-Process (WIP)
• Schedule of Finished Goods
• Summary of Inventory Costs

These schedules provide deeper insight into your inventory management and are crucial for audits.

Deadline for Submission

The annual deadline is within 30 days after your financial year ends. Missing this window can result in penalties, so mark your calendar and plan the preparation process early.

Penalties for Non-Compliance

Failing to submit the BIR Inventory List—or submitting inaccurate or incomplete data—can lead to:

• A basic penalty of Php 1,000 (per Sec. 250 of the Tax Code) for failure to file required reports
• Disallowance of inventory costs as deductions, potentially increasing tax liability
• Additional fines or legal consequences if non-compliance is persistent

Compliance is not just a formality; it protects your business from unnecessary financial and legal risks.

Resources

To ensure accuracy, always use official BIR sources:

• BIR Inventory List Format: Refer to the annex of RMC No. 57-2015 and its amendments under RMC No. 8-2023.
• Official Website: www.bir.gov.ph
• Consult a certified public accountant (CPA) or tax professional for guidance specific to your business.

Actionable Next Steps

1. Verify your financial year-end date.
2. Mark the 30-day deadline for submission on your calendar.
3. Assign preparation and submission to your bookkeeper or finance team.
4. Gather inventory data, prepare schedules, notarize documents, and submit to your RDO on time.