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Revenue Memorandum Order (RMO) No. 21-2020: New and improved policy on inventory/asset destruction/disposal allowing third party witness and virtual witnessing

Posted by on February 18th, 2022

RMO NO. 21-2020 prescribes the policies, guidelines and procedures for the inspection or supervision of the destruction or disposal and determination of deductible expense pertaining to inventory of goods or assets which have been declared as waste or obsolete.

The Revised guidelines now allows a third party to be the BIR’s authorized representative to witness the process of destruction or disposal of inventory or assets which must be a BIR-accredited tax practitioner or an external auditor and must come with BIR approval.

The BIR also adopted an online mode of communication through the use of technology or the virtual means which is both available to BIR and the Taxpayer in witnessing the process of destruction or disposal.

A taxpayer that intends to obtain a certificate of deductibility of goods/assets destructed/disposed is required to:

  1. Submit an Application for Destruction/Disposal of Goods/Assets to the BIR’s Large Taxpayers’ Office (LTO) or revenue district office (RDO) where its principal place of business is registered and with corresponding attachments, such as the Sworn Declaration of Goods/Assets as Waste or Obsolete with five other requirements that includes the Letter of Intent that the taxpayer is considering availing of the services of a third party as a witness in the process of destruction or disposal and providing the name thereof at least seven days before the scheduled date of the destruction or disposal of the inventory or equipment;
  • Arrange the inventory or assets that will facilitate easy identification and counting, as failure to observe may be grounds for denial;
  • Ensure that photographs or video documentation procedures are properly observed if the taxpayer is authorized to have the destruction or disposal witnessed by a BIR representative (physical or virtual witnessing) or by a third party;
  • Coordinate and assist the BIR’s duly authorized representative in verifying the value of the assets and supervising the destruction or disposal; and
  • Submit all required documents including the report of the third party certifying therein that the necessary procedures were followed.

Attached herewith also is the abovementioned Revenue Memorandum Order for your reference. If you need any assistance relating to this BIR issuance, you may email us at

Click to access RMO%20No.%2021-2020.pdf