Remember that trademark scene from Jurassic Park, the one with the glass of water moving with the vibrations because something big is coming? Then better hold on to your glasses of water for this update!
Well it is not that big, nor dangerous. More Barney than Jurassic Park, get it?
In the business landscape of the Philippines, adhering to BIR rules on receipts is paramount. It’s akin to following a well-marked trail through a dense jungle – necessary for smooth operations and compliance. Just like in Jurassic Park, change is inevitable, and a shift from Official Receipts to Invoices is on the horizon.
So, what exactly do these BIR rules on receipts entail? Let’s break it down:
The BIR defines an “Invoice” as a written account of goods or services sold to customers. This includes various types like Sales Invoice, Commercial Invoice, and more.
“Invoice – it is a written account evidencing the sale of goods and/or services issued to customers in the ordinary course of trade or business. This includes Sales Invoice, Commercial Invoice, Cash Invoice, Charge/Credit Invoice, Service Invoice, or Miscellaneous Invoice. It is also referred to as a “principal invoice” and is categorized as follows:
1.1 VAT Invoice- it is a written account evidencing the sale of goods, properties, services and/or leasing of properties subject to VAT issued to customers or buyers in the ordinary course of trade or business, whether cash sales or on account (credit) or charge sales. It shall be the basis of the output tax liability of the seller and the input tax claim of the buyer or purchaser.1.2 Non-VAT Invoice – it is a written account evidencing the sale of goods, properties, services and/or leasing of properties not subject to VAT issued to customers or buyers in the ordinary course of trade or business, whether cash sales or on account (credit) or charge sales. It shall be the basis of the Percentage Tax liability of the seller, if applicable.
Invoice may also serve as a written admission or acknowledgement of the fact that money has been paid and received for the payment of goods or services.”
Now, let’s address the burning question: who needs to issue invoices? The answer is clear-cut: any business operating in the Philippines.
Here are the key guidelines outlined in BIR’s Revenue Regulations (RR) No.7 2024:
- Businesses subject to internal revenue tax must issue registered invoices for sales or services valued at P500 or more. This threshold is adjusted every three years based on inflation.
- Sellers must issue invoices upon buyer’s request, regardless of transaction amount. Even if individual sales are below P500, if total daily sales reach P500, one invoice for the total amount can be issued. VAT-registered businesses must issue invoices regardless of transaction amount.
- The word “Invoice” must be clearly printed on the document, with options for indicating cash or charge sales. Official Receipts are no longer mandatory but can be issued optionally.
Understanding the BIR rules on receipts is crucial, but equally important is knowing what information to include in an invoice:
- Seller’s registered name, TIN, and business address.
- Statement of VAT registration status.
- Clearly labeled as an “Invoice.”
- Date of transaction.
- Space for buyer’s details (not mandatory for Business-to-Consumer transactions).
- Prominent serial number.
- Quantity, unit cost, and description of goods or services.
- Total sale amount, with VAT shown separately.
- Breakdown of sales if applicable.
- Additional information for specific transactions.
- Guidelines for manual and system-generated invoices.
But what about those unused Official Receipts collecting dust? Here’s what you can do:
- Businesses can continue using their remaining Official Receipts as supplementary documents until they’re used up. These receipts must be stamped with “THIS DOCUMENT IS NOT VALID FOR CLAIM OF INPUT TAX.” upon the regulation’s effective date.
- Alternatively, businesses can convert unused Official Receipts into invoices by striking through the term “Official Receipt” and replacing it with “Invoice” or similar terms. These converted documents are valid for input tax claims until December 31, 2024, provided they contain required invoice information.
- The conversion of Official Receipts to invoices does not need approval but must follow specific guidelines.
- New invoices with an Authority to Print (ATP) should be obtained before December 31, 2024, or before fully consuming converted Official Receipts.
There you go! Be sure to check out the official BIR RR for the complete details.
If you are in need of an online invoicing solution – join our waitlist to get early access through this reservation link.
May I add. You still need to present your unused OR to your RDO after stamping them with “service invoice” they still need to check the inventory list. In my RDO they said no need to present the “receipt book” just the newly stamped OR.
Pingback: Frequently asked questions on RR 7-2024 (from ORs to Invoices)
Will you be sharing an article for the latest sales invoice format?
For the new invoice, on 7-2024 Section 6.B 16 states “Taxpayers whose transactions are not subject to VAT or percentage tax shall issue non-VAT invoice indicating at the face of such invoice the word EXEMPT”.
This wasn’t a requirement for the previous non-VAT OR. Little confused on this part–does it mean that the word “EXEMPT” is printed on the new sales invoice wherever?
Thank you.
Hi Say! 🙂 Sharing this: https://www.taxumo.com/blog/frequently-asked-questions-on-rr-7-2024/ For the word exempt, it’s not clearly state if this will be written or printed. We assume that the accredited printers know where to put it together with “THIS DOCUMENT IS NOT VALID FOR CLAIM OF INPUT TAX” once they print out new invoices. To be safe, if you’re using your old receipts, you can 1) cross out “official” receipt and stamp on “service invoice / sales invoice” then 2) write “EXEMPT” or “VAT EXEMPT” on the face of receipt, maybe near the breakdown. 🙂
Hello,
Do i still need to present an inventory of unused official receipts to the BIR if i intend to use it as supplementary receipts? Thanks
Hello Dennis,
If you already have a new set of sales/service invoice, there’s no need to submit an inventory of unused ORs to your RDO. 🙂
anu pong gagawin sa mga natirang or? d na po gagamitin? itatabi nlng po ba? i have two bundles nlng po eh.i have new sets of sales invoice already
Hello Anne,
Puwede panga gamitin ito hanggang full consumed mo na yung booklets mo. But before that you have to submit the inventory list to your RDO.
What’s the rationale behind this change?
What’s wrong with official receipts?
Hello Rand,
The new Revenue Regulation 7-2024 (RR 7-2024) primarily focuses on the implementation of electronic official receipts and electronic sales invoices. The regulation mandates the use of electronic systems for generating and issuing official receipts and sales invoices, aiming to modernize and streamline the invoicing process while enhancing transparency and efficiency in tax administration. 🙂
But the new sales invoices are not in digital/electronic format.
If you are using a POS provider, contact your POS provider about this and see if you need to do anything. This guide are for those who are issuing physical ORs / Invoices printed by BIR accredited printers. For those who have loose leaf invoice accreditation, you’ll need to submit the new format for your new Sales Invoices.
In this case, is it better to do the electronic sales invoice route than to reprint?
Hello Pam,
It depends on how convenient it will be for your business but the important part here is that we comply to the new invoicing rules of the BIR. 🙂
Hi Rand.
The rationale behind this is the timing of the computation and filing of tax due.
Previously, when businesses issued sales invoices, the output tax had to be filed during the month when the invoices were issued but had no payment yet. In short, they are following the accrual basis of accounting. Conversely, when businesses issue OR, the output tax must first be deferred until collections are made. Simply stated, it is a cash basis of accounting.
With this new BIR regulations particularly under RR 7-2024. These differences will be eliminated by using only an Invoice. From now on, Businesses will follow the accrual method of accounting.
How about down payments? Do we issue invoice for DP’s? I didn’t see any guidelines whether we can issue like a collection receipt first then DP will be included in the progress billing invoice.
Hello Claire,
For this one, you can issue one sales invoice for the whole amount of sale then issue two collection receipts. One for DP and second is for the remaining balance. 🙂
Hi,
Is RR 7-2024 applicable only to VAT-registered entities? Is this applicable to Banks and Finance companies who offer financial services?
Hello Dante,
This applies to all types of businesses and organization registered in BIR. 🙂
What happens next year? starting Jan 2025, should we need to print new booklets for INVOICE?
Hello Mae,
Based on the update related to RR 7-2024, you can use your ORs as your Sales Invoice until your current ORs are fully consumed. 🙂
How do we report the unused receipts to BIR? we will just go there with the receipts?
Hello Gil,
You can submit your inventory list through the TRRA portal of the BIR. 🙂
https://web-services.bir.gov.ph
Are the collection receipt should also be converted to invoice?
or just the official receipt?
Hello Rose,
Good day!
Kindly update and use the Sales Invoice as your principal documentation for your sale upon receiving the order of item/service. The collection receipt can be used once you already received the payment from your clients. 🙂
Hi, if i have received the payment from my client
What can i give them as an acknowledgement that i have received the payment?
Hello Marie,
You can issue a collection receipt as a documentation of the collected payment. 🙂
our rdo already received the inventory list. but we changed our office address. can we strike the address in the converted invoice and stamp the new address?
Hello Cherry,
Good day!
In your case, you need to update your registration and update the registered business address too. It is best to have new sales invoice printed so your information on the issued sales documentation will be updated as well. 🙂
So I am just about to have my invoices printed and I was told I have to surrender my old booklets? Does this include the booklets Ive used or just the ones i havent used?
Hello Hans,
Good day!
Kindly surrender the unused ORs only. 🙂
Hi your sample OR coverted to Service Invoice has no quantity, unit cost and description of transaction indicated hence the sample OR format can not be converted to Service Invoice. Is this correct?
Hello Raymondo,
Good day!
The sample Service Invoice is actually an OR from the BIR that is being converted into temporary sales invoice. There is a field where you can add the item description, sum of the total price and item description. As long as these information are indicated, it is okay to use this as your guide if you will be using your OR as your temporary sales invoice.
Just make sure that the information for the quantity, unit cost and description of transaction will be indicated on your proposed Sales Invoice format once you’re ready to print your new sales invoice booklets. 🙂
hi is this implemented nationwide? or per RDO only?
Hello Chiori,
This is applicable and implemented nationwide. 🙂
Can I use a custom stamp called “Invoice” instead of “Service Invoice”? Or does it need to be specific like “Service Invoice”
Hello Nap,
Good day!
You can use the Invoice stamp too but is is better to use Sales or Service Invoice instead. 🙂
If I do not want to convert the unissued ORs to invoices, do I still need to submit inventory list? Is it possible to just apply for destruction of ORs in BIR and get a new ATP for invoices?
Hello Kristine,
Even if you decide not to convert the unissued ORs to Sales Invoices, you are still required to submit an inventory list of the unissued ORs to the BIR. This is necessary to account for all the official receipts that have been printed and issued to you. 🙂
What are the requirements for submission of remaining ORs?
Hello Jed,
Just submit your inventory list and you’re all good. :0
In our business, we are using sales invoice if we sell goods and official receipt if we render our services. If we are not planning to convert our OR to Service Invoice, are we required to get Service Invoice or can we use Sales Invoice on services?
Hello Gayle,
Good day!
You will need to convert your Official Receipt into Service Invoice too. 🙂
Upon collection sir, anong resibo ang iissue namin,. if wala po kami collection receipt.
Hello Roselie,
If you have an OR po pwede ppo yun. Collection receipts are optional po and is a supplementary documentation only. 🙂
Hi,
Is it allowed to just manually strike through and write “Service Invoice”? Or does it have to be stamped?
Hello Sheena,
You have to strikethrough the word official receipt and stamp it with Sales Invoice 🙂
Hi,
Currently we issued Billing Statement for services rendered. We also issue Statement of Account for reimbursement of advances, what form to use now ?
We hope for your guidance.
Thank you.
Hello Edzel,
You should issue a Billing Invoice instead of Billing Statements 🙂
Would you need to file a BIR form for this new regulation? What form would that be?
Hello Eric,
Good day!
You only need to submit an Annex D for the inventory list of your unused OR. Here is the template that we prepared for your reference: https://docs.google.com/document/d/1XmbUc7zbwI151r5M8Q3fFSmMKOvGoGz2i7-0DdbMP34/edit 🙂
Hi! how about for the CAS issuances? shall we still include the corresponding unused series of the CAS to the inventory list that we will provide apart from the unused manual official receipts vat exempt/vat?
Hi Arlene,
Yes, you should still include the corresponding unused series of the CAS (Computerized Accounting System) in your inventory list, in addition to the unused manual official receipts (both VAT-exempt and VAT). This ensures that all types of receipts and invoices are accounted for correctly and comply with BIR regulations.
Make sure to maintain an accurate and comprehensive record of both CAS and manual receipts for proper documentation and compliance.
Hi Eric,
Good day!
You just need to submit an inventory list of unused ORs. You can check our prepared template for this here: https://docs.google.com/document/d/1XmbUc7zbwI151r5M8Q3fFSmMKOvGoGz2i7-0DdbMP34/edit 🙂
Hello for clarification lang, if the business is vat registered and the buyer didn’t ask for invoice, Can I accumulate all my sales in a day in 1 invoice?
Hello Joann,
If your business is VAT-registered and the buyer didn’t ask for an invoice, you generally cannot accumulate all your daily sales into a single invoice. Each sale should be documented with its own invoice. However, if the buyer requests a summary invoice, you could issue one but it must still be based on the individual sales made. It’s best to ensure you issue a separate invoice for each transaction to comply with BIR requirements.
Hope this clarifies things!
Is this applicable to freelancers?
Hello Ryuu,
Good day!
Yes it is! Basically, the Sales Invoices are now the main documentation for sales, while official receipts are just supplementary.
I’m using official receipts before and writing on cash receipts journal. I transitioned to Service Invoice, which book of accounts should I update?
Hello Sarah,
The books of accounts will remain as is. The changes is only within the usage of ORs as our main documentation for our sale. For our books, we should still use Cash Receipt Journals for our sales/income entries. 🙂
HI,
Query only, We collected payment from our client and issue strikethrough official receipt with stamp of “service invoice”, and then they are still asking for issuance of Official receipt as a proof of payment.
Is this correct? Isn’t it issuance of “service invoice” suffice our collection?
Thank you very much for your answering our queries.
Hello Gina,
The issuance of a “Service Invoice” is generally sufficient for documenting the collection of payment, as it serves as both the billing document and proof of the transaction. However, if your client is requesting an Official Receipt (OR) as proof of payment, it’s important to consider their request to maintain good client relations.
The strikethrough and stamp on the Official Receipt to indicate it as a Service Invoice might not be sufficient if the client or their accounting policies specifically require an Official Receipt. It’s best to issue an Official Receipt if requested, or clarify with the client to ensure that both parties are aligned on documentation practices.
Hi,
Good day!
We are a non-stock non profit school, and we are planning to completely stop using ORs and solely use the invoice and receipt generated from our accounting software, thus, wanted to know as follows:
1. Do we need to register or submit any documentation related to using the invoice and receipt from our accounting software? If so, may we know the process and requirements?
2. What should we do with the unused ORs since were planning not to use them?
Thanks
Hello Marlo,
You need to register your accounting software with the BIR to use electronic invoices and receipts. This involves submitting a request to the BIR with a letter, proof of software registration, sample documents, and your school’s Certificate of Registration. For the unused Official Receipts (ORs), you must submit an inventory list to the BIR and follow their guidelines for safekeeping or disposal.
Question:
Do we really need to provide stamp or can we manually strikeout the word official receipt and Write – “invoice”
somehow the last statement/paragraph on RR 7-2024 section 8 sub 2.2 was very misleading.
Hello Eliezer,
When converting a document from “Official Receipt” to “Sales Invoice,” you should:
Strike through the term “Official Receipt.”
Stamp or clearly mark the document with “Sales Invoice.”
This ensures that the document is properly classified and complies with BIR regulations.
hello. our company used billing statement to billed clients and Official receipt if we collect cash.is it possible that we can strike out our billing statement to sales invoice and the Official receipt to Collection receipt?