Navigating BIR Rules on Receipts: Transitioning to Invoices

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:

1.  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.
2. 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.
3. 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.

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