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Navigating BIR Rules on Receipts: Transitioning to Invoices

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.
BIR Rules on Receipts
*To claim VAT, the breakdown of the amounts should be indicated on the left side. As such, this is incorrectly filled out, because it lacks the breakdown.

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.

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29 thoughts on “Navigating BIR Rules on Receipts: Transitioning to Invoices”

  1. 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.

  2. Pingback: Frequently asked questions on RR 7-2024 (from ORs to Invoices)

  3. 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.

    1. 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. 🙂

  4. 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

    1. 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. 🙂

    1. 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. 🙂

        1. 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. 🙂

    2. Listher Seno Boltiador

      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.

    1. 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. 🙂

  5. 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?

    1. 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. 🙂

  6. 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?

  7. 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?

    1. 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. 🙂

  8. Can I use a custom stamp called “Invoice” instead of “Service Invoice”? Or does it need to be specific like “Service Invoice”

    1. Hello Nap,

      Good day!

      You can use the Invoice stamp too but is is better to use Sales or Service Invoice instead. 🙂

  9. 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?

    1. Hello Ryuu,

      Good day!

      Yes it is! Basically, the Sales Invoices are now the main documentation for sales, while official receipts are just supplementary.

  10. “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.”

    I have emailed my inventory report. Do I still need to go to my RDO for the stamps?

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