Author MRTC

Introduction

REVENUE MEMORANDUM CIRCULAR NO. 77-2024

Through the effectivity of Republic Act (RA) No. 11976, known as the “Ease of Paying Taxes (EOPT) Act, a key reform was introduced: the modification in the use of Sales Invoices and Official Receipts for tax purposes.

Sections 113 and 237 of the said Act state:

“Sec. 113. Invoicing and Accounting Requirements for Value-Added Tax (VAT) Registered Persons

  • Invoicing Requirement: A VAT-registered person shall issue a VAT Invoice for every sale, barter, exchange, or lease of goods or properties and for every sale, barter, or exchange of services. xxx.”

“Sec. 237. Issuance of Sales or Commercial Invoices

  • Issuance: All persons subject to internal revenue tax shall, at the point of each sale and transfer of merchandise or services rendered valued at five hundred pesos (₱500.00) or more issue a duly registered sale or commercial invoices, showing the name, Taxpayer Identification Number (TIN), date of transaction, quantity, unit cost, and description of merchandise or nature of service. xxx”

In line with these provisions, an “Invoice” is now required for both the sale of goods and services. This Circular clarifies the invoicing requirements under the EOPT Act, including the use and printing of Sales Invoices. It also provides a sample format of Invoices to be used as a reference by taxpayers and BIR personnel.

The following clarifications pertain to the invoicing requirements set forth in Revenue Regulations (RR) No. 7-2024, as amended by RR No. 11-2024:

  1. A VAT-registered person is required to issue a duly registered VAT Invoice for every sale, barter, exchange, or lease of goods or properties, as well as for every sale, barter, or exchange of services, regardless of the transaction amount.
  2. A Non-VAT-registered person is required to issue a duly registered Non-VAT Invoice for every sale, barter, exchange, or lease of goods or properties, and for every sale, barter, or exchange of services valued at Five Hundred Pesos (₱500.00) or more. However, if the buyer requests an Invoice, the seller must issue one regardless of the transaction amount.
  3. The following rules apply regarding the issuance of an Invoice based on the sale amount:
    1. VAT-registered sellers are required to issue a VAT Invoice for each sale transaction, regardless of the transaction amount.
    2. Non-VAT registered sellers must issue an Invoice in the following cases:
      1. i. When the amount of a single sale transaction exceeds ₱500.00.
      2. ii. When the buyer requests or demands an Invoice, regardless of the transaction amount.
      3. iii. If the aggregate amount of all sales transactions at the end of the day, which are less than ₱500.00, exceeded the ₱500.00 threshold.
  4. The ₱500.00 threshold for issuing an Invoice will be adjusted to its present value every three years, starting on January 22, 2024, or upon the effectivity of the EOPT Act. This adjustment will be based on the Consumer Price Index as published by the Philippine Statistics Authority.
  5. After the effectivity of the EOPT Act, the seller engaged in the sale of services must apply for a new Authority to Print (ATP) Invoice and issue an Invoice. Since the Invoice is now the primary evidence for recording sales of goods and services, an ATP must be secured before a seller can have an Accredited Printer. However, during the transitory period, sellers may choose to use their remaining unused Official Receipts by converting them into Invoices.
  6. A VAT Invoice and a Non-VAT Invoice must contain the information specified under Section 6(B) of RR No. 7-2024.
  7. It is not necessary to indicate the business style of the buyer or seller in the Invoice. However, the seller may choose to include their business name in the Invoice for trade name or store name identification or branding purposes.
  8. Upon the effectivity of RR No. 7-2024, Official Receipts are treated as supplementary documents. Sellers with remaining unused booklets of Official Receipts have the following options:
    1. Option 1: Continue using the remaining Official Receipts as supplementary documents.
    2. Option 2: Convert and use the remaining Official Receipts as Invoices, following the requirements outlined in Questions No. 10 and No. 21 hereof.
  9. If the seller wishes to use their remaining unused booklets of Official Receipts as supplementary documents, the following requirement must be met: Each page of the unused Official Receipt must be stamped with the phrase “THIS DOCUMENT IS NOT VALID FOR CLAIM OF INPUT TAX.” Failure to include this stamp will render the document invalid as a replacement for the Invoice, and the seller may be considered as not issuing an Invoice and may be subject to applicable penalty.
  10. If the seller wants to convert and use their remaining unused booklets of Official Receipts, Billing Statements, Statements of Account, or Statements of Charges as Invoices, the following requirements must be met:

    a. The words “Official Receipt,” “Billing Statement,” “Statement of Account,” “Statement of Charges,” or any similar terms must be stricken out from the face of the manual and loose leaf printed receipts;

    b. The document must be stamped with one of the following terms: “Invoice,” “Cash Invoice,” “Charge Invoice,” “Credit Invoice,” “Service Invoice,” or “Billing Invoice,” or any name that accurately describes the transaction for which the Invoice is issued.

    These changes must be made until the remaining unused documents are fully consumed.

    Since the Official Receipt, Billing Statement, Statement of Account, or Statement of Charges will serve as a supplementary document, taxpayers have the option to convert these documents into Invoices or Billing Invoices as primary invoices. The converted Invoice or Billing Invoice must include the required information specified under RR No. 7-2024, as amended, including details such as quantity, unit cost, and description or nature of service, in accordance with Section 237 of the Tax Code. Any missing information can be stamped on the document if it was not originally included at the time of conversion.
  11. The seller may convert the Official Receipt (sample format in Annex C.1.2 or C.2 of Revenue Memorandum Order No. 12-2013) to an Invoice, provided that all required information under Section 6(B) of RR No. 7-2024 is included. This includes details such as quantity, unit cost, and description of goods sold or nature of service, as required under Section 237 of the Tax Code, as amended. Any missing information can be stamped on the document if it was not originally included at the time of conversion.
  12. The seller can use any descriptive name for their Invoice, such as “Cash Invoice,” “Charge Invoice,” “Credit Invoice,” “Service Invoice,” or “Billing Invoice,” and apply for its Authority to Print (ATP). The key requirement is that the word “Invoice” must be prominently printed on the document in all such cases
  13. Starting April 27, 2024, sellers of goods and services are required to use specific types of invoices that accurately reflect the nature of their transactions:

    – Invoice/Sales Invoice: A document used for both sales of goods and services. It can cover cash sales, credit sales, and general sales transactions.
    – Cash Invoice: Specifically used for sales where payment is received immediately.
    – Charge/Credit Invoice: Issued for sales where payment is deferred, allowing the customer to pay at a later date.
    – Service Invoice: Dedicated to transactions where a service is provided.
    – Billing Invoice: Similar to a Charge Invoice, this document is used to summarize charges for a specific transaction, often including details akin to a statement of account.
    – Commercial Invoice: Used in export transactions by exporters.
    – Miscellaneous Invoice: Issued for other types of income received by the seller.

    Taxpayers can select the appropriate invoice type based on the specific nature of their transactions. For example, an Invoice/Sales Invoice can be used for both cash and credit sales, while a Service Invoice is tailored for services rendered. The choice of invoice should align with the transaction it documents to ensure clarity and compliance.
  14. For utility companies and other recurring service providers that bill customers, a Billing Invoice should be issued upon billing instead of a Billing Statement or Statement of Account. The Billing Invoice must include the required information as specified under RR No. 7-2024, as amended, including quantity, unit cost, and description or nature of the service, in accordance with Section 237 of the Tax Code.
  15. Sellers cannot issue an Invoice upon receipt of payment. Instead, an Official Receipt, Payment Receipt, or Acknowledgement Receipt should be issued upon subsequent collection or receipt of payment.
  16. An Invoice can be used for both the sale of goods or services and the collection of payment or receivables for the same transaction. The Invoice serves as a document evidencing the sale and may also include information acknowledging the receipt of payment for that sales transaction.
  17. Taxpayers have the option which invoice/s may be used depending upon the type of transactions that will be issued. Taxpayers may have its own choice of using more than one type of invoices. However, such choice should consider the transactions that will be issued said invoice/s.
  18. Taxpayers transitioning from Official Receipts to Sales Invoices or equivalent Invoices must apply for a new Authority to Print (ATP) for Invoices. Each type or name of Invoice should have its own set of serial numbers, starting from one (1) or any other number, with optional prefixes or suffixes to differentiate them.

    For those continuing to use Official Receipts as supplementary documents, the serial numbers should continue from the last approved serial number of their Official Receipts when applying for subsequent ATPs.Top of Form
  19. When shifting from issuing Official Receipts to Invoices using a Cash Register Machine (CRM), Point-of-Sales (POS) Machine, or e-Receipting/Electronic Invoicing Software, the seller does not need to reset the series number. Instead, the serial number of the new Invoice should continue from the last issued Official Receipt.

    The seller must submit a Notice in two original copies indicating the starting serial number of the converted Invoice and the date when this serial number was or will be issued. This Notice should be submitted to the Revenue District Office (RDO), LT Office, or LT Division where the sales machines are registered. The RDO will transmit the original copy of the Notice to the Head Office RDO and retain the duplicate copy for reference and audit purposes.
  20. No prior approval from the Revenue District Office (RDO), Large Taxpayers (LT) Offices, or LT Divisions is required for stamping the word ‘Invoice’ on remaining unused Official Receipts. However, this must comply with Section 8(2.3) of RR No. 7-2024. Taxpayers are required to report the unused Official Receipts being converted to Invoices. Additionally, the taxpayer should obtain newly printed Invoices with an Authority to Print (ATP) before the full consumption of the converted Official Receipts.
  21. Taxpayers need to submit reports regarding the use of remaining unused Official Receipts and those converted to Invoices. They must report all unused manual and loose-leaf Official Receipts to the Bureau of Internal Revenue (BIR) by submitting an Inventory Report (suggested format – Annex C) in duplicate copies. This report should include the number of booklets and the serial numbers of the unused Official Receipts that have been converted to Invoices.

    Taxpayers using CRM/POS machines, e-receipting systems (CAS/CBA with e-receipting), or e-invoicing software that rename their Official Receipts to Invoices must report this change by submitting a Notice on the Renaming of Machine/System Generated Official Receipts to Invoices. This notice, following the suggested format in Annex D, should include the starting serial number of the converted Invoice and the date when this serial number was or will be issued.

    The Inventory Report (Annex C) and the Notice on the Renaming of Official Receipts to Invoices (Annex D) should be submitted to the Revenue District Office (RDO), Large Taxpayers (LT) Office, or LT Division where the Head Office or Branch Office is registered. Alternatively, they can be submitted through the Taxpayer Registration Related Application (TRRA) Portal via email to the Compliance Section. The specific deadline for submission should be checked with the relevant office or portal for the most accurate and current information.

    The receiving Branch RDO will transmit the original copy of the Inventory Report and Notice to the Head Office RDO, while retaining the duplicate copy for reference and audit purposes of both offices.

    Taxpayers who have already submitted the inventory report using Annex D of RMO No. 12-2013 or a Letter Notice before the publication date of this Circular on the BIR official website are not required to resubmit the inventory report using the format outlined in Annex C or D of this Circular.
  22. Taxpayer can submit the Inventory Report (Annex C) and Notice on the Renaming of Official Receipts to Invoices (Annex D) for all branches to the RDO where the Head Office is registered. The RDO of the Head Office will then transmit the copies for the respective branches to the concerned RDOs.

    However, if taxpayer choose to submit the Inventory Reports and/or Notices for specific branches to the respective branch RDOs, taxpayer should use the TRRA Portal for submission.
  23. Taxpayers have until December 31, 2024, to enhance the Computerized Accounting System (CAS) or Computerized Books of Accounts (CBA) with Accounting Records. If the taxpayer need an extension for further enhancements, it must be approved by the concerned Regional Director or Assistant Commissioner of the Large Taxpayers Service. The extension can be for a maximum of six months beyond December 31, 2024.
  24. To apply for an extension to enhance the system, taxpayers must notify the concerned RDO, LT Office, or LT Division through the Compliance Section or the relevant office where registered. Taxpayers must submit a Letter Request before December 31, 2024, which should include the reason or justification for the extension, the target date for completing the enhancement, and the email address and contact details of the contact person.

    The RDO/LT Office/LT Division will review and act on the request within three working days of receipt. They will then recommend approval or disapproval to the Regional Director or Assistant Commissioner. The Regional Director or Assistant Commissioner will decide within three working days from receiving the recommendation from the RDO.
  25. A VAT-registered person with mixed transactions, including VATable, Zero-Rated, and VAT-Exempt sales, may choose to issue either a single Invoice or separate Invoices for each type of sale.

    If opting for a single Invoice, the VAT amount and sales amount must be broken as to Vatable Sales, VAT-Exempt Sales, Zero-Rated Sales and the corresponding amount for each type of sale should be indicated in the Invoice.

    If the seller opts to issue separate Invoices for each type of sale, the terms “VAT-Exempt Sale” or “Zero-Rated Sale” must be clearly written or prominently printed on each respective Invoice.
  26. The issuance of an “Official Receipt” (whether stamped with “Invoice” or unstamped) generated by CRM/POS, E-receipting, or Electronic Invoicing Software and CAS/CBA with AR for the sale of goods and services after December 31, 2024, or until the completion of machine/system reconfiguration/enhancement (whichever comes first), and the issuance of Manual and Loose Leaf Official Receipts (unstamped) after April 27, 2024, will not be considered valid evidence of sales of goods or services. This will be deemed a failure to issue the required Invoice as stipulated under Section 6(A) of RR No. 7-2024. Such non-compliance is subject to penalties including a fine of not less than ₱1,000.00 and not more than ₱50,000.00, as well as imprisonment for not less than two years and not more than four years, in accordance with Section 264(a) of the Tax Code.
  27. Issuing an Official Receipt, Payment Receipt, Collection Receipt, Billing Statement, or Statement of Account without the corresponding Invoice or Billing Invoice upon the sale of goods or services is considered non-compliance with the requirement under Section 6(A) of RR No. 7-2024. These documents are deemed supplementary and do not serve as evidence of sales of goods or services. Such non-compliance is subject to penalties, including a fine ranging from ₱1,000.00 to ₱50,000.00, and imprisonment for a period of two to four years, as stipulated under Section 264(a) of the Tax Code.
  28. When dealing with VAT invoices, both Non-VAT and VAT-registered sellers must be aware of the potential liabilities and conditions under which VAT amounts can be used as input tax credits by purchasers:
  29. The invoicing provisions of RR No. 7-2024, which implement RA No. 11796, are effective from April 27, 2024. This date is fifteen (15) days after the publication on the BIR official website on April 12, 2024, and includes Section 8 of RR No. 7-2024 concerning the transitory provisions.
  30. For sale of service with different date of transaction and date of collection of payment, this document should be issued to evidence the transaction.
  31. For donations received by non-stock non-profit entities such as educational, charitable, religious, cultural, or social welfare organizations, or research institutions and NGOs, a supplementary document should be issued. This document can be a Non-VAT Official Receipt, Acknowledgment Receipt, or Donation Receipt and must include the donor’s name, the date of the donation, a description of the donation (e.g., monetary contribution, in-kind donation), and the intended purpose of the donation (e.g., construction of facilities, medical expenses, tuition fees).

    If these non-stock non-profit entities engage in profitable business activities, they are required to issue an Invoice for all sales of goods or services.
  32. Sample layouts of the manual Invoice are provided in the Annexes of this Circular. All concerned parties are encouraged to review these samples and follow the guidelines accordingly. This Circular is effective immediately upon posting on the BIR Website.