Invoice-Based System in the Philippines: Official Receipts After EOPT

The Philippines has shifted to an invoice-based system. Under Republic Act No. 11976, the Ease of Paying Taxes (EOPT) Act, the Bureau of Internal Revenue no longer requires the issuance of Official Receipts. Revenue Regulations No. 7-2024 states that because the EOPT Act no longer requires Official Receipts, the Invoice is now the primary evidence for both sales of goods and services. VAT-registered persons must issue a VAT Invoice for every sale, and the invoice is the basis of the seller's output tax and the buyer's input tax claim.

What changed under the Ease of Paying Taxes Act

Before the EOPT Act, the rules were split: a VAT invoice covered sales of goods, while a VAT official receipt covered services and leases. Revenue Regulations No. 7-2024 now defines an Invoice as a written account evidencing the sale of goods and/or services issued to customers in the ordinary course of trade or business. It includes the Sales Invoice, Miscellaneous Invoice, Commercial Invoice, Cash Invoice, Charge or Credit Invoice, and Service Invoice.

The same regulations confirm that the requirement to issue Official Receipts no longer applies. The Invoice now serves as the primary evidence of sales for both goods and services.

Invoice or Official Receipt — which should a business issue?

A VAT-registered person shall issue a duly registered VAT Invoice for every sale, barter, exchange, or lease of goods or properties, and for every sale, barter, or exchange of services, regardless of the amount of the transaction.

A Non-VAT Invoice is issued for sales of goods, properties, services, or leases that are not subject to VAT. It is the basis of the seller's percentage tax liability, if applicable.

Official Receipts are no longer mandatory, but they are not prohibited. Revenue Regulations No. 7-2024 allows a taxpayer to still issue an Official Receipt, Collection Receipt, or Payment Receipt as a supplementary document showing proof of payment. Unused Official Receipts may therefore still be used at the option of the taxpayer. A supplementary document, however, is not valid proof to support a claim for input taxes.

What information must appear on a VAT Invoice

Revenue Regulations No. 7-2024, implementing the invoicing requirements of the Tax Code as amended by the EOPT Act, requires the VAT Invoice to show:

• A statement that the seller is a VAT-registered person, followed by the seller's Taxpayer Identification Number and branch code;
• The total amount the purchaser pays or is obligated to pay, with the indication that the amount includes VAT, and the VAT shown as a separate item;
• The date of the transaction, quantity, unit cost, and description of the goods or properties or nature of the service; and
• For sales of One Thousand Pesos (P1,000) or more to a VAT-registered person, the registered name, address, and TIN of the purchaser.

If the sale is exempt from VAT, the term "VAT-Exempt Sale" must be written or printed on the invoice. If the sale is subject to zero percent (0%) VAT, the term "Zero-Rated Sale" must appear. Where a sale mixes taxable, exempt, and zero-rated components, the invoice must clearly show the breakdown and the VAT computation for each portion.

The Five Hundred Peso threshold and when an Invoice must be issued

Under the invoicing rules implemented by Revenue Regulations No. 7-2024, all persons subject to internal revenue tax shall issue a duly registered invoice for each sale and transfer of merchandise or services valued at Five Hundred Pesos (P500.00) or more, showing the name, TIN, date of transaction, quantity, unit cost, and description of merchandise or nature of service. This amount is adjusted to present value every three (3) years using the consumer price index published by the Philippine Statistics Authority.

If the buyer requires an invoice, the seller must issue one regardless of the threshold. If individual sales are below P500.00, the seller may issue one invoice covering the aggregate sales for the day. VAT-registered persons must issue a duly registered invoice regardless of the amount of the sale.

Consequences of issuing the wrong invoice

A person who is not VAT-registered but issues an invoice showing a TIN followed by the word "VAT" is liable for the VAT imposed on the sale without the benefit of any input tax credit, plus a fifty percent (50%) surcharge. The purchaser may still recognize an input tax credit if the required information appears on the invoice.

A VAT-registered person who issues a VAT Invoice for a VAT-exempt transaction but fails to display the term "VAT-Exempt Sale" or the required breakdown shall be liable for VAT as if the transaction were not exempt.

Failure to issue invoices is also a ground for the Commissioner of Internal Revenue to suspend business operations and temporarily close the establishment of a VAT-registered person.

Frequently asked questions

Are official receipts still required in the Philippines? No. The EOPT Act removed the requirement to issue Official Receipts. The Invoice is now the primary evidence of sales for goods and services. Official Receipts may still be issued as supplementary documents showing proof of payment.

Can I still use my unused official receipts? Yes. Revenue Regulations No. 7-2024 allows the taxpayer to still issue Official Receipts, and remaining unused Official Receipts may be used as supplementary documents. They cannot, however, support a claim for input taxes.

What is the difference between a VAT Invoice and a Non-VAT Invoice? A VAT Invoice is issued for sales subject to VAT and is the basis of the seller's output tax and the buyer's input tax claim. A Non-VAT Invoice covers sales not subject to VAT and is the basis of the seller's percentage tax liability, if applicable.

Practical takeaways

• The Invoice, not the Official Receipt, is now the primary evidence of sales of goods and services.
• VAT-registered persons must issue a VAT Invoice for every sale regardless of amount; others must issue an invoice for sales of P500.00 or more.
• Official Receipts may still be issued, but only as supplementary documents — they do not support input tax claims.
• A VAT Invoice must state that the seller is VAT-registered, show the VAT as a separate item, and carry the date, quantity, unit cost, and description.
• Issuing a VAT Invoice without being VAT-registered exposes the issuer to VAT without input tax credit plus a 50% surcharge.

Primary sources

The rules discussed above are drawn from the following primary sources. Where the firm's library holds the document as a PDF it is embedded here in full; the rest are cited by title.

RR No. 7-2024 — Implements Section 113, 235, 236, 237, 238, 242, 243 of the Tax Code of 1997, as amended by RA No. 11976 (Ease of Paying Taxes Act), on the registration procedures and invoicing requirements (Date Posted: April 12, 2024)Open in Law LibraryDownload PDF

RMC No. 62-2005 — Prescribes the guidelines in the form of basic questions and answers regarding the registration and invoicing requirements including clarification on common issues affecting Value-Added Tax taxpayers Digest | Full TextOpen in Law LibraryDownload PDF

• REPUBLIC ACT NO. 11976 - AN ACT INTRODUCING ADMINISTRATIVE TAX REFORMS, AMENDING SECTIONS 21, 22, 51, 56, 57, 58, 76, 77, 81, 90, 91, 103, 106, 108, 109, 110, 112, 113, 114, 115, 116, 117, 118, 119, 120, 128, 200, 204, 229, 235, 236, 237, 238, 241, 243, 245, 248, AND 169; AND REPEALING SECTION 34(K) OF THE NATIONAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.