Revenue Regulations No. 011-2025

Amending the Pertinent Provisions of Revenue Regulations No. 16-2005 to Implement the Value-Added Tax Provisions under Section 106, 108, 109, and 112 the National Internal Revenue Code of 1997, as Amended by Republic Act No. 12066.

SECTION 1. Scope. – Pursuant to Sections 244 and 245 of the National Internal Revenue Code of 1997, as amended (Tax Code), in relation to Sections 12, 13, and 32 of Republic Act (RA) No. 12066, these Regulations are hereby promulgated to implement Sections 237 and 237-A of the Tax Code, particularly on the issuance of electronic invoices, electronic sales reporting and additional allowable deduction related thereto.

SECTION 2. DEFINITION OF TERMS. – In applying the provisions of these Regulations, the following terms shall be defined as follows:

1. Electronic Invoice. – It is a written account evidencing the sale, exchange or transfer of goods, properties, services and/or lease/use of properties, issued in the ordinary course of trade or business, using an accounting/invoicing software or system with invoice management tools that is registered/accredited with the Bureau of Internal Revenue (BIR), containing the vital information as prescribed in the existing rules and regulations. It is a system-generated invoice issued to the buyers electronically in a digital/electronic format (e.g. via email as Portable Document Format (PDF) attachments or email content or through electronic viewing in mobile or system application) of subsequently printed: Provided that, it is system-generated in a structured invoice data which can be easily extracted electronically from the invoice and its data can be readily transmitted electronically to the BIR for electronic sales reporting.

A photo or scanned copy (in any file format) of a paper invoice (physical/manual copy) is not an electronic invoice.

• Electronic invoicing. –  This refers to the automated process of generating and electronic invoice in a structured invoice data which can be easily extracted electronically from the invoice allowing for automated electronic data processing. It involves the electronic exchange of an electronic invoice that records a transaction between a seller and a buyer. This can be a one-way electronic exchange where the seller sends the electronic invoices to the buyer.
• Electronic Sales Reporting System. – This refers to electronic reporting or process of sorting, transmitting and/or receiving the electronic invoice data, through direct system-to-system data transfer without manual entry, to the BIR in a structured electronic  format [ e.g. JavaScript Object Notation (JSON) file format or Extensible Markup Language (XML) and such other format as may be prescribed by the BIR] and not in PDF or image format, etc. The electronic invoice data contains sales information from sellers to buyers and may also contain payment information made by the buyers.

• Electronic Commerce (E-commerce). – This refers to my commercial transaction conducted through electronic. Optical, and similar medium, mode, instrumentality and technology. The transaction includes the sale or offer for sale, purchases of physical or digital goods and services, or lease or offer for lease of the same, between individuals, households, businesses, and government conducted over computer-mediated networks through the Internet, mobile phones, electronic data interchange (EDI), or other electronic channels through open or closed networks. These May be digitally ordered, digitally delivered or platform-enabled transactions.

For purpose of these Regulations, internet transactions shall also refer to e-commerce. Internet transactions. – This refers to the sale or offer of sale, or lease or offer for lease of digital or non-digital goods and services over the internet.

SECTION 3. POLICIES AND GUIDELINES. – All taxpayers mandated to comply with these Regulations shall observe the policies and guidelines set forth herein. A separate revenue issuance shall be provided for the details and specific requirements hereof.

1. Issuance of Electronic Invoice. The following taxpayers are mandated to issue     electronic invoices in a structured invoice data which can be easily extracted electronically from the invoice and can be readily transmitted to the BIR for electronic sales reporting:
   • Taxpayers engaged in electronic commerce (e-commerce) or internet transactions.
   • Taxpayers under the jurisdiction of the Large Taxpayers Service (LTS);
   • Taxpayers classified as Large Taxpayers under RA No. 11976 (Ease of Paying Taxes Act) and RR No. 8-2024;
   • Taxpayers using Computerized Accounting System (CAS), and Computerized Books of Accounts (CBA) with Accounting Records (with electronic invoicing) and other invoicing software; and
   • Upon the establishment by the BIR of a system capable of storing and processing the required data to be transmitted to it, the following taxpayers are mandated to issue electronic invoices:
     • Taxpayers engaged in the export of goods and services pursuant to Sections 106 and 108 of the Tax Code, except those falling under Section 3(A)(4) hereof;
     • Registered Business Enterprises availing of Tax Incentives under Section 304(D) of the Tax Code, as amended, except those falling under Section 3(A)(4) hereof;
     • Taxpayers using Point-of-Sales (POS) System; and
     • Other taxpayers as may be required by the Commissioner.

In case the above taxpayers or business activities are signed as a branch Office, the taxpayers’ Head Office and all its Branch Offices shall also be mandated to issue electronic invoices.

All CAS, CBA with Accounting Records (with electronic invoicing), or other invoicing software shall be mandated to generate a system-generated invoice in a structured invoice data that can be easily extracted electronically and can be readily transmitted electronically to the BIR for electronic sales reporting.

Invoices generated by a CAS, and CBA with Accounting Records (with electronic invoicing), Cash Register Machines (CRM), POS System, or other invoicing software and subsequently printed on paper for issuance to buyers, without the capability or readiness to electronically report the sales and invoice data, shall not qualify as electronic invoices. Instead, they shall be classified as traditional, manually issued invoices.

B. Electronic Sales Reporting Requirements (as defined in Section 2(3) of these Regulations). Upon establishment by the BIR of a system capable of storing and processing the required data to be transmitted to it, the following taxpayers shall be covered by the Electronic Sales Reporting System requirement under Section 237-A of the Tax Code, as amended:

• Taxpayers engaged in electronic commerce (e-commerce) or internet transactions, classified as Small, Medium and Large Taxpayers;
• Taxpayers under the jurisdiction of the Large Taxpayers Service (LTS);
• Taxpayers classified as Large Taxpayers under RA No. 11976 (Ease of Paying Taxes Act) and RR No. 8-2024;
• Taxpayers using CAS, and CBA with electronic invoicing and other invoicing software.
• Taxpayers engaged in the export of goods and services pursuant to Sections 106 and 108 of the Tax Code;
• Registered Business Enterprises availing of Tax Incentives under Section 304(D) of the Tax Code, as amended;
• Taxpayers using POS System; and
• Other taxpayers as may be required by the Commissioner.

C. Taxpayers Engaged in E-commerce. For purposes of these Regulations, taxpayers engaged in e-commerce shall cover persons, whether natural or juridical, who are engaged in the following trade or business in the Philippines, including but not limited to:

1.  E-commerce or online businesses, whether formal or informal, including sale, procurement, or availment of physical or digital goods (including virtual items in online games), digital content/products, digital financial services, entertainment services, social commerce, on-demand labor and repair services, and property and space rentals;
2. Operation of digital platforms, including e-marketplace platforms;
3. Sale and/or lease of goods and services through digital platforms;
4. Digital content creation and streaming that are income generating including online advertising, blogging/vlogging, subscription or commission;
5. E-retailing of goods and services;
6. Sale of creative or professional services, on-demand or freelance services or digital services supplied over the internet;
7. On-demand Services over the internet, available whenever a customer request them rather than being provided on a fixed schedule such as, but not limited to, ride-sharing, food delivery, grocery delivery, home services (like cleaning or repairs), and streaming entertainment;
8. Transport and Delivery Services contracted through an online platform, application, website, webpage or other similar platform operated by the provider, regardless of whether the provider is authorized to engage in e-commerce in the Philippines; and
9. Other form of businesses other than those mentioned above which are conducted online.

D. Additional Allowable Deductions for Taxpayers using Both Electronic Invoices and Electronic Sales Reporting System. – All taxpayers required under Section 3(A) and 3(B) of these Regulations, including those taxpayers who voluntarily complied both with the issuance of electronic invoice and electronically report their sales data to the BIR, shall be granted the following deduction from their taxable income amounting to certain percentage of the total cost for setting up an electronic sales reporting system, in addition to the allowable deduction under Section 34(A)(1) of the Tax Code, as amended:

The foregoing allowable deduction shall be availed of only once within the taxable year the electronic sales reporting system has been completed or final payment has been made. The importation of such electronic sales reporting system shall also be exempt from taxes.

SECTION 4. EXEMPTION FROM THE MANDATORY REQUIREMENTS TO ISSUE AN ELECTRONIC INVOICE. – In line with the Ease of Doing Business and Ease of Paying Taxes, all taxpayers classified as Micro Taxpayers under Section 3(A)(1), 3(A)(4),3(A)(5)(i), 3(A)(5)(ii), 3(A)(5)(iii) and 3(A)(5)(iv) of these Regulations, shall be exemptedfrom the mandatory requirement to use and issue electronic invoice. However, this exemptiondoes not preclude Micro Taxpayers who are already using electronic invoices, if any, or thosewho choose to voluntarily use them.

In the absence of an electronic invoice, Micro Taxpayers shall issue a registered manual invoice. They may also use CAS, CRM, and POS System, in lieu of electronic invoices.

SECTION 5. PENALTY PROVISIONS. – Any violation of or non-compliance with these Regulations shall be subject to the penalties as defined in Sections 264 and 264-A of the Tax Code.

SECTION 6. TRANSITORY PROVISIONS. – Taxpayers covered under Section 3(A)(1)

to (3) have a period of one (1) year from the effectivity date of these Regulations to comply with the electronic invoicing requirements (issuance of electronic invoice).

Upon the establishment of a system capable of storing and processing the required data by the BIR, all taxpayers covered under Sections 3(A)(5)(i), 3(A)(5)(ii), 3(A)(5)(iii) and 3(A)(5)(iv) and 3(B) of these Regulations shall be mandated to comply with the issuance of electronic invoice and Electronic Sales Reporting System requirements. A separate Revenue Regulations shall be issued for this purpose.

SECTION 7. SEPARABILITY CLAUSE. – If any of the provisions of these Regulations is subsequently declared invalid or unconstitutional, the validity of the remaining provisions hereof shall remain in full force and effect.

SECTION 8. REPEALING CLAUSE. – All other issuances and rules and regulations or parts thereof which are contrary to and inconsistent with the provisions of these Regulations are hereby repealed, amended or modified accordingly.

SECTION 9. EFFECTIVITY. – These Regulations shall take effect fifteen (15) days following its publication in the Official Gazette or the BIR Official Website, whichever comes first.

By: Tax and Accounting Center Philippines

As a rule under Section 237 of the Tax Code, as amended by Republic Act No. 11976 or Ease of Paying Taxes Act , taxpayers engaged in trade or business are required to issue official receipts and/or sales invoices for each sale and transfer of goods and services. Hereunder we quote for easy reference:

“SEC. 237.            Issuance of Receipts or Sales or Commercial Invoices. — All persons subject to an internal revenue tax shall, for each sale and transfer of merchandise or for services rendered valued at Five Hundred Pesos or more, issue duly registered sale or commercial invoices, showing the name, taxpayer identification number, date of transaction, quantity, unit cost and description of merchandise or nature of service: X x x. Provided, further, That the seller shall issue sale or commercial invoices when the buyer so requires regardless of the amount of transaction: Provided, however, That if the sales amount per transaction is below the threshold, the seller will issue one (1) invoice for the aggregate sales amount for such sales at the end of the day: Provided, further, That the aggregate sales amount at the end of the day is at least Five hundred pesos (P500): Provided, finally, That VAT-registered persons shall issue duly registered sale or commercial invoices regardless of the amount of the sale and transfer of merchandise or of services rendered.”

X x x.”‘

Based on the above, let us share you some important matters about official receipts and sales invoices in the Philippines a s follows:

1. Principal and Supplementary Receipts and Invoices

Under Republic Act No. 11976 or Ease of Paying Taxes Act, issuance of commercial invoice has been harmonized for both sellers of goods and sellers of services and the issuance of official receipts for sellers of service has been changed. For tax purposes, commercial invoices are classified into principal and supplementary as follows under Revenue Regulations No. 7-2024 dated May 22, 2024 or RR 7-2024 (amending Revenue Regulations No. 18-2012 dated October 22, 2012):

INVOICES  – is the written account evidencing the sale of goods and/or services issued to customers in an ordinary course of business and is categorized as follows:

• VAT invoice – for transactions subject to VAT and shall be the basis of the output VAT of the seller and input VAT of the buyer; and,
• Non-VAT invoice – for transactions not subject to VAT and shall be the basis of percentage tax liability of the seller.

Invoices includes sales invoice, commercial invoice, cash invoice, charge/credit invoice, service invoice, or miscellaneous invoice.

SUPPLEMENTARY DOCUMENT – a written account, other than sales or commercial invoice, which serves as source of accounting entries in the books of accounts. This includes but are not limited to delivery receipts, order slips, debit and/or credit memo, purchase order, job order, provisional/temporary receipt, acknowledgement receipt, collection receipt, cash receipt, bill of lading, billing statement, statement of account, and any other documents, by whatever name it is known or called, whether prepared manually (handwritten information) or pre-printed/pre-numbered loose-leaf (information typed using excel program or typewriter) or computerized as long as it is used in the ordinary course of business being issued to customers or otherwise.

Supplementary documents, for purposes of Value-Added Tax, are not valid proof to support the claim of Input Taxes by buyers of goods and/or services.

2. Securing Authority to Print (ATP)

Under the rules, principal invoice and supplementary documents are required to be registered with the BIR by securing an approval on the authority to print using BIR Form No. 1906. Certain documentary requirements are required to be attached to the BIR form, and process will take some time with the BIR depending on the completeness of the documentation and volume of BIR applications.

3. Invoices and supplementary documents printed by BIR accredited printers  

Pursuant to Revenue Regulations No. 15-2012 dated December 3, 2012, only BIR accredited printers based on certain criteria are allowed to print BIR receipts and commercial invoices to see to it that unauthorized printers could not print invalid receipts and invoices. BIR offices publish a list of accredited printers that taxpayers may simply browse for easy reference.

4. BIR invoices per establishment

For taxpayers with head office and branches engaged in the sale of goods or services, each of such establishment must have its own official receipts and/or invoices. Invoices of each establishment is designated special codes through the last digit of the tax identification numbers (TIN) – 000 for head office, 001, 002, 003, etc. for branches, sales offices and other establishments.

5. Contents of Sales Invoices

Pursuant to Revenue Regulations No. 7-2024 (implementing RA No. 11976 – Ease of Paying Taxes Axt) amending Section 4.113-1(B) of Revenue Regulations No. 16-2005 dated September 1, 2005, the following shall be indicated in VAT sales invoice:

1. Statement that a seller is VAT-registered followed by TIN;
2. For sales of P1,000 or more to a VAT-registered person, the name, address, and TIN of the buyer.
3. Total amount which the purchaser pays or is obligated to pay to the seller with the indication that such includes VAT;

• The amount of VAT shall be shown as a separate item in the invoice;
• If the sale is exempt from VAT, the term “VAT-exempt sale” shall be written or printed prominently on the invoice;
• If the sale is subject to 0% VAT, the term “VAT-zero rate sale” shall be written or printed prominently on the invoice;
• If the sale involves goods, properties, or service some of which are subject to VAT and some zero-rated or VAT-exempt, a breakdown of such sales shall clearly be indicated, unless the seller each type invoice for the corresponding VATable, zero-rated, and VAT-exempt sale.

Please note as well the transition rules under RR 7-2024 with regards to the use of existing Official Receipts as a primary sales invoice (by striking out Official Receipts and stamping Sales Invoice) until consumed or December 31, 2024, whichever comes earlier, or using the same as supplementary invoice; the issuance of Sales Invoice of cash register machines (CRM) and point of sale machines (POS) upon effectivity of RR 7-2024 on April 27, 2024; and Sales Invoicing of users of computerized accounting system (CAS) and computerized books of accounts on June 30, 2024, unless they are approved for extension by BIR not later than 6 months or until December 31,2024. Failure of taxpayers to comply with the above transition would entail penalties.

Summary

Official receipts and commercial invoices are business matters that management shall likewise give attention. They must register principal and supplementary receipts and commercial invoices of each establishment, require its representatives to indicate required information, and timely renew the same prior to the expiry of the authority to print. Failure to strictly follow these simple rules could end up unnecessary penalties.

Disclaimer: This article is for general conceptual guidance only and is not a substitute for an expert opinion. Please consult your preferred tax and/or legal consultant for the specific details applicable to your circumstances. For comments, you may please send mail at in**@************er.org, or you may post a question at Tax and Accounting Center Forum and participate therein.