Are Dealers Required to Issue Official Receipts? BIR Invoicing Rules in the Philippines

Introduction

In the Philippine tax system, the issuance of official receipts and invoices serves as a cornerstone for ensuring transparency, accountability, and proper revenue collection. Administered by the Bureau of Internal Revenue (BIR), these requirements apply to all dealers, sellers, and service providers engaged in business activities. The rules aim to document transactions accurately, facilitate the computation of taxes such as Value-Added Tax (VAT), Percentage Tax, and Income Tax, and prevent tax evasion. This article provides a comprehensive overview of the obligations of dealers to issue official receipts, the governing invoicing rules, exemptions, penalties, and recent developments in the legal framework.

The term "dealers" broadly encompasses individuals or entities involved in the sale of goods, properties, or services in the course of trade or business. This includes retailers, wholesalers, manufacturers, service providers, and even professionals like lawyers and accountants. The BIR's invoicing rules are designed to create an audit trail for all taxable transactions, ensuring that both buyers and sellers comply with tax laws.

Legal Framework Governing Invoicing and Receipts

The primary legal basis for invoicing requirements in the Philippines is found in the National Internal Revenue Code of 1997 (NIRC), as amended by subsequent laws such as the Tax Reform for Acceleration and Inclusion (TRAIN) Law (Republic Act No. 10963), the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act (Republic Act No. 11534), and most recently, the Ease of Paying Taxes (EOPT) Act (Republic Act No. 11976, effective January 22, 2024).

Section 113 of the NIRC (Invoicing and Accounting Requirements for VAT-Registered Persons): This section mandates that all VAT-registered persons issue an invoice for every sale, barter, or exchange of goods or properties, and an official receipt for every lease of goods or properties and for every sale, barter, or exchange of services. The invoice or receipt must contain specific details to be considered valid.
Revenue Regulations (RR) No. 18-2012: This regulation consolidated the rules on the issuance of sales invoices and official receipts, introducing the concept of a "principal invoice" that can serve as both an invoice and a receipt, simplifying documentation for businesses.
RR No. 7-2014 and RR No. 16-2018: These provide guidelines on the printing and issuance of invoices and receipts, including the requirement for an Authority to Print (ATP) from the BIR.
RR No. 9-2021 and RR No. 7-2024 (Implementing the EOPT Act): These recent regulations transition the system toward a unified "Invoice" as the principal proof of sale, replacing the traditional distinction between sales invoices and official receipts. Under the EOPT Act, the term "official receipt" is phased out in favor of a single "invoice" document for all transactions, whether for goods or services.

Other relevant issuances include Revenue Memorandum Circulars (RMCs) that clarify specific scenarios, such as RMC No. 28-2019 on electronic invoicing and RMC No. 55-2024 on the implementation of digital tax compliance measures.

Who Is Required to Issue Official Receipts or Invoices?

All persons subject to internal revenue taxes, particularly those registered with the BIR, are obligated to issue invoices or receipts. This includes:

VAT-Registered Taxpayers: Those with annual gross sales or receipts exceeding PHP 3 million (as adjusted under the TRAIN Law) must register for VAT and issue VAT invoices.
Non-VAT Registered Taxpayers: Businesses below the VAT threshold (e.g., those subject to Percentage Tax under Section 116 of the NIRC) must still issue non-VAT invoices or receipts.
Dealers in Goods and Services: Retailers, wholesalers, importers, exporters, lessors, and service providers (e.g., contractors, consultants) fall under this category. Even marginal income earners, if registered, may have simplified requirements.
Professionals and Self-Employed Individuals: Doctors, lawyers, engineers, and other professionals must issue receipts for their fees.
Exempt Entities with Conditions: Government entities, non-stock non-profit organizations, and cooperatives may be exempt from certain taxes but are still required to issue receipts for accountability, especially if they engage in taxable activities.

Exemptions are rare and specific. For instance, sales to the government or exports may require special documentation, but receipts are still mandatory. Casual sellers (not in the course of business) are generally not required, but repeated transactions could trigger registration.

Types of Receipts and Invoices

Prior to the EOPT Act, the BIR distinguished between:

Sales Invoice (SI): Used for the sale of goods or properties, detailing the quantity, unit price, and total amount.
Official Receipt (OR): Issued for services, leases, or upon receipt of payment, acknowledging the amount received.

Under RR No. 18-2012, businesses could use a single "Commercial Invoice" or "Billing Invoice" as a substitute, but it had to comply with BIR standards.

With the EOPT Act and RR No. 7-2024:

The system shifts to a unified "Invoice" as the sole principal receipt for all sales of goods, properties, and services. This invoice serves as proof of transaction and substantiates input tax claims for VAT purposes.
Supplementary documents like delivery receipts, acknowledgment receipts, or collection receipts may be used for internal purposes but do not replace the principal invoice.
Electronic Invoices (e-Invoices): The BIR promotes digital invoicing through the Electronic Invoicing/Receipting System (EIS) under RR No. 8-2022. Taxpayers can opt for electronic issuance, which must be certified by the BIR and transmitted in real-time or near-real-time to the agency's system.

Special types include:

Cash Register Machine (CRM) or Point-of-Sale (POS) Receipts: For retail establishments, these must be BIR-registered and generate tapes for auditing.
Provisional Receipts: Temporary documents issued while awaiting ATP for principal receipts.
VAT-Exempt or Zero-Rated Invoices: Must explicitly state the exemption status.

Requirements for Valid Invoices and Receipts

To be considered official and compliant, invoices/receipts must include:

Registered Business Name and Address: As per BIR Certificate of Registration (COR).
Taxpayer Identification Number (TIN): Of the seller.
Date of Transaction: Including time for certain sales.
Serial Number: Sequentially numbered and pre-printed with ATP.
Description of Goods/Services: Quantity, unit, nature.
Amount: Gross amount, discounts, VAT (separately stated if applicable), and total.
Buyer's Details: Name, address, and TIN (mandatory for sales PHP 500 and above under certain rules).
BIR Permit to Use: Indication that the document is BIR-authorized.
Other Mandates: For VAT sales, the phrase "VAT-Inclusive" or breakdown; for exempt sales, "VAT-Exempt Sale."

Invoices must be issued in duplicate (original for buyer, duplicate for seller), and books of accounts must record them promptly. The ATP is obtained by submitting specimen copies to the BIR, valid for five years or until depletion.

When and How to Issue Receipts/Invoices

Timing: Invoices for goods must be issued upon transfer of ownership or delivery. For services, upon completion or payment, whichever is earlier. Partial payments require proportional invoicing.
Method: Manual, computerized, or electronic. Computerized systems require BIR accreditation.
Record-Keeping: Sellers must retain copies for at least three years (or longer if under audit), available for BIR inspection.
Special Cases:
- Installment Sales: Issue invoice for full amount at sale, with receipts for payments.
- Returns and Allowances: Credit memos must be issued.
- Exports: Invoices must comply with zero-rating rules.
- Government Transactions: Additional certifications may be needed.

Penalties for Non-Compliance

Failure to issue invoices/receipts is a serious offense under the NIRC:

Civil Penalties: Under Section 264, a fine of PHP 1,000 to PHP 50,000 per violation, plus 50% surcharge on the tax due if underpayment results.
Criminal Penalties: If willful, imprisonment from 2 to 6 years, especially if involving fraud (Section 255).
Compromise Penalties: BIR may offer settlements, e.g., PHP 1,000 for first offense of non-issuance.
Other Sanctions: Suspension of business operations, revocation of registration, or additional assessments during audits.

Common violations include issuing unofficial or "fake" receipts, understating amounts, or failing to secure ATP.

Recent Developments and Reforms

The EOPT Act represents a significant overhaul, aiming to digitize and simplify tax compliance:

Unified Invoice System: Effective July 1, 2025, all existing ORs and SIs must be replaced with the new "Invoice" format.
Digital Transition: Mandatory e-invoicing for large taxpayers by 2025, with voluntary adoption for others. This integrates with the BIR's Online Registration and Update System (ORUS) and EIS.
Simplified Requirements for MSMEs: Micro, small, and medium enterprises (MSMEs) benefit from reduced thresholds and easier registration.
Impact of COVID-19 and Economic Recovery Laws: Temporary relief measures under BAYANIHAN Acts allowed flexible invoicing, but standard rules have resumed.

Best Practices for Compliance

To avoid penalties, dealers should:

Register promptly with the BIR and update details.
Secure ATP before printing receipts.
Train staff on proper issuance.
Adopt accounting software compliant with BIR standards.
Regularly reconcile sales with issued documents.
Consult Revenue District Offices (RDOs) for clarifications.

Conclusion

The requirement for dealers to issue official receipts or invoices is not merely a bureaucratic obligation but a fundamental mechanism for fair taxation in the Philippines. By adhering to BIR rules, businesses contribute to national revenue while protecting themselves from legal risks. As the system evolves toward digitalization, staying informed through BIR issuances is crucial for sustained compliance. Taxpayers are encouraged to seek professional advice for specific circumstances to ensure full adherence to these regulations.