With the enactment of Republic Act No. 11976, otherwise known as the Ease of Paying Taxes (EOPT) Act, and its implementing rules under Revenue Regulations (RR) No. 7-2024, the Bureau of Internal Revenue (BIR) has fundamentally altered the landscape of compliance for Philippine businesses.

The most significant change is the harmonization of documentation: the Sales Invoice (SI) has replaced the Official Receipt (OR) as the primary proof of sale for both goods and services.

1. The New Standard: Sales Invoice as Primary Evidence

Previously, the BIR distinguished between "Sales Invoices" (for goods) and "Official Receipts" (for services). Under the EOPT Law, the Sales Invoice is now the required document to substantiate the sale of both goods and services for Value-Added Tax (VAT) purposes.

Official Receipts have been relegated to "supplementary documents." While they can still be used to acknowledge the movement of cash, they are no longer valid for claiming Input VAT.
Accrual Basis for Services: For VAT-registered taxpayers, VAT is now recognized upon issuance of the invoice, regardless of when the cash is actually received.

2. Rules on Partial Payments and Installments

Handling partial payments (or "progress billings" in construction and service industries) requires careful synchronization between the timing of the invoice and the recognition of tax.

A. Issuance upon Milestone or Billing

For contracts involving partial payments, a Sales Invoice must be issued at the time the payment is "due or demandable" or when a milestone is reached.

VAT Liability: The full VAT amount indicated on that specific Sales Invoice is due for the period in which the invoice was issued, even if the client has not yet settled the balance.

B. The "Pre-payment" or Deposit Scenario

If a customer pays an advance or deposit before the actual delivery of goods or completion of services:

A Sales Invoice must still be issued for the amount received.
The invoice serves as the basis for the seller's Output VAT and the buyer's Input VAT.
Upon final completion, a final Sales Invoice is issued reflecting the total amount, less the previous partial payments already invoiced.

3. Compliance Requirements for Invoicing

To stay compliant and ensure that your customers can claim Input VAT, every Sales Invoice must contain the following "Mandatory Information" (per RR No. 7-2024):

Registered Name and TIX: The seller’s name and Taxpayer Identification Number (with Branch Code).
Business Address: Where the seller is registered.
Date of Transaction: The date the invoice is issued.
Description of Items: A clear breakdown of the goods sold or services rendered.
Breakdown of Sale:
VATable Sales
VAT-Exempt Sales
Zero-Rated Sales
VAT Amount (must be shown as a separate line item)
Total Amount: The gross sum payable.
Buyer’s Information: For sales to VAT-registered persons amounting to ₱1,000 or more, the invoice must include the buyer’s Name, Address, and TIN.

4. Transitioning from "Official Receipts" to "Sales Invoices"

The BIR provided a transition period for businesses to exhaust their remaining printed Official Receipts.

Striking Through: Taxpayers are allowed to use their existing ORs as "Sales Invoices" provided they strike through the word "Official Receipt" and stamp or print the words "Sales Invoice" on the document.
Validity: This conversion is valid for claiming Input VAT only until the remaining stocks are consumed or until the deadline set by the BIR (whichever comes first).
Inventory List: Taxpayers who converted their ORs were required to submit an inventory list to the BIR to map out the remaining serial numbers.

5. Penalties for Non-Compliance

Failure to issue the correct Sales Invoice for partial or full payments can lead to severe repercussions:

Surcharge and Interest: Late filing and payment of VAT arising from un-invoiced partial payments.
Compromise Penalties: Fines ranging from ₱1,000 to ₱50,000 depending on the frequency of the violation.
Disallowance of Input VAT: For the buyer, if the invoice does not contain the mandatory information (like the TIN or correct name), the BIR will disallow the Input VAT deduction during an audit.

Summary Table: Old vs. New Rules

Feature	Old Rule (Pre-2024)	New Rule (EOPT/RR 7-2024)
Primary Document (Services)	Official Receipt (OR)	Sales Invoice (SI)
VAT Recognition (Services)	Upon Cash Collection	Upon Issuance of Invoice
Partial Payments	OR issued for every collection	SI issued for the billed amount
Input VAT Basis	Payment (for services)	Invoice (for everything)

Would you like me to draft a sample template of a compliant Sales Invoice reflecting these partial payment requirements?