The distinction between Sales Invoice (SI) and Official Receipt (OR) is one of the most critical yet frequently misunderstood aspects of Philippine tax compliance. The rules are not based on whether payment has been made, nor on the form’s title printed by the printer, but strictly on the nature of the transaction as defined in the National Internal Revenue Code (NIRC) and implementing Revenue Regulations.
Direct Legal Basis in the Tax Code
Section 113 of the NIRC of 1997, as amended, is explicit and controlling:
Section 113. Invoicing and Accounting Requirements for VAT-Registered Persons.
(A) Invoicing Requirements — A VAT-registered person shall issue:
(1) A VAT invoice for every sale, barter or exchange of goods or properties; and
(2) A VAT official receipt for every lease of goods or properties, and for every sale, barter or exchange of services.
This provision has never been amended in its core substance since the introduction of EVAT under RA 9337. All subsequent Revenue Regulations (RR 16-2005, RR 18-2012, RR 7-2018, RR 13-2018, etc.) merely implement and clarify this statutory rule.
Therefore, the controlling criterion is the nature of what is being transferred:
| Transaction Type | Required Document (VAT-registered taxpayer) |
|---|---|
| Sale, barter, exchange of goods or properties | Sales Invoice (or Commercial Invoice if non-VAT) |
| Sale, barter, exchange of services | Official Receipt |
| Lease of goods or properties | Official Receipt |
Practical Application and BIR Interpretation
1. Sale of Goods or Properties → Always Sales Invoice
- Tangible items (merchandise, equipment, vehicles, real property sold by real estate dealers, condominium units, machinery, etc.)
- Consumables, raw materials, supplies
- Real property sold in the ordinary course of trade or business (real estate dealers)
- Even if the buyer pays in full upon ordering but delivery is later, the Sales Invoice is issued upon delivery/constructive delivery or transfer of title.
2. Sale or Performance of Services → Always Official Receipt
- Professional fees (lawyers, accountants, doctors, engineers, consultants)
- Construction services, repair services, installation services
- Transportation, freight, hauling, towing
- Hotel accommodation, restaurant services (food is goods, but the service of preparing and serving is predominant — BIR consistently requires OR for restaurants)
- Commission income, brokerage, agency fees
- Security services, janitorial, manpower supply
- Rental/lease of commercial or residential property, equipment, vehicles
- Telecommunications, electricity, water (considered services)
- Hospital services, school tuition fees
Restaurants and food establishments predominantly engaged in selling prepared food are considered sellers of services, hence they issue Official Receipts even though food is physically goods. This has been upheld in numerous BIR rulings since 2005.
3. Mixed Transactions (Both Goods and Services)
The BIR applies the predominance test (50% or more) only for determining which document is the principal document for Authority to Print (ATP) purposes.
- If gross sales/receipts from goods ≥ 50% → Principal document: Sales Invoice; Supplementary document: Official Receipt
- If gross receipts from services ≥ 50% → Principal document: Official Receipt; Supplementary document: Sales Invoice
However, even with a principal/supplementary setup, the document must still follow Section 113 for each transaction:
Example: A hardware store (predominantly goods) that also installs the items it sells must issue:
- Sales Invoice for the materials/goods sold
- Official Receipt for the installation labor/service
The BIR has repeatedly penalized taxpayers who issue only one type of document for mixed transactions.
Timing of Issuance
| Document | When Issued |
|---|---|
| Sales Invoice | At the moment of sale/delivery or transfer of ownership (even if on credit or installment) |
| Official Receipt | For services: upon receipt of payment (cash or check) or when the income is earned, whichever comes first. For credit services, a Statement of Account/Billing Statement may be issued first, but the Official Receipt must be issued upon collection. |
For purely service transactions on credit (e.g., legal retainers, monthly consulting), many practitioners issue the Official Receipt only upon payment, which is accepted by the BIR as long as total collections are reported correctly.
Content Requirements (Minimum under RR 16-2005 as amended)
Both documents must contain:
- Taxpayer’s registered name, trade name (if any), and address
- Taxpayer Identification Number (TIN) with suffix (e.g., 000-123-456-00000)
- “VAT” or “NON-VAT” clearly printed
- Authority to Print (ATP) details at the bottom
- Serial number
- Date of transaction
- Description of goods/services
- Quantity and unit price (for goods)
- Total amount
- Separate 12% VAT amount (for VAT-registered)
- Name, address, and TIN of buyer (if transaction > ₱1,000 or if requested)
Key difference in description:
- Sales Invoice: Must show quantity, unit, description of goods
- Official Receipt: Description of service rendered and period covered (if applicable)
Non-VAT Registered Taxpayers
Non-VAT taxpayers (gross sales/receipts ≤ ₱3,000,000 or those who opted for 8% tax) are prohibited from issuing VAT invoices or receipts. They issue:
- Non-VAT Sales Invoice (for goods)
- Non-VAT Official Receipt (for services)
They may also use a single “Invoice/Receipt” form provided it does not indicate VAT separation.
Electronic Invoicing/Receipting (EAS, CAS, CRM-POS, e-Invoice System)
As of 2025, large taxpayers and many others are already mandated under the Ease of Paying Taxes (EOPT) Act (RA 11976) and BIR’s e-Invoicing system to transmit invoices/receipts real-time to BIR.
The same distinction applies electronically:
- System must be capable of generating both e-Invoice and e-Receipt
- Transmitted JSON must correctly classify the transaction as “SI” or “OR”
BIR has been rejecting applications for CAS/CRM-POS that can only generate one type when the taxpayer has mixed transactions.
Common Errors and Corresponding Penalties
| Violation | Penalty (under Section 264 + RR 7-2018) |
|---|---|
| Issuing only Official Receipt for sale of goods | Input tax disallowance + 50% surcharge + possible criminal case |
| Issuing only Sales Invoice for services | Same as above |
| Using supplementary OR for sale of goods | Input tax of buyer disallowed |
| Failure to issue proper document | ₱1,000 to ₱50,000 per violation + 25% or 50% surcharge |
| Issuing “Acknowledgement Receipt” instead of OR | Considered non-issuance |
The Supreme Court has consistently upheld BIR assessments when taxpayers issue the wrong document (e.g., G.R. No. 210836, Silicon Philippines v. CIR; G.R. No. 215378, Samyang Corp. v. CIR).
Best Practices for Compliance
- Determine the correct document per transaction, not per customer or per day.
- For mixed businesses, apply for ATP for both Sales Invoice and Official Receipt (principal and supplementary).
- Train accounting/cashier staff rigorously — the most common audit finding is wrong document issuance.
- For restaurants, hospitals, schools, hotels — always Official Receipt, never Sales Invoice.
- For real estate developers selling condominium units with parking — Sales Invoice (sale of property).
- For contractors — Official Receipt for construction service, separate Sales Invoice if supplying materials under a separate contract.
Conclusion
The rule is simple and absolute under Philippine law: goods = Sales Invoice; services or lease = Official Receipt. There is no discretion, no “either/or,” no “we’ve always done it this way” defense that survives a BIR audit.
Taxpayers who treat the two documents as interchangeable do so at their peril. The Bureau of Internal Revenue has assessed hundreds of billions in deficiencies over the years precisely on this issue, and the courts have consistently upheld those assessments.
Compliance is not merely good bookkeeping — it is statutory mandate under pain of severe civil and criminal sanctions.