Legality of Adding Surcharges or Extra Fees for Issuing Official Receipts in the Philippines

I. Introduction

In the Philippines, the “official receipt” (OR) is more than a piece of paper. It is a tax document required by law, a proof of payment, and an essential record for both businesses and customers.

Despite this, it’s still common to encounter practices like:

  • “₱20 if you want an official receipt.”
  • “Discounted price without OR; higher price with OR.”
  • “We don’t issue OR for small amounts—only if you add a fee.”

These practices raise a central legal question: Can a business lawfully impose a surcharge or extra fee for issuing an official receipt?

In Philippine law and tax practice, the answer is effectively no for private businesses, subject to some narrow exceptions where a government-imposed fee for a certified or special document is authorized by statute or ordinance. For ordinary business transactions, issuing an OR is a mandatory legal obligation and must not be treated as an optional, paid “extra.”

This article explains why, by looking at the tax rules, consumer laws, and related regulations that govern official receipts in the Philippines.

II. Legal Framework on Official Receipts

A. Official receipts vs sales invoices

Under the National Internal Revenue Code (NIRC) and Bureau of Internal Revenue (BIR) regulations:

  • Sales invoice – used primarily for sale of goods.
  • Official receipt – used primarily for sale of services and for certain rental and other income.

For purposes of this article, “official receipt” is used broadly, but the same logic applies whether the transaction uses a sales invoice or an OR: a compliant tax document must be issued, and the business cannot charge extra for simply fulfilling this legal duty.

B. Statutory duty to issue receipts

Key concepts from the NIRC and related BIR regulations:

  1. Issuance is mandatory. Businesses and professionals are required by law to issue a receipt or invoice for every sale or service, at or about the time payment is received, subject to minimal de minimis thresholds that BIR may set in regulations (e.g., very small retail sales may use simplified receipts, but the general obligation remains).

  2. Accredited and registered receipts only. Official receipts must be:

    • Printed by BIR-accredited printers or generated by BIR-registered computerized systems/point-of-sale systems; and
    • Registered with the BIR (authority to print, acknowledgment of system, etc.).

  3. Content requirements. Receipts must show, among others:

    • Name, address, TIN of the issuer
    • Serial number of the receipt
    • Date and amount of transaction
    • VAT breakdown if VAT-registered (e.g., “VATable sales,” VAT amount, or “VAT-exempt sale”)
    • Name and address of the customer in prescribed cases (e.g., if above certain amounts or if requested for input tax or reimbursement).

  4. Price must be tax-inclusive or clearly broken down. For VAT-registered taxpayers, BIR rules generally require that the price displayed or quoted to the public is VAT-inclusive unless clearly indicated otherwise. The VAT portion must be properly shown in the OR/invoice.

    This is crucial: the taxes due on the transaction are not an “add-on” for issuing the OR; they are part of the legal price structure.

C. Consumer protection and price display laws

Apart from tax laws, consumer protection laws are directly relevant:

  1. Consumer Act and Price Tag rules Philippine consumer law (and specific “price tag” requirements) generally requires that:

    • The price offered or advertised to the public must be the total price payable, subject only to clearly disclosed and legitimate add-ons (e.g., delivery fee if optional and agreed to).
    • Hidden or misleading charges may be treated as deceptive or unfair sales practices.

  2. No “surprise” charges at the point of payment. If the business posts a price on the menu, shelf, or website, and then adds an undisclosed “OR fee” at the cashier, it risks violating consumer laws because the customer has not been given clear and prior notice of the true price.

  3. Regulation of service charges and surcharges Service charges (e.g., in hotels and restaurants) are regulated separately and must be disclosed. They are not the same as a fee for issuing an OR. Even if service charges are allowed, the official receipt still must be issued, and the service charge, if any, should appear in the receipt — again, without treating the OR itself as a billable “service.”

D. Local government codes and fees

Local government units (LGUs) can impose local taxes and regulatory fees through ordinances. However:

  • These ordinances cannot override the NIRC’s mandatory requirement to issue receipts.
  • LGUs may charge fees for documents issued by the LGU itself (e.g., business permits, certified true copies of records). These are different from private businesses charging fees to customers merely to receive an OR for a sale.

III. Why Charging a Fee for Issuing an Official Receipt is Generally Illegal

Let’s go straight to the core issue: Can a private business say, “We will issue an OR only if you pay an additional fee”?

Legally, multiple problems arise from this practice.

A. The OR is part of the transaction, not an optional add-on

The law requires that for taxable transactions, an official receipt or sales invoice must be issued. This is:

  • A statutory obligation of the seller/service provider; and
  • An inherent part of the conduct of business, not an “extra service” that can be monetized separately.

When a business imposes a surcharge for issuing an OR, it is effectively saying:

“We will comply with the tax law only if you pay us more.”

That stance is fundamentally inconsistent with the nature of the obligation. Compliance with tax regulations is not a commodity; the business cannot sell its own legal compliance to the customer.

B. It undermines correct tax reporting

A business that offers a lower price “without OR” and a higher price “with OR” is sending a clear signal:

  • The lower, “no OR” price is likely not being reported as taxable sales;
  • The OR is issued only if the customer is willing to “pay extra,” suggesting that the business might only declare and pay tax on those “with OR” transactions.

This leads to:

  • Under-declaration of income;
  • Incorrect computation of VAT or percentage tax;
  • Exposure to BIR audits, assessments, surcharges, interest, and penalties;
  • Potential closure of business for habitual failure to issue receipts.

C. It constitutes a failure or refusal to issue receipts

Even if the business technically issues receipts to those who pay extra, it refuses to issue ORs to those who do not pay the surcharge. In the eyes of tax law, that refusal is tantamount to:

  • Failure to issue the required receipt for some or all transactions;
  • A taxable offense, regardless of any internal “policy” or posted notice.

The business cannot defend itself by saying, “The customer declined to pay our surcharge; therefore, we didn’t issue the OR.” The obligation to issue a receipt does not depend on the customer’s willingness to pay an extra fee.

D. It can be an unfair or deceptive trade practice

From the consumer law angle, adding a fee at the end just because the customer asks for an OR can be:

  • Misleading – because the posted price did not tell the customer that wanting a receipt would cost extra;
  • Unfair – because it forces consumers to choose between (a) getting proper documentation of their purchase and (b) being charged more than the advertised price.

In certain sectors (e.g., taxis, ride-hailing, professional services), customers often need an OR for reimbursement, company liquidation, or accounting purposes. Penalizing them for asking for what the law already requires can be considered an abusive practice.

IV. Illustrative Scenarios

Below are common real-world scenarios and how the law generally views them.

1. Restaurants and cafés

  • Scenario: The menu shows prices. At the cashier, the customer asks for an OR. The cashier replies, “Add ₱10 for the OR; otherwise, we give a provisional slip only.”

    Legal view:

    • The restaurant is required to issue a proper receipt for the transaction.
    • Imposing a separate ₱10 “OR fee” is improper; the price on the menu should already reflect the total charge.
    • Failure to issue the OR without the extra fee is a violation of BIR rules and may also violate consumer pricing rules.

2. Professionals (doctors, lawyers, accountants, consultants)

  • Scenario: A professional charges a consultation fee and says, “If you need an OR for your company, I will have to charge an additional amount,” or “No OR if you want the lower rate.”

    Legal view:

    • Professionals engaged in trade or business are required to register with the BIR and issue ORs for fees received.
    • Splitting the fee into “with OR” and “without OR” portions is inconsistent with lawful and accurate income reporting.
    • It risks BIR investigation and undermines the credibility and ethical standing of the practitioner.

3. Transport services, delivery riders, and logistics

  • Scenario: A logistics company or ride-hailing partner provides a fare breakdown in an app but says the OR is available only if the shipper or passenger pays an additional document fee.

    Legal view:

    • If the transport or logistics company is the party required to issue the OR, it must do so for the fare actually paid, not for a higher “fare plus OR fee.”
    • Any service charge or processing fee must be openly disclosed and correspond to an actual service (e.g., rush delivery), not to the mere issuance of a receipt.

4. Schools and training centers

  • Scenario: A school or training center says tuition/fees are a certain amount, but “if you want an official receipt for company reimbursement, there’s an extra processing fee per OR.”

    Legal view:

    • The school or training center is required to issue receipts for payments received.
    • Administrative or processing fees are not automatically illegal, but they must correspond to a legitimate optional service, not to the basic issuance of the OR itself.
    • If the “processing fee” exists only when an OR is requested, it is suspect.

5. Government agencies charging for certifications

  • Scenario: A government office charges a “certification fee” or “documentary fee” for issuing certified true copies or official certifications.

    Legal view:

    • This is generally lawful, because such fees are imposed by law or ordinance and relate to government-issued documents, not to a private entity’s statutory obligation to issue an OR.
    • This should not be confused with private businesses charging for their own ORs.

V. Penalties and Consequences for Businesses

Businesses that engage in “no OR unless you pay extra” schemes risk multiple layers of liability.

A. Tax penalties

Under the NIRC and its amendments:

  • Failure or refusal to issue receipts or invoices can result in:

    • Administrative penalties (surcharges, interest, compromise penalties);
    • Criminal liability (fines and possible imprisonment);
    • Possible closure of business as a sanction for repeated violations.

Even if the surcharge is small, it can flag the business as likely under-declaring sales, which may prompt deeper BIR auditing.

B. Regulatory and consumer protection sanctions

  • The DTI (for goods and some services) or sector-specific regulators can investigate complaints that involve:

    • Undisclosed or deceptive fees;
    • Overpricing or refusal to issue receipts;
    • Unfair or abusive trade practices.

  • Administrative sanctions may include:

    • Fines and penalties;
    • Suspension or revocation of permits or licenses;
    • Orders to cease and desist from the unlawful practice.

C. Contractual and reputational risks

For businesses dealing with corporate clients, NGOs, and government:

  • Failure to issue ORs properly can violate contract terms (e.g., requirements for proper documentation of payments).
  • It can disqualify a supplier from future bids or contracts.
  • It harms reputation and trust, especially in sectors that rely heavily on audit trails and compliance.

VI. Are There Any Legitimate “Extra Fees” Related to Documentation?

There are some situations where extra charges may be legitimate if properly structured and disclosed. The key is that the fee must not be merely for issuing an OR, but for a separate and real service or statutorily mandated cost.

Examples:

  1. Documentary stamp tax (DST) For certain transactions (e.g., loans, leases, insurance policies), there may be DST payable. The parties can agree that the DST is for the account of the client or customer, and the amount can appear on the OR/invoice as a separate line item.

    • This is not a “fee for the OR.” It is a tax on the instrument/transaction itself, authorized by the NIRC.

  2. Notarization fees, courier fees, and special handling If a client requests extra services like notarization, courier delivery of documents, or rush processing where a clear, distinct service is provided, charging a fee is legitimate.

    • Again, this fee is for the extra service, not for the mere issuance of the official receipt.

  3. Certified true copies or duplicate receipts If a customer loses the original receipt and requests duplicate or certified copies, a reasonable fee may be justified for retrieval, certification, and administrative work—provided it’s not used as an excuse to avoid issuing the original OR at the time of transaction.

    • The original OR, issued at the time of payment, cannot be subject to a separate surcharge.

The general test:

If the fee exists even when no OR is involved (because the service itself is real), it may be lawful. If the fee exists only because the customer wants an OR, it is highly suspect.

VII. Practical Guidance for Businesses

To stay compliant and avoid disputes:

  1. Build the cost of compliance into your pricing.

    • Whatever it costs you to print or generate ORs (paper, ink, software, accredited printers, staff time), treat it as part of your overhead cost and price your goods and services accordingly.
    • Do not isolate OR issuance as a billable item charged to the customer.

  2. Standardize prices “with OR” — no discounts for “no OR.”

    • Set a single, lawful price per product or service and apply it consistently.
    • Avoid informal practices like “₱X if no receipt, ₱X+ if with receipt.”
    • If you offer discounts or promos, make sure they are legitimate marketing tools, not covert ways of telling customers “we won’t declare this sale.”

  3. Ensure your receipts are BIR-registered and properly formatted.

    • Use only BIR-authorized receipts or systems.
    • Train staff to issue receipts for every transaction that requires one, regardless of whether the customer explicitly asks for it.

  4. Be transparent with any add-ons.

    • If you charge for a separate service (delivery, rush processing, special packaging), clearly inform the customer before the transaction is finalized.
    • Show these add-ons as separate lines on the OR/invoice.

  5. Audit internal policies.

    • Review whether branches or employees have adopted informal “OR fee” practices to meet sales targets or reduce tax.
    • Correct and document changes; consider internal memos formally prohibiting such surcharges.

VIII. Practical Guidance for Consumers

If you encounter a business that charges a fee for issuing an official receipt or refuses to issue one:

  1. Politely insist on a proper OR.

    • You have a legitimate right to a receipt for your payment.

  2. Ask why there is an extra fee.

    • Sometimes the staff may be misinformed; raising the issue can prompt correction.

  3. Keep evidence.

    • If the business persists, keep any provisional slip, screenshot, or written indication that they charge extra for ORs.

  4. Consider reporting.

    • You may lodge a complaint with the relevant agencies (BIR for tax compliance issues, DTI or sector regulators for pricing and consumer issues).
    • For companies you work for (e.g., if you need ORs for reimbursement), inform your accounting or audit department; they may escalate the matter formally.

IX. Conclusion

In the Philippine legal context, issuing an official receipt is a non-negotiable obligation of businesses and professionals for taxable transactions. It is:

  • Required by the National Internal Revenue Code and enforced by the BIR;
  • Supported by consumer protection laws demanding transparency and fairness in pricing;
  • Central to accurate tax reporting and business integrity.

Because of this, adding a surcharge or extra fee solely for issuing an official receipt is generally unlawful and risky. Businesses should incorporate compliance costs into their normal pricing and issue receipts as a matter of course. Consumers, for their part, are fully entitled to insist on ORs without being penalized for asking.

The safest rule of thumb is simple:

“The price you see should already be the price with a proper official receipt — no extra charge just for the OR.”

Disclaimer: This content is not legal advice and may involve AI assistance. Information may be inaccurate.

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