Penalties for Non‑Issuance of Official Receipts in the Philippines
A comprehensive legal guide for taxpayers, accountants, compliance officers, and law students
1. Why Official Receipts (ORs) Matter
- Tax transparency & audit trail – ORs are the primary evidence that sales or service income took place, enabling the Bureau of Internal Revenue (BIR) to verify both income‑tax and value‑added‑tax (VAT) obligations.
- Consumer protection – A customer who receives an OR can later enforce warranty claims, refund demands, or prove expense deductions.
- Corporate governance – Proper receipting shows faithful compliance with statutory duties and reduces exposure of directors and officers to personal criminal liability.
2. Statutory Duty to Issue ORs
| Provision | Core Rule | Key Implementing Issuances |
|---|---|---|
| § 237, National Internal Revenue Code (NIRC) | Every sale of goods, property or services ₱100 and above or if the buyer demands must be covered by an official receipt (service) or sales invoice (goods). | Rev. Regs. (RR) 18‑2012, RR 16‑2018, RR 10‑2022 (on ATP/CAS/POS rules); Rev. Memo. Circ. (RMC) 29‑2019 (FAQs) |
| § 115(b), NIRC | Authorises the Commissioner to suspend or close a business for, inter alia, failure to issue ORs. | RMO 03‑2009 & subsequent “Oplan Kandado” directives |
| Consumer Act (RA 7394) & Price Act (RA 7581) | Require suppliers to furnish proof of purchase, reinforcing § 237. | DTI Adm. Orders on retail trade |
Tip: VAT‑registered taxpayers issue official receipts for services and sales invoices for goods; non‑VAT taxpayers issue either but must still observe § 237.
3. Criminal Penalties under § 264, NIRC (as amended by the TRAIN Law, RA 10963)
| Offence (every single act/omission) | Fine | Imprisonment |
|---|---|---|
| § 264(a) – Failure or refusal to issue a required OR/invoice or issuance of non‑compliant OR/invoice | ₱1,000 – ₱50,000 | 2 – 4 years |
| § 264(b) – Same acts when the taxpayer’s annual gross sales/receipts exceed ₱3 million (VAT threshold) or where a “multiple/double” OR scheme is used | ₱500,000 – ₱10 million | 6 – 10 years |
| § 265 – Use or possession of sales suppression devices (e.g., “zappers”) to avoid issuing true ORs | ₱500,000 – ₱10 million plus confiscation & destruction of device | 2 – 4 years (1st) / 3 – 5 years (subsequent) |
Corporate liability: When the offender is a corporation, the responsible officers (usually President, CEO, GM, or partner) are prosecuted and may be solidarily liable for the fine (§ 253, § 256).
4. Administrative Sanctions Imposed by the BIR
4.1 Compromise Penalties (RMO 7‑2015, latest schedule)
| Violation | 1st | 2nd | 3rd |
|---|---|---|---|
| Failure/refusal to issue OR | ₱20 000 | ₱30 000 | ₱50 000 |
| Issuance of incomplete OR (missing TIN, address, date, etc.) | 10 000 | 20 000 | 40 000 |
These may be offered in lieu of criminal prosecution before the filing of information. Acceptance is discretionary and does not erase the underlying civil tax liabilities.
4.2 Oplan Kandado (Business Suspension/Closure)
- Ground: At least three verified instances of non‑issuance within a taxable quarter or failure to register/change address of POS/CAS.
- Effect: Closure for a minimum of 5 days; re‑opening only after payment of a compromise penalty and submission of compliance plan.
4.3 Other Measures
- Revocation of Authority to Print (ATP) official receipts.
- Blacklisting of printers that cater to offenders (RR 15‑2012).
- Disallowance of input VAT/expense claims corresponding to unreceipted sales.
5. Civil Tax Liabilities Accompanying Non‑Issuance
Deficiency VAT, Percentage Tax, and Income Tax – Reconstructed from third‑party and industry data.
Surcharge:
- 25 % for simple negligence (failure to pay/file), or
- 50 % for willful neglect or fraudulent intent (Sec. 248).
Interest: 12 % p.a. (double the Bangko Sentral overnight rate) from Jan 1 2018 onward (§ 249, as amended).
Compromise or Administrative Penalties (see § 4 above).
6. Related Offences & Ancillary Laws
| Section | Description |
|---|---|
| § 258, NIRC | Printing ORs without BIR authority – ₱500,000 – ₱10 million; 6 – 10 years imprisonment. |
| § 260, NIRC | Failure of a VAT taxpayer to transmit sales data from CRM/POS to BIR’s eSales – similar fines and jail terms. |
| Anti‑Red Tape Act (RA 9485 / RA 11032) | Imposes administrative liability on public officers who refuse to accept ORs or require extras beyond BIR rules. |
7. Jurisprudence Snapshot
| Case | G.R. No. | Ruling |
|---|---|---|
| People v. Ong | L‑34337 (Oct 23 1986) | Affirmed conviction for deliberate refusal to issue receipts; intent inferred from repeated warnings. |
| People v. Asuncion | 11138 (May 15 2013, CA) | POS logs & undercover BIR purchase confirmed guilt; absence of OR is a mala prohibita offence—intent is immaterial. |
| BIR v. Seafood Shack | CTA EB‑1194 (Feb 10 2021) | Sustained Oplan Kandado closure; taxpayer failed to overcome prima facie findings of three non‑issuance events. |
8. Compliance Checklist for Businesses
- Secure valid ATP or CAS Permit before printing/using ORs or POS.
- Pre‑number, pre‑print TIN, business name, address, and “VAT” or “NON‑VAT”.
- Issue OR immediately upon receipt of payment, even for deposits and advances.
- Two‑year retention of duplicate copies (longer if under audit).
- Train staff; undercover BIR buyers are common.
- Monitor POS data transmission (RR 5‑2014, RMC 68‑2019).
- Conduct periodic self‑audit; compare inventory withdrawals vs. OR totals.
- Document petty cash sales; threshold of ₱100 no longer a de‑facto defence if buyer demands a receipt.
9. Practical Take‑Aways
- The financial pain points are no longer trivial—the TRAIN Law multiplied fines to seven‑digit levels for large enterprises and introduced long‑term jail time.
- Administrative closure can cripple operations in peak season; reputational damage often exceeds the monetary penalties.
- Directors, partners, and even branch managers are now squarely criminally liable when they “knowingly” tolerate the practice.
- Compromise penalties are a one‑time escape hatch; repeat offenders almost always face full criminal prosecution.
- Preventive compliance is cheaper than post‑facto defence: invest in robust POS, continuous staff training, and clear SOPs for every transaction.
Conclusion
Failure to issue official receipts in the Philippines is both a criminal offence and a tax infraction that triggers a cascade of fines, imprisonment, business closure, and civil assessments. The BIR’s sharper enforcement tools after the TRAIN Law—particularly higher fines, “Oplan Kandado,” and electronic sales monitoring—underscore how critical it is for every taxpayer, from sari‑sari store to conglomerate, to institutionalise strict receipting protocols. Sound compliance not only avoids punitive outlays but also strengthens consumer trust and corporate credibility.