INVOICING SYSTEM GOES ELECTRONIC!

Last June 30, 2022, the Bureau of Internal Revenue (BIR) issued Revenue Regulations (RR) No. 8-2022, which prescribes the policies and guidelines for using the Electronic Invoicing System (EIS). The new BIR Regulation requires taxpayers in e-commerce, large taxpayers, and exporters of goods and services to issue electronic invoices/receipts in lieu of manual receipts or sales/commercial invoices. This is pursuant to the implementation of Section 237 and 237(A) of the National Internal Revenue Code (NIRC), as amended by Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law, to wit:

“SEC. 237. Issuance of Receipts or Sales or Commercial Invoices. –

• All persons subject to an internal revenue tax shall, at the point of each sale and transfer of merchandise or for services rendered valued at One hundred pesos (P100.00) or more, issue duly registered receipts or sales or commercial invoices, showing the date of transaction, quantity, unit cost and description of merchandise or nature of service: Provided, however, That where the receipt is issued to cover payment made as rentals, commissions, compensations, fees, receipts or invoices shall be issued which shall show the name, business style, if any, and address of the purchaser, customer or client: Provided, further, That where the purchaser is a VAT-registered person, in addition to the information herein required, the invoice or receipt shall further show the Taxpayer Identification Number (TIN) of the purchaser.
                                                                                   xxx                              xxx                         xxx"

"SEC. 237-A. Electronic Sales Reporting System. –

• Within five (5) years from the effectivity of this Act and upon establishment of a system capable of storing and processing the required data, the Bureau shall require taxpayers engaged in the export of goods and services, and taxpayers under the jurisdiction of the Large Taxpayers Service to electronically report their sales data to the Bureau through the use of electronic point of sale systems, subject to rules and regulations to be issued by the Secretary of Finance as recommended by the Commissioner of Internal Revenue: Provided, That the machines, fiscal devices, and fiscal memory devices shall be at the expense of the taxpayer.                                                                               xxx                             xxx                          xxx”

In view thereof, the BIR will establish EIS, which will be capable of storing and processing the data required to be transmitted by the taxpayers using their Data Sales Transmission System (DSTS). The certified DSTS is the system wherein taxpayers will transmit their sales data into the EIS of the BIR.

What is in the Electronic Invoicing System?

The electronic invoicing system will provide real-time data to the BIR in monitoring sales reports. Through matching of information, they can easily identify non-reporting and/or under -declaration of revenue. Hence, the transmission of sales data recorded electronically will encourage taxpayers in reporting the correct/actual sales through their BIR reports. This helps prevent taxpayers from committing fraud or tax evasion. Otherwise, they will be penalized by the Tax Code. 

Penalties for Under-declaration of Income

Section 248(b) of the Tax Code, as amended, provides that a fifty percent (50%) surcharge shall be imposed for failure to report sales, receipts or income in an amount exceeding thirty percent (30%) of that declared per return, and shall render the taxpayer liable for substantial under-declaration of sales, receipts or income.

BIR Piloting of e-receipts System

In the recent episode of “The Mangahas Interviews” published last July 22, 2022, BIR Commissioner Lilia Guillermo said that the move will make it easier for them to fast-track invoices and receipts for business and taxpayers. The e-receipt and invoicing that they launched was piloted for 100 large taxpayers. She also mentioned that if the implementation of the EIS will be successful, the BIR will eventually require all taxpayers to utilize EIS.

As of date, only taxpayers in e-commerce, large taxpayers, and exporters of goods and services are required to use EIS. However, taxpayers may voluntarily register in EIS in lieu of manual receipts.

Indeed, the Philippine Tax System continuously evolves as the businesses in the Philippines adapt and embrace the fast changes and development of technology. Digital transactions and the Covid-19 pandemic are just some of the reasons to digitize the tax administration due to certain limitations. The electronic invoicing system will surely help our tax administrators as long as the implementation procedures will be issued as soon as possible.