Consequence of Issuing Erroneous VAT Invoice - BIR RR No. 7-2024

Are you ready of the Consequence of Issuing Erroneous VAT Invoice in relation with Registration Procedures and Invoicing Requirements as per Bureau of Internal Revenue (BIR) Revenue Regulations (RR) No. 7-2024?

The Consequence of Issuing Erroneous VAT Invoice is stated in SECTION 3 (D) of RR No. 7-2024 to as follows:

D. Consequence of Issuing Erroneous VAT Invoice

1. All persons who are not VAT-registered and issued VAT invoice showing the person's TIN followed by the word VAT or showing the information under Section (B)(1) of these Regulations, shall, in addition to other percentage taxes be liable to (i) VAT imposed under Section 106 or 108 Tax Code, without the benefits of any input tax credit and (i) a fifty percent (50%) surcharge under Section 248 (B) of the Tax Code.

The VAT shall be recognized as input tax credit under Section 110 of the Tax Code, to the purchaser, buyer or receiver or erroneous VAT Invoice if all the required information under Section 3(B)(1) of these regulations are shown on the invoice.

2. A VAT-registered person or seller issuing a VAT Invoice for a VAT-Exempt transaction, but fails to display the term 'VAT-Exempt Sale" or clearly provide a breakdown of the VAT-Exempt Sale' on the invoice as provided for under Section 3(B)(2.4) of these Regulations, shall be liable for the VAT in Section 106 and 108 as if Section 109 of the Tax Code did not apply.

3. Lack of information required under Section 3(B) of these Regulations - If a VAT-registered person or seller issues a duly registered VAT Invoice to another VAT-registered person or buyer/purchaser with lacking information required under Section 3(B) of these Regulations, the seller or issuer shall be liable for non-compliance with the invoicing requirements. However, the VAT amount shall be still be allowed to be used as an input tax credit under Section 110 of the Tax Code, on the part of the purchaser or buyer, except if the lacking information pertains to any of the following:

a. Amount of Sales

b. VAT amount

c. Registered name and TIN as shown on the Bureau of Internal Revenue (BIR) Certificate of Registration of both purchaser or buyer and issuer or seller.

d. Description of goods or nature of services; and

e. Date of transaction.

Please refer https://www.bir.gov.ph/images/bir_files/internal_communications_1/Full%20Text%20RR%202024/RR%20No.7-%202024.pdf of the full text of RR No. 7-2024.

Streamlining the Business Registration Process and Documentary Requirements

The bureau just recently issued Revenue Memorandum Circular (RMC) No. 93-2016 Streamlining the Business Registration Process and Documentary Requirements by Further Amending the List of Documentary Requirements for the Registration of Each Type of Application under "Annex A" of Revenue Regulations (RR) No. 7-2012, as Clarified Under Revenue Memorandum Circular (RMC) No. 70-2013 and RMC No. 37-2016.

1. Primary and secondary registration requirements amending the list of documentary requirements of each type of application published as "Annex A" of RR No. 7-2012 dated April 2, 2012, as clarified under RMC No. 70-2013 and RMC No. 37-2016.

The revised checklist of documentary requirements herein attached as Annexes "A1A11" included the acknowledgement of the applicant on the identified lacking documents for completion to facilitate the processing of application.

2. Steps for the registration of business in the Bureau of Internal Revenue (BIR) to be implemented as follows:

STEP 1. Apply for Registration [with complete documentary requirements (Annexes "A1-A11")]

STEP 2. Pay Annual Registration Fee [thru Mobile Revenue Collection Officers System (mRCOs), Authorized Agent Banks, Revenue Collection Officer or GCash]

STEP 3. Get Certificate of Registration with auto-approved Authority to Print (ATP) for initial principal receipts/invoices

The auto-approved ATP for initial principal receipts/invoices is only applicable to newly registered business taxpayer. But, subsequent application for receipts/invoices shall be processed in accordance with the procedures specified under existing issuances.

This Circular revokes all other circulars or issuances inconsistent herewith and shall take effect immediately. All internal revenue officers and employees are hereby enjoined to give this Circular a wide publicity as possible.

Reference: http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No%2093-2016.pdf