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.

Invoicing and Accounting Requirements for Value-Added Tax (VAT) Registered Persons - BIR RR No. 7-2024

The Invoicing and Accounting Requirements for Value-Added Tax (VAT) Registered Persons under Section 113 of the Tax Code is stated  in Section 3 of the Revenue Regulations (RR) No. 7-2024  as follows:

All VAT-registered persons and those required to register for VAT shall comply with the following:

A. Invoicing Requirements

1. A VAT-registered person shall issue a duly registered VAT Invoice, for every sale, barter, exchange or lease of goods or properties, and for every sale, barter or exchange of service regardless of the amount of the transaction.

2. A VAT Invoice shall be issued as evidence of sale of goods and/or properties and sale of services and/or leasing of properties issued to customers in the ordinary course of trade or business, whether cash sales or on account (credit), which shall be the basis of the output tax liability of the seller and the input claim of the buyer.

B. Information Contained in a VAT Invoice - The following information shall be indicated in the VAT Invoice:

1. A statement that the seller is a VAT-registered person followed by the seller's Taxpayer Identification Number (TIN) and Branch Code (e.g., VAT Reg. TIN 123-456-789-00000);

2. The total amount which the purchases pays or is obligated to pay the seller with the indication that such amount includes the VAT; provided that:

2.1 The VAT amount is shown as a separate item;

2.2 The term "VAT-Exempt Sale" is written or printed, if the sale is exempt from VAT;

2.3 The term "Zero-Rated Sale" is written or printed, if the sale is subject to zero percent (0%) VAT;

2.4 If the sale involves goods, properties or services some of which are subject to and some of which are VAT Zero-Rated or VAT-Exempt, the invoice shall clearly indicate the breakdown of the sale price between taxable, exempt, and zero-rated components and the calculation of the VAT on each portion of the sale shall be shown on the Invoice. Provided, that the seller may issued separate invoices for the taxable, exempt and zero-rated components of the sale.

3. The date of transaction, quantity, unit cost and description of the goods or properties or nature of the service;

4. In the case of sales in the amount of One thousand pesos (P1,000) or more where the sale or transfer is made to a VAT-registered person, the registered name or name, address and TIN of the purchaser, customer or client; and

5. Other Information required under Section 6 (B) of these Regulations.

C. Accounting Requirements - All Persons subject to VAT under Section 106 and 108 of the Tax Code shall maintain a subsidiary sales journal and subsidiary purchase journal on which the daily sales and purchases are recorded, in addition to the regular accounting records required.

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.

Definition of Invoice and Supplementary Documents - BIR RR No. 7-2024

Should the taxpayers and concerned citizens understand the Definition of Terms stated in Revenue Regulations (RR) No. 7-2024?

In connection with the "Ease of Paying Taxes Act", the bureau has issued Revenue Regulations (RR) No. 7-2024 of the Registration Procedures and Invoicing Requirements.

The Definition of Invoice and Supplementary Documents is stated in Section 2 of the RR No. 7-2024 as follows:

SECTION 2. Definition of Terms - 

1. Invoice - it is a written account evidencing the sale of goods and/or services issued to customers in the ordinary course of trade or business. This is includes Sales Invoice, Commercial Invoice, Cash Invoice, Charge/Credit Invoice, Service Invoice, or Miscellaneous Invoice. It is also referred to as a "principal invoice" and is categorized as follows:

1.1 VAT Invoice - it is a written account evidencing the sale of goods, properties, services and/or leasing of properties subject to VAT issued to customers or buyers in the ordinary course of trade or business, whether cash sales or on account (credit) or charge sales. It shall be the basis of the output tax liability of the seller and the input tax claim of the buyer or purchaser.

1.2 Non-VAT Invoice - it is a written account evidencing the sale of goods, properties, services and/or leasing of properties not subject to VAT issued to customers or buyers in the ordinary course of trade or business, whether cash sales or on account (credit) or charge sales. It shall be the basis of the Percentage Tax liability of the seller, if applicable.         

Invoice may also sere as a written admission or acknowledged of the fact that money has been paid and received for the payment of goods or services.

2. Supplementary Document - it is a written document, other than sales or commercial invoice, which serves as source of accounting entries in the books of accounts.

This includes but not limited to official receipt, delivery receipt, order slip, debit and/or credit memo, purchase order, acknowledgement or cash receipt, collection receipt, bill of lading, billing statement, statement of account and any other documents, by whatever name it is known or called, whether prepared manually (hand written information) or preprinted/pre-numbered loose leaf (information typed using spreadsheet program or typewriter) or computerized as long as they are used in the ordinary course f business and being issued to customers or otherwise.

For purposes of VAT, Supplementary Documents are not valid proof to support the claim of input taxes by the buyers/purchasers of goods and/or services.

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

Coverage And Classification of Taxpayers - BIR Revenue Regulations (RR) No. 8-2024

In relation with the "Ease of Paying Taxes Act", the bureau has issued Revenue Regulations (RR) No. 8-2024 implementing Section 21(b) of the Tax Code on the classification of taxpayers.

Section 2 of these regulations has stated the Coverage and Classification of Taxpayers as follows:

A. Micro Taxpayer - shall refer to a taxpayer whose gross sales for  a taxable year is less than Three Million Pesos (P3,000,000.00).

B. Small Taxpayer - shall refer to a taxpayer whose gross sales for a taxable year is Three Millions Pesos (P3,000,000.00) to less than Twenty Million Pesos (P20,000,000.00).

C. Medium Taxpayer - shall refer to a taxpayer whose gross sales for a taxable year is Twenty Million Pesos (P20,000,000.00) to less than One Billion Pesos (P1,000,000,000.00).

D. Large Taxpayer - shall refer to a taxpayer whose gross sales for a taxable year is One Billion Pesos (P1,000,000,000.00) and above. 

For purpose of classification of taxpayers, under these Regulations, gross sales shall refer to total sales revenue, net of VAT, if applicable, during the taxable year, without any other deductions.

Please refer .https://www.bir.gov.ph/images/bir_files/internal_communications_1/Full%20Text%20RR%202024/RR%20No.%208-%202024.pdf of the full text of RR No. 8-2024.

Updated Version of the Alphalist Data Entry and Validation Module (Version 7.2)

Recently, the bureau has issued a Tax Advisory with regards of the updated version of the Alphalist Data Entry and Validation Module (Version 7.2) which is available for use for the update the Monthly Alphalist of Payees (MAP); Quarterly Alphalist of Payees (QAP); Summary Alpahlist of Withholding Taxes (SAWT) and Annual Information Return of Income Taxes Withheld On Compensation and Final Withholding Taxes (1604 C); Annual Information Return of Creditable Income Taxes Withheld (EXPANDED)/ Income Payments Exempt From Withholding Tax (1604 E) and Annual Information Return of Income Taxes Withhold On Compensation and Final Withholding Taxes (1604 F).

Please refer https://www.bir.gov.ph/images/bir_files/internal_communications_1/Advisory/2024/TAX%20ADVISORY-%20ALPHALIST%20DATA%20ENTRY%20AND%20VALIDATION%20MODULE%20VERSION%207.2.pdf of the Tax Advisory.

Availability of BIR Form Nos. 1700 and 2000 in the eFPS

The bureau has issued Revenue Memorandum Circular (RMC) No. 18-2024 to inform the taxpayers of the availability of BIR Form Nos. 1700 and 2000 in the Electronic Filing and Payment System (eFPS) as follows:

1. BIR Form No. 1700 (Annual Income Tax Return for Individuals Earning Purely Compensation Income (Including Non-Business/Non-Profession Related Income) - Due on or before April 15 of each year covering income for the preceding taxable year.

2. BIR Form No. 2000 (Monthly Documentary Stamp Tax Declaration/Return) - Due within five (5) days after the close of the month when the taxable document was made, signed, issued, accepted or transferred (or when reloading a metering machine becomes necessary or upon remittance by avenue collection agents of collection from the sale of loose stamps.

Please refer: https://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/2024%20RMCs/RMC%20No.%2018-2024.pdf of the full text of RMC No. 18-2024.

New Selling Price Threshold of the Sale of House and Lot, and Other Residential Dwellings for VAT Exemption Purposes

As per Revenue Regulations (RR) No. 1-2024 dated January 10, 2024, the Selling Price Threshold of the Sale of House and Lot, and Other Residential Dwellings is adjusted to Three Million One Hundred Ninety-Nine Thousand Two Hundred (Php3,199,200.00) Pesos for Value-Added Tax (VAT) Exemption Purposes.

Please refer the https://www.bir.gov.ph/images/bir_files/internal_communications_1/Full%20Text%20RR%202024/RR%20No.%201-2024.pdf of the full text of RR No. 1-2024.

New Offline eBIRForms Package v7.9.4.2

The bureau has updated the version of the Bureau of Internal Revenue (BIR) Offline eBIRForms Package from v7.9.4.1 to v7.9.4.2 as part of ease of filing of the BIR returns and payment of taxes of an ease of doing business of the taxpayers in the community.  

To new Offline eBIRForms Package v7.9.4.2 is available for down load at BIR Website (www.bir.gov.ph)

BIR Annual Registration Fee (ARF) is no longer required Effective January 22, 2024

As part of ease of doing business in the community, the Bureau of Internal Revenue (BIR) has issued an advisory on January 8, 2024 that the Business Taxpayers is no longer required to pay the Annual Registration Fee (ARF) of Five Hundred Pesos (PHP500.00) effective January 22, 2024 in compliance with Republic Act No. 11976, the "Ease of Paying Taxes Act." With this, business taxpayers are exempt from filing BIR Form No. 0605 and paying the Five Hundred Pesos (PHP500.00) ARF on or before January 31 every year or annually.

Besides, Business taxpayers with existing BIR Certificate of Registration (COR) that includes Registration Fee will retain its validity. These taxpayers may choose to update / replace their COR at the BIR Revenue District Office where they are registered on or before December 31, 2024, by surrendering their old COR.

 Please refer   https://www.bir.gov.ph/images/bir_files/internal_communications_1/2024/Advisories/Advisory_ARF.pdf of the full text of the Advisory from BIR.

Updated Features and Functionalities of BIR Online Registration and Update System (ORUS)

For ease of doing business of the taxpayers in the community, the bureau has issued Revenue Memorandum Circular (RMC) No. 121- 2023 dated November 29, 2023 announcing the Updated Features and Functionalities of the Online Registration and Update System (ORUS) starting November 21, 2023.

The additional features and functionalities of ORUS are now available online as follows:

1. Taxpayer Identification Number (TIN) Inquiry;

2. Access to Digital TIN ID; and

3.  Availability of MyEG as one of the online payment facilities in ORUS

The three functionalities added are as follows:

1. Primary Registration

2.  Secondary Registration 

3. Registration Information Update

Taxpayers who have an existing ORUS may access and avail the online registration updates and other functionalities and taxpayers who do no not have an ORUS account and opted to use the said online registration-related facilities are required to enroll or create an account on ORUS following the guidelines prescribed under RMC No. 122-2022.

Please consider the link: https://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/2023%20RMCs/RMC%20No.%20121-2023.pdf of the full text of RMC No. 121-2023.