How to comply with the BIR’s invoicing requirements
By: Atty. Elaisha Nelle Espinosa on May 8,2025
REPUBLIC Act 11976, or the Ease of Paying Taxes Act, which took effect last Jan. 22, 2024, introduced significant changes to the invoicing requirements of the Bureau of Internal Revenue (BIR). Section 21 of the law, which amended Section 113 of the National Internal Revenue Code (Tax Code), mandates that all value-added tax (VAT)-registered persons and/or entities, regardless of the amount of transaction, should issue VAT invoices for every sale, barter or exchange of goods or services or lease of properties.
Under Revenue Regulation (RR) 7-2024, the implementing regulations for the law, VAT invoices are now the primary documents evidencing sales transactions and will be used as the basis for a seller’s output VAT liability, or a buyer’s input VAT claims. They may also prove the fact of payment and/or receipt of such payment for the goods and services. Upon RR 7-2024’s effectivity on April 27, 2024, official receipts (ORs), order slips and debit/credit memos, among others, are now considered supplementary documents only and are not valid for claiming input VAT by the buyers.
Section 3(B) of RR 7-2024 requires that the following information be indicated in all VAT invoices: a statement that the seller is VAT-registered; the seller’s taxpayer identification number (TIN) with its branch code; the total amount the buyer pays or is obliged to pay, inclusive of VAT, with the VAT amount shown as a separate line item; the date of the transaction; quantity; unit cost; and description of the goods or properties sold, or the nature of the services rendered. The law adds that if the sale amounts to P1,000 or more and is made to a VAT-registered person or entity, the name, address and TIN of the buyer must also appear in the invoices.
Section 3(B) of the RR adds that the term “VAT-exempt sale” must be written and/or printed in invoices involving VAT-exempt sales and “zero-rated sale” for VAT zero-rated transactions. For mixed transactions involving items subject to different VAT treatments, a clear breakdown of the transaction price between the VAT-taxable, VAT-exempt and VAT zero-rated components with their respective VAT calculations, must be provided. Alternatively, the seller may also issue separate invoices for the taxable, exempt and zero-rated components of the sale.
The BIR also issued Revenue Memorandum Circular (RMC) 77-2024 to clarify the invoicing requirements set under RR 7-2024 as amended by RR 11-2024. Q3 of RMC 77-2024 states that while VAT-registered persons are required to issue invoices for every sale transaction regardless of the amount, a non-VAT-registered person only needs to issue a non-VAT invoice for every transaction valued at P500 or more or upon the buyer’s request. Moreover, if the aggregate amount of transactions less than P500 exceeds the P500 threshold at the end of the day, an invoice must likewise be issued. However, Q6 of the RMC clarifies that for both VAT and non-VAT invoices, it is still necessary to show all the information required under Section 3(B) of RR 7-2024.
To aid taxpayers in better adapting to the new invoicing system, RR 11-2024 introduced certain transitional provisions. Section 2 amended Section 8 of RR 7-2024, allowing taxpayers to convert their unused ORs into invoices by striking through the words “official receipt” and stamping “invoice” or a term of similar import in their place, until fully consumed. Additionally, if any of the information required by Section 3(B) of RR 2024 is missing from the OR, the seller may simply stamp such missing information onto the invoice-converted ORs. Alternatively, taxpayers may just opt to treat their unused ORs as supplementary documents by stamping “THIS DOCUMENT IS NOT VALID FOR CLAIM OF INPUT TAX” on their face.
Following the law and RR 7-2024, an erroneous issuance of VAT invoice carries certain legal implications. Non-VAT-registered persons who issue VAT invoices showing his/her TIN and the word “VAT” will be liable to pay VAT imposed under Section 106 or 108 of the Tax Code, as amended, in addition to other percentage taxes, if any, and a 50-percent surcharge. However, the charged VAT can still be recognized as an input tax credit to the buyer. Meanwhile, for VAT-exempt transactions, registered sellers who fail to mark invoices with “VAT-exempt sale” or provide proper breakdowns will result in the transaction being treated as if subject to VAT.
If a VAT-registered person issues a registered VAT invoice to another VAT-registered person who lacks any of the required information under Section 3(B) of RR 07-2024, the seller will be held liable for noncompliance with invoicing requirements. However, the buyer may still claim input tax credits from such an invoice, provided the missing information does not refer to any of the following: amount of sales; VAT amount; registered name and TIN; description of goods and/or nature of services; and date of transaction.
Elaisha Nelle C. Espinosa is an associate of Mata-Perez, Tamayo & Francisco (MTF Counsel). This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. If you have any question or comment regarding this article, you can email the author at info@mtfcounsel.com or visit MTF website at www.mtfcounsel.com.