BIR Prescribes Policies and Guidelines for the Admissibility of Sales Documents in Electronic Format, Issuance of Receipts or Sales or Commercial Invoices, and Electronic Sales Reporting System

On 23 June 2022, the Bureau of Internal Revenue (“BIR”) issued Revenue Regulations No. 9-2022 (the “Regulation”) which provides policies and guidelines for the admissibility of electronic sales documents or data, particularly in the verification of sales and purchases of taxpayers during audit or processing of VAT refund claims. 

The BIR has developed the Electronic Invoicing/Receipting and Sales Reporting System (“EIS”) to store and process sales data required to be transmitted by covered taxpayers using their Sales Data Transmission System. The BIR took note of the fact that taxpayers, especially export-oriented companies who have significant amounts of input VAT to claim for refund are still submitting hard copies of invoices and receipts for their compliance. These Regulations are issued to provide a more efficient and accurate manner of investigating internal revenue tax liabilities of taxpayers and verification of sales and purchases in the processing of VAT refund claims under the National Internal Revenue Code (Tax Code), as amended. 

Taxpayers engaged in the export of goods and services, taxpayers engaged in electronic commerce (e-commerce), and taxpayers under the Large Taxpayers Service (LTS) are covered by the Regulation. Taxpayers that are not mentioned in this group but have been authorized by the BIR to issue electronic Service Invoices/Official Receipts (SIs/ORs) through the web-based facility of the Electronic Invoicing/Receipting and Sales Reporting System (EIS). 

The Regulation provides that the sales and purchases data that will be generated and verified through the EIS are admissible in lieu of hard copies at the time of the tax audit or investigation or verification of the taxpayer. However, it is required that these comply with the minimum information required under Section 113 of the Tax Code. The requirement of prominently stamping the term “zero-rated sales” on the face of the receipt or invoices is no longer necessary because a separate reporting to the EIS is required for each sales classification.

Since the Regulation provides for the EIS, taxpayers authorized to use the system are no longer required to submit printed copies of invoices or receipts issued for their sales. Moreover, the Printed Invoices/Receipts from suppliers using the web-based issuance in the EIS, or through Sales Data Transmission System, will no longer be required to be submitted. However, it is important to note that only purchases data validated in the EIS will be allowed to claim input VAT under Section 110 of the Tax Code or for claiming deductible expenses for income taxes. If the receipts and invoices presented or claimed by the buyer as purchases are not reported in the EIS by the supplier, it will be considered as unreported sales and shall be subject to further investigation. 

The Regulations further provide that the original form or digital copies, whichever is applicable, must be retained in accordance with Sections 235 and 237 of the Tax Code. This is for the taxpayer to provide the same upon demand for verification and validation of the sales and purchases data generated through the EIS or submitted electronic forms of invoices or receipts. 

Notwithstanding the use of the EIS as provided by the Regulations, there are still instances when the taxpayers may be required to present or submit hard copies of the receipts or invoices or allowed access to the computerized system, subject to the approval of the Commissioner of Internal Revenue or his authorized representatives. Such instances include, among others, missing or vague details in the invoices or receipts that were transmitted to the EIS, which the investigating Revenue Officer needs clarification, information in the invoices and receipts that are not included in the data required to be transmitted to the EIS, validation of export sales data during verification of VAT refund claims for unutilized input VAT attributable to zero-rated sales by taxpayer-claimants under Section 112(A) of the Tax Code, and others. For a complete list of these instances, see Section 2(5) of the Regulations. 

Even with the use of the electronic format, revenue officers are not precluded from accessing the respective CAS or POS/CRM machines of the taxpayer under the EIS to validate whether the sales data transmitted to the EIS matches the sales recorded in their electronic systems under RR No. 9-2009. Refusal of the taxpayer to allow the revenue officers assigned to access the CAS will give authority to the revenue officers to employ other means in the verification of the records of the taxpayer or may even result in possible disallowances or assessments. Moreover, any violation of RR No. 9-2009 may result in the prosecution of the taxpayer and liability for the penalties provided in Section 255 of the NIRC. 

If the sales and purchases are not covered by these Regulations, they must still comply with the existing policies and procedures for the manual verification of sales and purchases. A separate issuance will be provided for the details and specific requirements of the policies and guidelines.