Philippines Insists On Official Receipt Tax Compliance

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It has been announced by the Philippines Bureau of Internal Revenue (BIR) that a revenue regulation, which requires the cancellation of all existing official invoices and receipts (ORs) and the issuance of new ones by July 1, 2013, will be fully implemented and proceed as scheduled.

ORs include all sales invoices, delivery receipts, charge invoices and other commercial receipts of business establishments in the country. Under the Philippines tax code, all taxpayers are required to issue ORs, as proof of income and expense, for each sale of goods and services rendered over the amount of PHP25 (USD0.60). Failure to issue ORs could be the grounds for the suspension of a business and for the BIR to make an additional assessment for income or value added tax.

Commissioner of Internal Revenue Kim Jacinto-Henares said: "Complaints against the new regulation are without any basis since the tax agency issued Revenue Regulation (RR) 18-2012 last year and published it on January 3, 2013, informing everyone that existing receipts will expire on June 30, 2013. We believe that six months is enough preparation for everyone to comply with the requirement."

RR 18-2012 also provides that OR printers must have applied for a new authority to print (ATP) at least 60 days (or April 30, 2013) before the expiry of the old receipts on June 30, and must start issuing the new ORs on July 1, 2013. Previous and expired receipts should to be turned over to the local BIR office.

Henares added that the Bureau of Internal Revenue issued Revenue Memorandum Order on May 2, 2013, to provide for penalties since very few taxpayers were complying with the new RR. Printers applying for their ATPs after April 30 pay a penalty of PHP1,000, while those who apply for authority after June 30 and failed to issue new ORs from July 1, 2013, will pay the maximum penalty of PHP50,000, as provided for in the tax code.

The Bureau of Internal Revenue has given several reasons for the issuance of the new Revenue Regulation. For example, it has become aware of businesses registered with the tax agency that are not really engaged in any other business than to sell ORs to entities who are either engaged in smuggling and/or purchasing goods without receipts, thereby defrauding the government of tax revenues.

In addition, the BIR has found that a significant number of ORs that were printed in the 1970s are still being used and there is a need to clear those up by providing an expiry period, while the regulations are also aimed at reforming the process of issuing ATPs.

Therefore, with the objective of properly implementing and monitoring their compliance, the RR 18-2012 also provides for an online system run by the BIR for the accreditation of printers with ATPs, as well as for the online submission of printers' periodic reports of OR issuance. The agency will have the capability to match and process data and generate a discrepancy report of any dubious entries.