The Philippines’ tax system is mostly driven by supporting documents. The deductibility of allowable expenses and claiming of input value-added tax (VAT) rely heavily on valid official receipts and sales invoices. Hence, it is paramount for every business to ensure that the documents they issue are free from errors.
For a receipt/invoice to be valid, the taxpayer should first secure an Authority to Print (ATP) or Permit to Use (PTU) computerized accounting system (CAS), cash register machines (CRM), point-of-sale (POS) machines, and other sales receipting software from the Bureau of Internal Revenue (BIR). Based on previous revenue issuances, official receipts and invoices have a five-year validity from date of ATP or PTU.
Revenue Regulations (RR) No. 18-2012 provides that a taxpayer with expiring ATP for its receipts/invoices shall apply for a new ATP not later than sixty (60) days prior to the expiry date. The use of receipts and invoices beyond the five-year validity renders the receipts/invoices invalid; hence, the issuing party is imposed a penalty and the expense of the party claiming such deduction is disallowed. However, not all taxpayers are knowledgeable of this and are issuing receipts/invoices even beyond their validity, making it one of the most common issues faced by taxpayers.
Fortunately, the BIR revisited its policies and removed the five-year validity period of receipts and invoices, which is also in line with Republic Act (RA) No. 11032 otherwise known as the Ease of Doing Business and Efficient Government Service Delivery Act of 2018. This new revenue issuance relieves taxpayers of the burden of continuously incurring costs of reproducing their receipts/invoices every five years. This move also promotes sustainability as it reduces paper consumption caused by destruction of expired invoices and receipts and numerous reprinting.
Perpetual validity of receipts and invoices
The removal of the five-year validity of receipts and invoices took effect on July 16, 2022, which is fifteen (15) days from the date of publication of RR No. 6-2022 on July 1, 2022.
As a result, all taxpayers with unused manual principal and supplementary receipts/invoices with ATP may continue to use such until fully exhausted. The phrases “THIS INVOICE/RECEIPT SHALL BE VALID FOR FIVE (5) YEARS FROM THE DATE OF THE ATP” and “VALID UNTIL (MM/DD/YYYY)”, printed at the bottom of the receipt/invoices shall be disregarded. Subsequent production of manual receipts/invoices shall no longer require a validity date printed on the bottom portion.
Taxpayers with PTU or Acknowledgment Certificate (AC), as applicable to CRMs, POS machines, and CAS, may continue to use the previously approved receipts/invoices. Like manual receipts/invoices, the five-year validity shall also be disregarded. In addition, the system/software generating receipts/invoices from CAS, component of CAS and CRMs and POS machines must be reconfigured to omit the phrases on validity period.
Unlike manual receipts/invoices, computer-generated receipts/invoices are not “exhausted” because the same are not printed or bound by booklets. Hence, all PTUs shall be perpetually valid unless revoked by the BIR based on the following grounds:
- Tampering of sales data/integrity of the data and/or software specification/features to alter/avoid the recording of sale transaction;
- Any major repair, upgrade, integration, and modification/alteration without prior notification and approval by the BIR office concerned, including the items enumerated in Section V, Item No. 8 of Revenue Memorandum Order (RMO) No. 9-2021, to wit:
- Change in the functionalities of the system, particularly on enhancements that will have a direct effect on the financial aspect of the system that includes modified computations and other financial-related issues that were considered;
- Addition or removal of modules or submodules within the system that will have a direct impact on the financial aspect of the system;
- Change in the system/software version or release number that will have enhancements on the financial aspect of the system; and
- All other enhancements that will be deemed as a major system enhancement based on the recommendation of the technical evaluators of the BIR; and
- Any violation(s) on the policies and procedures for registration under RMO No. 10-2005 and RMO No. 9-2021, and other related revenue issuances.
Receipts/invoices printed prior to RR No. 6-2022
Since perpetual validity of the receipts/invoices took effect on July 16, 2022, all receipts/invoices expiring on or before July 15, 2022 are no longer valid. However, worry not because it was clarified that upon the issuance of RR No. 6-2022, taxpayers with ATP expiring on or before July 15, 2022 who failed to apply for subsequent ATP not later than the sixty-day mandatory period prior to expiration shall not be liable to pay penalty for late application of ATP.
The receipts/invoices which are unused and expiring on or before July 15, 2022 shall be surrendered together with an inventory listing to the BIR Revenue District Office (RDO) where the Head Office or Branch is registered on or before the 10th day after the validity period of the ATP for the destruction of such receipts/invoices.
Modification of the system/software generating the receipts/invoices
Due to the perpetual validity of receipts/invoices which is now in effect, the system/software generating the receipts/invoices for taxpayers employing CRMs, POS machines, and CAS shall be modified to remove the phrase indicating the five-year validity. This modification is considered a minor enhancement because such was mandated upon the effectivity of RR No. 6-2022. Only major modifications require prior written notification before such modifications are made.
Doing business is not an easy feat – you must consider, among others, the profitability of your products/services, your target consumers, the way you will market your business, and most especially how you will take care of your clientele. Thanks to the Ease of Doing Business and Efficient Government Service Delivery Act of 2018 and the efforts of government agencies in helping improve business processes, ministerial tasks like renewing your receipts/invoices every five years are now removed. Taxpayers and entrepreneurs can devote more of their energy and resources on their core businesses. Here’s to a big win towards total ease of doing business and promoting environmental sustainability.
Let's Talk Tax is a weekly newspaper column of P&A Grant Thornton that aims to keep the public informed of various developments in taxation. This article is not intended to be a substitute for competent professional advice.
As published in BusinessWorld, dated 13 September 2022