BIR clarifies the presentation of Creditable Withholding Tax (CWT) in sales invoices and provides transitory compliance guidelines

The Bureau of Internal Revenue (BIR) has issued Revenue Memorandum Circular (RMC) No. 112-2026, clarifying the implementation of Revenue Regulations (RR) No. 006-2026 regarding the separate presentation of Creditable Withholding Tax (CWT) in sales invoices. The Circular provides detailed guidance on when CWT must be reflected in invoices, the responsibilities of buyers and sellers, and the transitional rules applicable to existing manual and system-generated invoices.

The Circular emphasizes that the requirement to present CWT as a separate line item applies only when the transaction is subject to creditable withholding tax under the Tax Code and applicable revenue issuances. The mere classification of a transaction as business-to-business (B2B) does not automatically make it subject to withholding tax.

The BIR clarified that:

• B2B transactions are subject to CWT only when the buyer or payor is required to withhold tax;
• Ordinary business-to-consumer (B2C) transactions are generally not subject to CWT; and
• When a transaction is not subject to withholding tax, no CWT amount is required to be indicated in the invoice.

Treatment of subsequent determination of CWT

Where a buyer subsequently determines that CWT should have been withheld after the invoice has already been issued, the original invoice remains valid. In such cases, the seller must issue a BIR-registered Credit Memo reflecting the applicable CWT amount and referencing the original invoice.

The Circular likewise provides that any later revision or correction of withholding information should be properly documented through a Credit Memo to preserve the audit trail.

Guidelines for manual and loose-leaf invoices

For unused or unissued manual and loose-leaf invoices existing upon the effectivity of RR No. 006-2026:

• Taxpayers may continue using existing invoices until fully consumed;
• The phrase "Less: Withholding Tax," "Less: Creditable Withholding Tax," or "Less: CWT" must be stamped, printed, or written only when the transaction is subject to CWT;
• No advance stamping of all remaining invoices is required; and
• Taxpayers are not required to surrender existing invoices or secure a new Authority to Print solely because the original layout does not contain a dedicated CWT field.

Guidelines for CRM, POS, CAS, and Electronic Invoicing Systems

The Circular requires CRM/POS systems, Computerized Accounting Systems (CAS), Computerized Books of Accounts (CBA) with electronic invoicing, and other invoicing software to incorporate a CWT field as part of their invoice configuration.

To ease compliance, the BIR classified modifications made solely to accommodate the CWT field as a limited system change, provided that the changes do not materially affect the system's core functions, security controls, or invoice-numbering mechanisms. Such modifications generally do not require a new system registration or accreditation.

Compliance deadlines and transitory measures

The Circular provides transitional periods for taxpayers to update their systems:

• Taxpayers covered by mandatory electronic invoicing requirements must ensure compliance by 1 January 2027, following the applicable implementation deadline;
• Existing POS systems and other invoicing software not yet covered by mandatory electronic invoicing are generally allowed until 31 March 2027, to complete system modifications; and
• Existing Cash Register Machine (CRM) users are likewise given until 31 March 2027, to implement the required changes.

Pending system modification, taxpayers may temporarily comply by stamping, printing, or manually writing the required CWT information on system-generated invoices whenever the transaction is subject to withholding tax.

The Circular takes effect on 22 October 2026. Please be guided accordingly. 

Source:  

P&A Grant Thornton  

Certified Public Accountants  

P&A Grant Thornton is the Philippine member firm of Grant Thornton International Ltd.

As published in SunStar Cebu, dated 04 November 2026