The Bureau of Internal Revenue (BIR) has released a series of Revenue Regulations (RR) for the implementation of Republic Act No. 11976, otherwise known as the Ease of Paying Taxes Act. This edition of Tax Notes discusses the salient changes in the rules for value-added tax (VAT) and percentage taxes (PT) covered under RRs No. 3-2024 and 7-2024, as posted by the BIR on April 12, 2024. 

Amendments in the Definition of Tax Terminologies

The following words, phrases, or actions shall be uniformly applied to provisions affected under RR No. 16-05 and its subsequent amendments: 

Gross Sales – The EOPT Act adopts the accrual basis of recognizing sales for both sales of goods and services. Hence, all references to “gross selling price”, “gross value in money”, and “gross receipts” shall now be referred to as “GROSS SALES”, regardless of whether the sale is for goods or for services. Previously, VAT on sales of goods was generally recognized upon substantial transfer of risks and rewards of ownership, while VAT on sales of services was generally recognized upon collection of the billings. 

Invoice – The EOPT Act mandates a single document for both sales of goods and services. Hence, all references to Sales/Commercial Invoices or Official Receipts shall now be referred to as “INVOICE”. 

Billings for sale of service on account – All references to receipts or payments that were previously the basis for the recognition of sales or services under VAT and PT under the Tax Code, shall now be referred to as “BILLING” or “BILLED”, whichever is applicable. 

VAT-exempt threshold – All provisions mentioning the VAT-exempt threshold of P3 million shall be read as “the amount of the VAT threshold herein stated shall now be adjusted to its present value every three (3) years using the Consumer Price Index, as published by the Philippine Statistics Authority”. Previously, the VAT-exempt threshold was set at P3 million. 

Amendments in Recognition of VAT, Tax Credits on Uncollected Receivables

The basis for the computation of VAT on the sale of services and the use or lease of properties is now the gross sales.

Gross sales refer to the total amount of money or its equivalent representing the contract price, compensation, service fee, rental, or royalty, which the purchaser pays or is obliged to pay to the seller in consideration of the sale, barter, or exchange of services that have already been rendered by the seller and the use or lease of properties that have already been supplied by the seller.

Furthermore, in computing the gross sales, only valid sales refunds for which allowances were granted by the seller and sales discounts appearing on the invoice at the time of sale and not dependent on a future event are allowed as deductions from sales for output VAT purposes. 

The EOPT Act introduces a new provision known as VAT credit on uncollected receivables. A seller of goods or services may deduct the output VAT pertaining to uncollected receivables from its output VAT on the next quarter, after the lapse of the agreed upon period to pay,as long as the seller has already remitted the VAT on the transaction. Further, the VAT component of the uncollected receivables should not be claimed as allowable deductions for income tax purposes.

To be entitled to VAT credit, the following requisites must be present:

1.     The sale or exchange has taken place after the effectivity of these regulations;

2.     The sale is on credit or on account;

3.     There is a written agreement on the period to pay the receivable, i.e. credit terms;

4.     The VAT is separately shown on the invoice;

5.     The sale is specifically reported in the Summary List of Sales covering the period when the sale was made and not reported as part of “various sales”;

6.     The seller, within the period prescribed under existing rules, declared in the tax return the corresponding output VAT indicated in the invoice ;

7.     The period agreed upon, whether extended or not, has elapsed; and

8.     The VAT component of the uncollected receivable was not claimed as a deduction from gross income.

In case of recovery of uncollected receivables, the output VAT pertaining thereto shall be added to the taxpayer's output VAT during the recovery period.

Transitory Provisions on Billed but Uncollected Sale of Services.

The recognition of gross sales based on the accrual method shall apply to sale of services that transpired upon its effectivity. 

For outstanding receivables on services rendered prior to the effectivity of the EOPT regulations, the corresponding output VAT shall only be declared in the quarterly VAT return when the collection has been made. 

The collection shall be supported with an Invoice following the transitory provisions contained in the RR for invoicing requirements to implement the EOPT Act (RR No. 7-2024)[JR1] [PD2]  or the new BIR-approved set of Invoices, whichever is applicable.

The following information shall be indicated in the VAT Invoice:

1.     A statement that the seller is VAT registered is followed by the Tax Identification Number (TIN) and Branch Code.

2.     The total amount which the purchaser pays or is obligated to pay, with the corresponding breakdown showing separately the VAT amount, the classification of sale, whether VAT exempt sale or zero-rated sale.

3.     The date of transaction, quantity, unit cost, and description of the goods,properties or nature of the service.

4.     The registered name, address, and TIN of the purchaser, customer, or client.

Transitory Provisions Uncollected Receivables from Sale of Goods 

In accordance with the provision on output VAT credit on uncollected receivables (Section 4 of RR No. 3-2024), the claim of output VAT credit shall only be applicable to transactions that occurred upon the effectivity of RR No. 3-2024. No output tax credit shall be allowed for outstanding receivables from sale of goods on account prior to the effectivity of the same regulations.

Transitory Provisions on Issuance of VAT Invoice

Under Section 8 of RR No. 7-2024, taxpayers with unused Official Receipts have two options in transitioning to the new VAT invoice. 

Taxpayers may continue to use the remaining Official Receipts as supplementary document until fully consumed, provided that the phrase “THIS DOCUMENT IS NOT VALID FOR CLAIM OF INPUT TAX” is stamped on the face of the document. The Official Receipt, along with other equivalent documents such as Collection Receipt, Acknowledgement Receipt, and Payment Receipt are all the same, and will serve as proof of payment that cash has been received.

On the other hand, taxpayers may convert and use the remaining Official Receipts as Invoice. This means that taxpayers shall be allowed to strikethrough the word “Official Receipt” on the face of the manual and loose leaf printed receipt and stamp “Invoice”, “Cash Invoice”, “Charge Invoice”, “Billing Invoice, “Service Invoice”, or any name describing the transaction, and to be issued as primary invoice to its buyer until December 31, 2024. These documents shall be valid for claim of input tax by the buyer for the period issued from January 22 to December 31, 2024.

The stamping of official receipts as invoices by the taxpayers does not require approval from any Revenue District Office/LT Offices/LT Divisions.

All unused official receipts to be converted as Invoice shall be reported by submitting an inventory of unused official receipts, indicating the number of booklets and corresponding serial numbers within thirty (30) days upon effectivity of these regulations, to the RDO/LT Office/LT Division.

 Meanwhile, taxpayers using CRM/POS/E-receipting may change the word “Official Receipt” to “Invoice”, “Cash Invoice”, “Charge Invoice”, “Billing Invoice, “Service Invoice”, or any name describing the transaction, without the need to notify the Revenue District Office having jurisdiction over the taxpayer. Further, the serial number of the renamed Invoice shall start by continuing the last series of the previously approved Official Receipt and shall submit notice, indicating the starting serial number of the converted invoice to the RDO/LT Office/LT Division where the machines are registered.

Lastly, taxpayers using duly registered Computerized Accounting System (CAS), or Computerized Books of Accounts (CBA) would need to revisit their systems to comply with the provisions of the EOPT Act. Since the system reconfiguration will have a direct effect on the financial aspect, it shall be considered as major enhancement which will require taxpayers to update their system registration following the existing policies and procedures of filing a new application. The reconfiguration shall be undertaken on or before June 30, 2024; any official receipts issued by CAS- or CBA-registered taxpayers for sale of service after such date will be considered a failure to issue or non-issuance of invoice. Any extension of the reconfiguration of CAS or CBA beyond June 30, 2024, will need approval from the Regional Director or Assistant Commissioner of the Large Taxpayer Service, which shall not be longer than six (6) months from the effectivity of these regulations.


These regulations shall take effect fifteen (15) days following its publication in the Official Gazette or the BIR official website, whichever is applicable.  The BIR website posted these regulations on April 12, 2024.

Please be guided accordingly.



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 28 April 2024