Under the Tax Code, all persons subject to an internal revenue tax shall, at the point of each sale and transfer of merchandise or for services rendered valued at one hundred pesos (P100.00) or more, issue duly registered receipts or sales or commercial invoices. However, the Commissioner of Internal Revenue may, in meritorious cases, exempt any person subject to internal revenue tax from compliance with the issuance of receipts or sales or commercial invoices.

Thus, under Revenue Regulation (RR) No. 12-2023, the Commissioner exempts Agricultural Producers (APs) from the issuance of principal and supplementary receipts or invoices on their sale of Agricultural Food Products if the gross sales/receipts for the year do not exceed one million pesos (P1,000,000.00). Provided that APs shall record each sale transaction in a simplified sales book containing the following information:

a. date of transaction;

b. description of goods sold or services rendered;

c. registered name, registered address, and Taxpayer Identification Number (TIN) of the purchaser if engaged in business;

d. amount of sales;

e. amount of tax withheld, if any, and the

f. net amount received

The information listed above shall be from the Certificate of Income Payment Not Subject to Withholding Tax (BIR Form No. 2304) or the Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307). The buyer or purchaser who is engaged in trade or business shall issue these forms for each purchase transaction in two (2) copies, indicating the transaction date, registered name, address, and TIN of the payor (buyer) and payee (seller).

The following are the conditions that determine the issuance of the above BIR Forms:

  1. BIR Form No. 2304

If income payments made by purchasers to APs do not exceed three hundred thousand pesos (P300,000.00), the purchaser shall issue BIR Form No. 2304.

  1. BIR Form No. 2307

If income payments made by purchasers to APs exceed the cumulative amount of three hundred thousand pesos (300,000.00), there shall be a withholding tax rate of one percent (1%). In this case, the purchaser shall issue BIR Form No. 2307.

The buyer or purchaser shall file the Quarterly Remittance Return of Creditable Income Taxes Withheld (Expanded) [BIR Form No. 1601-EQ] together with the Quarterly Alphabetical List of Payees (QAP), whether actually subjected to or exempted from withholding tax in accordance with RR No. 11-2018.

The issued BIR Form No. 2304 or 2307 shall be constituted and treated as the substituted official receipts/sales invoices. This shall likewise serve as evidence of purchases made to substantiate claims for deductible expenses of the buyer or purchaser engaged in trade or business for tax purposes.

Agricultural producers refer to individuals who are suppliers, producers, sellers, contract growers, and millers of agricultural food products whose annual gross sales/receipts, for tax purposes, do not exceed one million pesos (P1,000,000.00).

The Agricultural Food Products shall also refer to the following products in their original state: (1) Farm Produce; (2) Livestock; (3) Poultry; (4) Marine Product; (5) Ordinary Salt; and (6) Agricultural Inputs. Even if it has undergone the simple processes of preparation or preservation for market, such as freezing, drying, salting, broiling, roasting, smoking, or stripping, the RR still applies. The advanced technological means of packaging, such as shrink wrapping in plastic, vacuum packing, tetra packs, and other similar packaging methods, shall also be covered.

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 18 November 2023