Understanding BIR Revenue Regulation No. 7-2024: Transitioning to Invoices

The Bureau of Internal Revenue (BIR) has implemented the new Revenue Regulation No. 7-2024. Remember that trademark scene from Jurassic Park, the one with the glass of water moving with the vibrations because something big is coming? Well, it’s not quite that dramatic, but there’s a significant change on the horizon for businesses in the Philippines. This impacts how transactions are documented. Let’s break it down:

From Official Receipts to Invoices

Under the Ease of Paying Taxes Act (EOPT Act), the BIR has implemented Revenue Regulation No. 7-2024. This regulation phases out the use of Official Receipts (ORs) and mandates the use of Invoices instead. But what exactly does this mean?

1. What Is an Invoice?
   • An “Invoice” is a written account of goods or services sold to customers. It includes various types like Sales Invoice, Commercial Invoice, and more.
   • There are two main categories:
     – VAT Invoice: Evidences the sale of goods, properties, services, or leasing of properties subject to VAT.
     – Non-VAT Invoice: Evidences the sale of goods, properties, services, or leasing of properties not subject to VAT.
   • Regardless of transaction amount, VAT-registered businesses must issue invoices, and the word “Invoice” must be clearly printed on the document.
   • Sellers must issue invoices upon buyer’s request, even if individual sales are below P500. If total daily sales reach P500, one invoice for the total amount can be issued.
2. Who Needs to Issue Invoices?
   • Any business operating in the Philippines must issue registered invoices for sales or services valued at P500 or more.
   • The threshold is adjusted every three years based on inflation.
3. Transition Guidelines
   • The conversion of Official Receipts to invoices does not need approval but must follow specific guidelines.
   • New invoices with an Authority to Print (ATP) should be obtained before December 31, 2024, or before fully consuming converted Official Receipts.

Compliance and Adaptation

Businesses need to adapt swiftly to these changes. Here are some key takeaways:

• Update Your Processes: Ensure that your business processes align with the new invoicing requirements. Train your staff on the proper issuance of invoices.
• Monitor Thresholds: Keep track of your daily sales. If they reach P500, issue an invoice.
• Replace Expired Receipts: Any receipts or invoices that expired on or before July 15, 2022, can no longer be used and must be surrendered.
• Stay Informed: Regularly check for updates from the BIR to stay compliant.

Non-compliance with the new BIR invoicing regulations can result in penalties. Here’s what you need to know:

• Unregistered Receipts or Invoices:
  If a business fails to register their receipts or invoices, the penalties are as follows:
  – First offense: Php20,000
  – Second offense: Php50,000
  – Possibility of imprisonment up to four years
• Failure to Issue Invoices:
  If a business fails to issue invoices, the penalties are as follows:
  – First offense: PhP10,000
  – Second offense: PhP20,000
• Intentional Refusal to Issue Invoices:
  If a business intentionally refuses to issue invoices, the penalties are as follows:
  – First offense: Php25,000
  – Second offense: Php50,000

Remember, just like in Jurassic Park, change is inevitable. But with the right knowledge and adaptation, your business can navigate this transition smoothly. Be sure to check out the official BIR Revenue Regulations for complete details. Businesses need to adapt swiftly to these changes to ensure compliance with the new invoicing regulations. If you have any specific questions or need further clarification, feel free to ask us!

Sources: Palawan News | Shoppable Business | BIR.GOV.PH | Ocampo & Suralvo Law Offices