The mandate of Section 237 of the Tax Code is clear. All persons subject to internal revenue tax are required to issue duly registered receipts or commercial invoices for each sale or transfer of merchandise or services amounting to P25 or more. Note that the minimum amount of P25 still applies today which, to my mind, practically covers all kinds of sale transactions whether these be goods or services.
The basic difference between a receipt and an invoice is in the nature of the sale. Sale of goods must be covered by an invoice while sale of services must be covered by a receipt.
Non-issuance of receipts and invoices is considered a criminal offense punishable by imprisonment plus the corresponding payment of penalties.
Other related offenses that are also considered criminal in nature under Section 264 of the Tax Code are:
• Issuance of receipts or invoices which do not truly reflect and/or contain information required by law
• Using multiple or double receipts and invoices
• Printing of receipts or invoices without authority from the Bureau of Internal Revenue (BIR)
“Oplan Kandado”, a program launched by the BIR in 2009, authorizes tax agents to temporarily close down business establishments found to be selling goods or services without the corresponding receipts or invoices and/or found to be issuing improper receipts, e.g., containing information which does not truly reflect the transactions or do not contain the required information.
Despite news of store closures, it seems that the gravity of failing to issue receipts/invoices is still lost on many who continue to ignore the mandate of the law. They consider the issuance of receipts and invoices as a mere option which can be dispensed with on a whim. Because the regime is so stringent, the seriousness of this legal obligation cannot be ignored.
Even the so-called underground economy, such as tiangges or privilege stores, have been reminded by virtue of Revenue Regulations (RR) No. 16-2013 that the legal obligation to issue receipts applies to them also. And in the not so distant past, no less than the BIR Commissioner had taken issue with self-employed professionals such as lawyers and physicians for not being diligent and conscientious in issuing receipts for their professional services.
It does not take a tax expert to realize that one of the basic measures to ensure that taxes are paid correctly is ensuring that invoices and receipts are properly issued. To ensure that all profit-making businesses comply with this requirement, new tax registrants are required to apply for an Authority to Print (ATP) invoices/receipts along with their application for tax registration (BIR Form 1903). This suggests that a new business must first apply for the printing of manual receipts/invoices prior to applying for a computerized accounting system for the issuance of receipts/invoices which, incidentally, must also be approved by the BIR. The BIR Certificate of Registration (COR) will only be issued once the ATP has been duly approved by the concerned BIR office. Only printers duly accredited by the BIR are authorized to print principal and supplementary receipts and invoices for the taxpayer applicants.
The printing of receipts must of course comply with the requirements of Revenue Memorandum Order (RMO) No. 12-2013 which specifies that the receipt/invoice must contain the taxpayer’s registered name; its business address; a statement on whether the taxpayer is value-added tax (TAX) or non VAT registered followed by the Taxpayers Identification Number (TIN); VAT amount if subject to VAT, among others. The taxpayer may also provide the company’s logo or trademark in the receipt or invoice but this is merely optional.
Subsequent to the issuance of the COR and during its business operations, the business entity may opt to shift from manual receipts to a computerized accounting system for printing of receipts.
Some business establishments, specifically those engaged in the immediate and frequent sale of goods, such as supermarkets and gasoline stations, choose to issue receipts generated by cash register machines (CRM)/Point of Sale (POS)/Business Machines. Such CRM/POS/Business Machines must also be duly approved by the BIR. RR No. 11-2004 provides the process for the registration, accreditation and use of such CRM/POS/Business Machines for the issuance of receipts.
Just last month, RR No. 10-2015 was circularized mandating the use of non-thermal paper in generating receipts and invoices. The directive seeks to preserve the clarity and integrity of invoices that are often rendered undecipherable after some time.
Another recent BIR issuance is Revenue Memorandum Circular (RMC) No. 64-2015 issued on Oct. 2, 2015 which amends the provisions of RR 11-2004 as it relates to VAT receipts/invoices generated by the CRM/POS/Business Machines. In line with the VAT law and regulations, RMC specifically provides that the following information must be indicated on the VAT receipts/invoices generated by CRM/POS/Business Machines in case of sales to VAT-registered persons amounting to at least P1,000:
• Name of purchaser, customer or client
• Address
• TIN
• Business style, if any.
With the constant circulation of BIR issuances relating to receipts and invoices, business owners should continually update themselves on current tax regulations; otherwise, violators would have to face the serious consequences imposed by law. Whether the infraction arises from non-issuance of receipts or non-compliance with formal requirements, both offenses carry a criminal liability. Aside from the penal consequences of non issuance and/or improper issuance of receipts, taxpayers may even lose their right to claim tax refunds due to their failure to substantiate their claim by means of receipts and invoices.
Although the BIR’s stance appears to be rigid and overbearing, the stringent measures reflect how cleverly tax evaders over time have exploited loopholes, evaded rules and resorted to the slow grind of court processes to skirt tax liability. As the BIR pulls in the reins to discourage erring taxpayers, the state hopes to address perennial problems of tax evasion and to achieve revenue targets.
As taxpayers, we can only wish that the BIR show the same vigorous stance in processing legitimate claims for tax refunds and applications for closure/tax clearance which in this part of the world proceeds with exceeding slowness.
Susan M. Aquino is a Senior Manager at the Tax Services Department of Isla Lipana & Co.,
(02) 845-2728
susan.m.aquino@ph.pwc.com
source: Businessworld
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