As the countdown to Christmas begins, taxpayers covered by the mandatory electronic invoicing requirement should now prepare for the December 31, 2026 electronic invoicing compliance deadline. The Bureau of Internal Revenue (BIR) is now moving ahead with the mandatory implementation for covered taxpayers by year-end, following the recent issuance of Revenue Memorandum Circular (RMC) 98-2026 prescribing the policies and guidelines for the issuance of electronic invoices under Revenue Regulations No. 8-2022 and RR No. 11-2025, as amended by RR No. 26-2025.
For the first phase of implementation, taxpayers required to issue electronic invoices by December 31 include 1) small, medium and large taxpayers engaged in e-commerce or internet transactions; 2) taxpayers under the Large Taxpayers Service (LTS); 3) taxpayers classified as Large under the Ease of Paying Taxes (EOPT) Act and RR No. 8-2024; and 4) taxpayers using a computerized accounting system (CAS) or computerized books of accounts (CBA) with accounting records involving electronic invoicing, or other invoicing software.
The mandatory requirement by December 31, 2026 is limited to electronic invoicing. I understand that electronic sales reporting requirement will be implemented separately, pursuant to rules and procedures to be subsequently issued by the BIR.
Pursuant to RMC No. 98-2026, for an invoice to be considered an electronic invoice, it must be generated by a duly registered, approved or accredited accounting or invoicing software or system and must contain invoice data in a structured electronic format. An electronic invoice must also be capable of being electronically generated and transmitted to the buyer through email, online viewing, QR code, mobile application, web-based platform or other electronic means. The invoice data must be capable of being electronically extracted, processed and transmitted to the BIR for electronic sales reporting purposes.
Taxpayers have the option to use an in-house or commercially acquired invoicing solution, or avail themselves of the services offered by an Electronic Invoicing Service Provider (ESP) that is organized or licensed to do business in the Philippines. So, covered taxpayers who do not have their own electronic invoicing capabilities should now consider looking for the assistance of an ESP duly accredited by the BIR. As of this writing though, the BIR is yet to issue policies and guidelines governing ESPs.
What happens when the system goes down? RMC No. 98-2026 recognizes that systems can fail. So, in cases of downtime, connectivity problems, power interruptions, cybersecurity incidents or other circumstances that prevent electronic invoicing, a duly authorized manual invoice may be issued. Once the system is restored, the manual invoice must be replaced with the corresponding electronic invoice, bearing the reference number of the manual invoice.
So, therefore, covered taxpayers should not completely do away with their authorized manual invoices even after shifting to electronic invoicing. They should continue to maintain an adequate supply of duly registered or authorized manual invoices for use as a contingency measure in case their electronic invoicing system becomes unavailable. This will help ensure that sales transactions can still be properly documented during system downtime.
What happens if a taxpayer is not ready and fails to meet the December 31, 2026 deadline? RR No. 11-2025 provides that violations or non-compliance with the electronic invoicing requirements are subject to the penalties under Sections 264 and 264-A of the Tax Code. Therefore, penalties may include fines and imprisonment. Of course, the potential exposure may depend on the particular violation and the circumstances of the taxpayer.
To recall, the shift to electronic invoicing and electronic sales reporting can be traced back to the Tax Reform for Acceleration and Inclusion (TRAIN) Law in 2018. The law contemplated the eventual transition from manual to electronic receipts and invoices, upon the establishment of a system capable of storing and processing the required data.
The BIR subsequently issued RR No. 8-2022 establishing the Electronic Invoicing/Receipting System framework, followed by RR No. 11-2025 implementing the electronic invoicing and electronic sales reporting provisions of the Tax Code. RR No. 26-2025 later extended the compliance period for the first group of covered taxpayers to December 31, 2026.
Thus, almost eight years after TRAIN took effect, the electronic invoicing framework now appears to be moving toward broader mandatory implementation. With the BIR targeting the December 2026 deadline, taxpayers should now prepare for compliance, even as many still continue to seek more time for compliance due to cost and difficulty in compliance.
But whether an extension for compliance is forthcoming or not, taxpayers should determine whether they are covered, review their existing invoicing and accounting systems, and assess their readiness for compliance. Those that have already started preparing should review their implementation timetable, test their systems, and address any remaining gaps. Those that have not yet started preparing have no choice but to begin now.
Covered taxpayers should assess their internal capability to comply or whether they need an electronic invoicing service provider. In either case, proper tax advice is essential to ensure compliance.
The author is a partner of Du-Baladad and Associates Law Offices (BDB Law) (www.bdblaw.com.ph).
The article is for general information only and is not intended, nor should be construed as a substitute for tax, legal, or financial advice on any specific matter. Applicability of this article to any actual or particular tax or legal issue should be supported, therefore, by a professional study or advice. If you have any comments or questions concerning the article, you may e-mail the author at rodel.unciano@bdblaw.com.ph or call 8403-2001 local 380.