THE Bureau of Internal Revenue (BIR) is requiring small, medium and large taxpayers engaged in online business or Internet transactions to transition to electronic invoicing systems by the end of the year.
Electronic invoicing will become mandatory by December 31, 2026, according to Revenue Memorandum Circular 098-2026. The latter also prescribes the policies and guidelines for the system.
The requirement applies to small, medium and large taxpayers operating in e-commerce or internet channels; taxpayers under the ‘large taxpayers service;’ companies classified as large taxpayers under the Ease of Paying Taxes Act; and, users of computerized accounting systems and computerized books of accounts.
All covered taxpayers, except micro taxpayers, must issue electronic invoices using an in-house or commercially-acquired electronic invoicing solution or the services of an electronic invoicing service provider.
Accounting and tax software provider Intuit Ltd., for example, offers invoicing solutions for P131 a month for a basic plan and P551 a month for an advanced plan. (See https://tinyurl.com/kfy9d46h)
‘Electronic invoicing and electronic sales reporting are separate requirements. For now, taxpayers should focus on complying with the electronic invoicing rules. Electronic sales reporting will follow once the BIR issues the separate implementing policies and procedures for it,’ Mendoza said.
For an electronic invoice to be considered valid, it must be generated in a structured digital format, electronically delivered to the buyer through email, QR codes, mobile applications or web platforms and capable of automated data extraction, according to the BIR.
Manually-generated invoices using standard office productivity applications, such as Microsoft Word, Microsoft Excel, Google Docs and Google Sheets, will not be recognized as valid electronic invoices for tax compliance purposes.
In cases of technical malfunctions, power outages or Internet disruptions, taxpayers are required to issue BIR-authorized manual invoices. Once system connectivity is restored, all manually issued invoices must be immediately replaced with corresponding electronic invoices bearing the reference numbers of the manual documents.
The BIR also imposed strict anti-tampering controls, prohibiting the deletion, alteration or modification of issued electronic invoices. Any reduction in transaction amount must be documented through a duly authorized ‘credit note/memo,’ while any increase requires issuing a new electronic invoice referencing the original transaction.
Covered businesses must file an application for a Permit to Issue Electronic Invoice with their respective Revenue District Office or Large Taxpayer Office, which the BIR will evaluate within 20 working days.
Following the permit’s approval, taxpayers will have six months to complete online testing and obtain an ‘Electronic Invoicing and Sales Reporting Certification.’ Failure to secure the certification within the six-month period will constitute grounds for revocation of the taxpayer’s permit.
‘Electronic invoicing is a huge step toward revolutionizing invoicing and tax administration in the Philippines. It will change how businesses document transactions, how tax information is generated, and how the BIR uses data to build a more modern and efficient tax system,’ Internal Revenue Commissioner Charlito Martin R. Mendoza said.