Welcome to our Ease of Paying Taxes (EOPT) Act Series!

At YAHSHUA-ABBA, we're committed to keeping you updated on the latest tax regulations to ensure your business remains compliant and efficient. Today, we're diving into the new invoicing requirements mandated by the Ease of Paying Taxes (EOPT) Act in the Philippines.

What is the EOPT Act?

The Ease of Paying Taxes (EOPT) Act is a comprehensive tax reform law aimed at simplifying tax compliance processes in the Philippines. Effective from January 22, 2024, this legislation seeks to modernize tax administration and improve its efficiency and effectiveness by providing mechanisms that encourage proper and easy compliance at the least cost and resources possible.

Understanding the New Invoicing Requirements

The EOPT Act introduces detailed invoicing requirements for VAT-registered individuals and businesses. Here's a breakdown of what you need to know:

Key Invoicing Requirements:

1. VAT Invoices for Every Transaction:

In alignment with the shift from cash basis to accrual basis for the sale of services, the EOPT Act mandates a single document for both sales of goods and services. Consequently, all references to Sales/Commercial Invoices or Official Receipts will now be collectively referred to as "Invoice".

Every VAT-registered entity must issue a duly registered VAT invoice for all transactions involving the sale, barter, exchange, or lease of goods or services, irrespective of the transaction amount.

2. Evidence of Transaction:

VAT invoices serve as evidence for sales transactions, whether they're cash sales or on credit. These documents are the basis for the seller's output tax liability and the buyer's input tax credit.

Essential Information in a VAT Invoice:

1. Seller's Details:

A statement confirming the seller is VAT-registered, along with the seller's Taxpayer Identification Number (TIN) and Branch Code.

2. Total Amount and VAT Breakdown:

• The invoice must show the total amount payable, indicating that this includes VAT. The VAT amount should be listed as a separate item.
• For VAT-exempt or zero-rated sales, the terms "VAT-Exempt Sale" or "Zero-Rated Sale" must be clearly indicated.
• If a transaction includes both taxable and non-taxable components, the invoice must detail the breakdown and VAT calculations for each portion. Separate invoices for each component are permissible.

3. Transaction Details:

Date of transaction, quantity, unit cost, and description of goods or services.

4. Purchaser's Information (for transactions ≥ Php1,000):

For sales of Php1,000 or more to VAT-registered purchasers, the invoice must include the purchaser's registered name, address, and TIN.

5. Compliance with Bureau of Internal Revenue (BIR) Regulations:

The invoice must contain any additional information required by BIR Revenue Regulation (RR) No. 7-2024.

Consequences of Lack of Required Information:

If an invoice lacks required information, the seller may face non-compliance penalties. However, the purchaser can still claim the VAT as input tax unless critical details like sales amount, VAT amount, names, TINs, description of goods/services, or transaction date are missing.

Transitory Provisions to Note:

1. Unused Official Receipts:

• Supplementary Documents: Unused official receipts can continue to be used as supplementary documents, provided they are stamped with "THIS DOCUMENT IS NOT VALID FOR CLAIM OF INPUT TAX."
• Conversion to Invoices: These receipts can be converted into invoices by striking through "Official Receipt" and stamping “Invoice” until December 31, 2024.
• Inventory Submission: An inventory of unused official receipts to be converted as invoice must be submitted to the relevant tax office within 30 days of the effectivity of BIR RR No. 7-2024.

2. CRM/POS and E-Invoicing:

• System Reconfiguration: Businesses must adjust their Cash Register Machines (CRM), Point-of-Sales (POS) machines, and e-invoicing software to align with the BIR RR No. 7-2024. This includes changing "Official Receipt" to "Invoice" without the need for prior notification to the Revenue District Office (RDO).

3. Computerized Accounting Systems (CAS)

• System Update: Taxpayers using a registered Computerized Accounting System (CAS) or Computerized Books of Accounts (CBA) must update their systems to comply with the EOPT Act. This reconfiguration is considered a major enhancement, requiring a new application and updated registration.
• Process: Surrender the previously issued Acknowledgement Certificate (AC) or Permit to Use to the RDO, then obtain a new AC.
• Deadline: Ensure all adjustments are completed by June 30, 2024.
• Implication: Issuing "Official Receipt" after June 30, 2024, will not be valid evidence of sales or services and will be considered a failure to issue an invoice.

How YAHSHUA-ABBA Can Help:

At YAHSHUA-ABBA, we understand the complexities of tax compliance. Our compliance consultants are here to handle your BIR filings, payments, and other regulatory requirements, ensuring your business stays on track. With our YAHSHUA Tax Online software, your accounting and financial records are meticulously maintained, making your BIR tax compliance seamless and hassle-free.

Stay tuned for our next installment, where we'll delve deeper into the changes brought by the EOPT Act. For more personalized assistance, reach out to our team of experts today.

Contact Us:

Website: theabbainitiative.com

Email: marketing@abba.works

Phone: 0917 625 5249

Together, let's navigate the EOPT Act with ease and confidence!