Removal of 5-year validity period of receipts/invoices

The emergence of various digital platforms has contributed to the increase in the number of SMEs in recent years. Budding entrepreneurs may feel overwhelmed by the numerous regulatory and tax requirements, such as those governing the issuance of valid receipts and invoices. But these problems may soon ease.

For context, the BIR previously required all receipts and invoices to have a five-year validity period as reflected by the Authority to Print (ATP). The same requirement applies to system-generated receipts/invoices issued from Cash Register Machines (CRMs), Point-of-Sale (POS) Machines, and other sales receipting system software. At the end of the five years, even if there are unused receipts/invoices available, taxpayers need to secure new sets of receipts and invoices thereby incurring additional costs. Moreover, all unused/unissued receipts and invoices, together with an inventory listing of the same, need to be surrendered to the BIR for proper destruction. Otherwise, taxpayers are penalized for failure to issue valid receipts or invoices.

Indicating the five-year period on the receipts/invoices is a prerequisite for its validity, which is critical for tax purposes. For instance, the deductibility of allowable expenses and recovery of input value-added tax (VAT) refund claims, among others, heavily rely on validly issued receipts and invoices.

Recently, the Bureau of Internal Revenue (BIR) revisited its policy after giving way to taxpayers’ clamor to remove the five-year validity period of receipts and invoices. This move, consistent with Republic Act (RA) No. 11032 or the Ease of Doing Business and Efficient Government Service Delivery Act of 2018, relieves taxpayers from the cyclical cost of reprinting their receipts/invoices upon expiration. It is also a win for the environment as it avoids unnecessary paper waste, among others.

The lifting of the expiration period was detailed in Revenue Regulations (RR) No. 6-2022, amending RR No. 18-2012, which took effect on July 15. This policy also covers taxpayers who will apply for (1) ATP official receipts, sales and other commercial invoices; (2) Registration of Computerized Accounting System (CAS)/Component of CAS; and (3) Permit To Use (PTU) CRMs and POS machines.

The phrases “THIS INVOICE/RECEIPT SHALL BE VALID FOR FIVE (5) YEARS FROM THE DATE OF THE PERMIT TO USE” and “Valid Until” are to be omitted from the bottom portion of newly issued manual and system-generated receipts/invoices. Accordingly, the five-year validity rule is no longer in force.

On the other hand, taxpayers with existing unexpired and unissued receipts and invoices may still utilize these until fully exhausted, and simply disregard the above-mentioned phrases. Notably, the RR provides for an additional requirement specifically for system/software generating receipts/invoices from CAS, component of CAS with PTU or Acknowledgment Certificate, and CRMs and POS machines with PTU to be reconfigured to omit the abovementioned phrases.

Under the RR, all PTUs to be issued will be valid unless revoked by the BIR based on valid grounds, such as the following:

A. Tampering of sales data/integrity of the data and/or software specification/features to alter/avoid the recording of a sale transaction;

B. Any major repair, upgrade, integration and modification/alteration without prior notification and approval by the BIR office concerned, including the items enumerated in Section V, Item No. 8 of RMO No. 9-2021, to wit:

i. Change in the functionalities of the system, particularly on enhancements that will have a direct effect on the financial aspect of the system, that includes modified computations and other financial-related issues that were considered;

ii. Addition or removal of modules or submodules within the system that will have a direct impact on the financial aspect of the system;

iii.  Change in the system/software version or release number that will result in enhancements on the financial aspect of the system; and

iv.  All other enhancements that will be deemed a major system enhancement based on the recommendation of the technical evaluators of the BIR.

C. Any violation(s) of the policies and procedures for registration under RMO No. 10-2005 and RMO No. 9-2021, and other related revenue issuances.

As with any newly revised policy, there may be other considerations for further clarification; expect the BIR to provide further details for implementation and monitoring. Particularly on the reconfiguration of systems/software on systems-generated receipts/invoices, one might ask how to go about it and how the BIR would monitor compliance by the taxpayers.

For instance, is there a prescribed timeline for the implementation of the reconfiguration? It has been a few months since the RR was issued, and some taxpayers may have already proceeded with the reconfiguration to comply with the transitory provision. Should further clarifications be released later on and an earlier timeline provided for taxpayers to observe, it is hoped that no penalties will be imposed on those who simply complied with the RR in good faith.

Another consideration involves the requirement of pre-approval from the BIR. Will this be examined post-implementation? Is there a need for a system walk-through, pre-, or post-approval? Based on the existing guidelines on CAS registration, reconfiguring the system to simply omit the abovementioned phrases as regards the five-year validity may be considered a minor enhancement as this does not affect any financial aspect on the system/software. Accordingly, such should not require prior notification or approval from the BIR, bearing in mind that the purpose of the RR was primarily to ease doing business.

The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.

Ruthie Mae G. Clemente is an assistant manager at the Tax Services department of Isla Lipana & Co., the Philippine member firm of the PwC network.

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