A welcome end to the five-year validity period of receipts/invoices

REPUBLIC (RA) Act 11032, or the “Ease of Doing Business and Efficient Delivery of Government Services Act of 2018”, obligates all government offices and agencies, including local government units, corporations owned and controlled by the government and other government instruments to adopt simplified procedures in order to reduce red tape and speed up transactions with the government. A recent development in this direction is the issuance of Tax Regulation (RR) 6-2022, which removes the five-year validity period on receipts/invoices.

The implementation of RR 18-2012, which resulted in the strict application of the authorization to print (ATP) of official receipts (OR), sales invoices (SI) and other commercial invoices (CI), came with daunting and cumbersome requirements, including a five year validity period on all invoices/receipts. After the validity period has elapsed, a taxpayer will incur additional costs to print new sets of manual receipts or invoices, regardless of the number of unused receipts/invoices that have expired. Taxpayers are also subject to a heavy fine if expired receipts/invoices are used without permission from the Bureau of Internal Revenue (BIR).

In line with the government’s objective to minimize the complexity of the tax system and compliance costs for taxpayers, the five-year validity was removed under RR 6-2022. The regulations cover taxpayers applying for ATP OR, SI and other CIs; Registration of the Computerized Accounting System (CAS) or a component of the CAS; and license to use (PTU) cash register machines (CRM) and point of sale machines (POS)

All receipts and invoices generated by the PTU and the system to be issued will be valid in perpetuity, unless revoked by the BIR for the following reasons:

– Falsifying sales data or data integrity and/or software specifications or functionality to modify or cancel the registration of a sale;

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– Any major repairs, upgrades, integrations, modifications and alterations without prior notification and approval by the relevant BIR office, including items listed in Revenue Memorandum Order (RMO) 9-2021, where the taxpayer submits a registration update in accordance with the provisions for filing a new application in the event of a major system improvement (section V, point 8 of RMO 9-2021). To simplify, everything that has a direct effect, an impact or an improvement on the financial aspect of the system must be approved by the BIR. Otherwise, the PTU will be invalidated; and

– Any violation of CRM, POS and other sales machinery policies and procedures, including sales receipt system software and recording (RMO 10-2005), and the use of CAS, computerized books of accounts and /or its components, including electronic storage system, middleware and other similar systems (RMO 9-2021), and other related revenue issues.

As noted in the regulations, previously required sentences will be omitted (or ignored for unused receipts/invoices) at the bottom of the following documents:

– For system-generated receipts or invoices, “THIS INVOICE OR RECEIPT WILL BE VALID FOR FIVE (5) YEARS FROM THE DATE OF LICENSE OF USE” and “Valid until”; and

– For unused receipts or invoices, “THIS INVOICE OR RECEIPT WILL BE VALID FOR FIVE (5) YEARS FROM DATE OF ATP” and Valid until (mm/dd/yyyy)

RR 6-2022 comes into force on July 15, 2022 and includes the following transitional provisions for the taxpayers mentioned above:

1) ATP OR, SI and other CIs — The above mentioned phrases and validity date printed on unused manual primary and supplementary receipts or invoices for manual receipts or invoices with ATP should be disregarded and the same can be issued until completely exhausted. Also, subsequent printing of manual receipts or invoices should not include the phrases mentioned and should no longer use the “five-year validity” period.

2) Registration of the CAS or a component of the CAS – All receipts or invoices generated by the system and issued with the mentioned sentences on the basis of the system or software previously approved with a corresponding PTU or certificate of acknowledgment should be ignored. However, said system or software must be reconfigured to omit said sentences.

3) PTU CRM and POS machines – All receipts or invoices generated by the system and issued with the mentioned phrases based on previously approved CRM or POS machines with a corresponding PTU should be ignored. However, said system or software must also be reconfigured to omit said sentences.

Given the desire to regularly review and revise policies and processes to promote a strong, streamlined and responsive regulatory system and reduce the compliance burden on taxpayers, it is only a matter of time. before the government achieves its goal of making our tax system simpler, fairer and more efficient.

The author is a senior partner in the Tax and Corporate Services division of Deloitte Philippines (Navarro Amper & Co.), a member of the Deloitte Asia Pacific Network. For comments or questions, email [email protected] Deloitte Asia Pacific Ltd. is a company limited by guarantee and a member firm of Deloitte Touche Tohmatsu Ltd. Members of Deloitte Asia Pacific Ltd. and their related entities, each separate and independent legal entities, provide services from more than 100 cities across the region, including Auckland, Bangkok, Beijing, Hanoi, Ho Chi Minh City, Hong Kong, Jakarta, Kuala Lumpur, Manila, Melbourne, Osaka, Seoul, Shanghai, Singapore, Sydney, Taipei, Tokyo and Yangon.

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