Non‑Compliance with the BIR Invoice‑Issuance Requirement
(Philippine Tax & Penal Law Perspective, updated to 18 April 2025)
1. Statutory & Regulatory Framework
| Source | Key Provision(s) |
|---|---|
| National Internal Revenue Code (NIRC), as amended | • §113 & §237–§238 – Duty to issue receipts/invoices; Authority‑to‑Print (ATP) or use Computerized Accounting System (CAS) or e‑invoice platform. • §264, §264‑A, §264‑B – Penalties for (i) non‑issuance, (ii) unauthorized printing, (iii) failure to transmit e‑invoice data. • §115(b) – Grounds for closure of business for repeated wilful non‑issuance. |
| Revenue Regulations (RRs) | • RR 18‑2012 (Consolidated BIR invoice rules) • RR 10‑2020 & 12‑2021 (Electronic Invoicing System, “EIS”, implementing §237 & §237‑A, TRAIN Law) • RR 16‑2005 (VAT invoicing specifics) • RR 7‑2024 (Latest schedule of compromise penalties). |
| Revenue Memorandum Circulars (RMCs) | e.g., RMC 29‑2009, RMC 97‑2021, RMC 30‑2023—interpretive guidance on acceptable invoice content, e‑invoicing roll‑out, and audit treatment. |
| TRAIN Law (RA 10963, 2017) & CREATE Law (RA 11534, 2021) | Inserted §237‑A (e‑invoicing) and aligned penalty ceilings; tasked BIR to mandate electronic or web‑based transmission. |
| Implementing Rules for Cash Register/POS Accreditation | BIR POS Accreditation Regulations (most recently updated by BIR Notice 20‑2024). |
2. Who Must Issue & When
- All persons subject to an internal‑revenue tax (§237, NIRC).
- Timing: At the point of sale or rendition of service, irrespective of payment (i.e., even on credit).
- Threshold Exemption: Sales ≤ ₱100 (VAT) or ≤ ₱500 (non‑VAT) may be covered by tape receipts or abbreviated “acknowledgment” slips, but a full invoice must still be produced upon demand.
- Special sectors:
- Exporters/BOI‑registered enterprises – must imprint “0% VAT / Zero‑Rated Sale”.
- Senior‑citizen & PWD sales – invoices must show discount breakdown.
- Online platforms – obligated since 2023 to autogenerate e‑receipts sent by e‑mail or in‑app.
3. Form & Content Requirements
| Element | Mandatory Detail |
|---|---|
| Serial Number‑Control | Consecutive, pre‑printed or system‑generated; one series per branch/POS. |
| Seller Identification | Business name, trade name, full address, TIN + 3‑digit branch code, VAT or Non‑VAT status. |
| Date & Time Stamp | Automatic for CAS/POS; manual acceptable for printed booklets. |
| Buyer Information | For B2B or sales ≥ ₱1,000 (VAT) / ₱500 (non‑VAT): Buyer’s name, address, and TIN. |
| Description of Goods/Services | In commercial terms; generic descriptors (“miscellaneous”) are disallowed beyond 1 % of invoice value. |
| Quantity/Unit/Unit Price | Needed for goods; hourly or lump‑sum rate for services. |
| VAT/Percentage‑Tax Breakdown | Show gross, VAT/(PT)‑exempt, zero‑rated, VAT‑able, and tax amount columns. |
| Footer Legends | “THIS DOCUMENT IS NOT VALID FOR CLAIM OF INPUT TAX” (if Non‑VAT taxpayer). |
| QR Code (starting 1 July 2025 for large taxpayers) | Embeds seller TIN, invoice number, timestamp, total, security hash. |
4. Modalities of Issuance
| Modality | Pre‑conditions | Compliance Controls |
|---|---|---|
| Manual (pre‑printed) | BIR‑approved Authority‑to‑Print (BIR Form 1906); validity: 5 years or until full use. | Cross‑check unused booklet numbers during audit. |
| CAS/LAS (Computerized/Loose‑Leaf Accounting System) | Prior Permit‑to‑Use (PTU) CAS; invoice template archived in PDF; eJournal generated. | Annual third‑party system audit reports. |
| POS/CRM | Device must bear BIR sticker and Z‑counter reading; monthly Z‑reports preserved. | Automatic serial reset control. |
| Electronic Invoice / E‑Receipt (EIS) | Mandatory for: • Top 1000 large taxpayers (since 1 July 2022) • Exporters & PEZA entities (fully in 2023) • Digital service providers (phased 2024‑2025) |
Real‑time transmission (<3 data-preserve-html-node="true" days grace) via API; acknowledgement reference number (ARN) acts as “counter‑foil”. |
5. What Constitutes Non‑Compliance
| Category | Typical Findings during Audit (e.g., BIR LOA) |
|---|---|
| Non‑issuance | No invoice/receipt at all; or using merely unnumbered “delivery receipts”. |
| Delayed issuance | Issued days/weeks after actual sale thereby understating taxable base for VAT or Percentage Tax. |
| Incorrect/Incomplete details | Missing TIN; wrong serial number series; absence of VAT breakdown; description “assorted”, etc. |
| Use of unregistered/expired forms | ATP lapsed; CAS/PTU revoked but forms still used. |
| Multiple sets / dual invoices | “Management” vs “BIR” copy with different amounts. |
| Tampering & erasures | Altered totals; missing pages; non‑sequential booklets. |
| Failure to transmit e‑invoice data | Data files not pushed to EIS within mandatory time. |
6. Civil, Criminal & Administrative Penalties
| Basis | Penalty |
|---|---|
| §264(a), NIRC – Failure or refusal to issue invoices/receipts; or issuing ones lacking material data | Fine: ₱1,000 – ₱50,000 per act, plus imprisonment: 2 – 4 years. (TRAIN raised ceiling amounts; CREATE retained imprisonment range.) |
| §264‑A – Unauthorized printing of invoices | Fine: ₱500,000 – ₱10 million; imprisonment: 6 – 10 years. |
| §264‑B – Failure to transmit e‑receipt/invoice to BIR | Fine: ₱500,000 – ₱10 million and closure of establishment for > 3 counts in a taxable year. |
| §115(b) – Closure/Suspension | BIR may padlock premises (Oplan Kandado) for at least 5 days; operates independently of criminal case. |
| Compromise Penalties (RR 7‑2024) | Ranges from ₱20,000 (micro‑biz) to ₱250,000 (large taxpayer) per investigation period per violation type, settled administratively. |
| Input‑VAT Disallowance (RR 16‑2005) | Buyer loses right to claim input tax if supplier’s invoice is invalid; cascading deficiency assessments arise. |
7. Jurisprudential Highlights
| Case | G.R. No. | Ratio / Holding |
|---|---|---|
| CIR v. Seagate Technology (Philippines), Inc. | 153866 (Feb. 11 2005) | Strict observance of invoicing requirements is a condition sine qua non for VAT zero‑rating incentives; mere export papers insufficient. |
| CIR v. American Express Int’l | 152609 (Nov. 29 2010) | “Receipts” issued abroad not acceptable proof of Philippine VAT zero‑rating; local VAT invoice needed. |
| People v. Que Po Lay | 51 O.G. 5225 (1955) | Early criminal conviction for non‑issuance; Court stressed presumption of wilfulness when transactions exceed threshold and no receipt issued. |
| St. Luke’s Medical Center v. CIR | 195909 (Sept. 26 2012) | Denial of input‑VAT where supplier’s invoices lacked TIN and serial; no substantial‑compliance doctrine applicable. |
8. Practical Consequences during BIR Audit
- Expanded Tax Base Assessments – Auditors often extrapolate un‑receipted sales from purchases or inventory shrinkage.
- Disallowance of Deductions – Operating expenses unsupported by valid ORs/SIs are treated as non‑deductible.
- Exposure to Oplan Kandado – Even if compromise penalties are paid, habitual violations trigger padlocking.
- Supplier & Customer Ripple Effect – Invalidated invoices create cascading VAT exposure for trading partners.
- Potential Money‑Laundering Angle – Recurrent suppression of sales may be referred to AMLC for dirty‑money investigations.
9. Defenses & Mitigating Strategies
| Stage | Possible Arguments / Actions |
|---|---|
| Pre‑Assessment (Notice of Discrepancy) | • Substantiate that slips/tape receipts qualify under minimal‑sale exemption. • Invoke good‑faith reliance on BIR’s prior ATP or PTU; attach copies. |
| Protest of FLD/FAN | • Cite CIR v. Sony Philippines (G.R. 195235, 2013) allowing rectification when buyer had other corroborative documents. |
| Criminal Complaint (DOJ or CTA Division) | • Challenge sufficiency of information; absence of wilfulness if violation resulted from force majeure (e.g., POS outage, fire). |
| Compromise Settlement | • Leverage latest compromise penalty schedule; request abatement of increments upon prompt payment. |
| Voluntary Disclosure Program (VDP, RMC 5‑2024) | • 100 % surcharge waived and criminal prosecution avoided if taxpayer files amended returns and pays within the VDP window. |
10. Compliance Best Practices (2025 Landscape)
- End‑to‑End Digital Trail – Integrate ERP/POS with EIS API to avoid manual uploads.
- Real‑Time Serial Monitoring – Dashboards flag duplicate or skipped numbers.
- Five‑Year ATP Calendar – Maintain tickler system; apply for re‑printing at least 60 days prior to expiry.
- Staff Training & Signage – Front‑liners reminded that refusal to issue is a criminal act; post BIR “please ask for receipt” posters.
- Supplier On‑Boarding Checks – Secure photocopy of supplier ATP or PTU before transacting.
- Archiving – Keep soft‑copies of e‑invoices and z‑reports for 10 years (Sec. 203, NIRC; Sec. 6 RR 18‑2012).
- Mock Compliance Audits – Internal or third‑party reviews using BIR RAMO 1‑2023 checklists.
- Incident Logs – Document power failures or POS malfunctions; attach technical service tickets to explain “missing” invoice dates.
- Transition Plan for 2025 QR Mandate – Update forms and POS firmware before July 2025 to embed QR requirement.
- Legal Audit of Apps – For online sellers, ensure cart/checkout system captures mandatory invoice fields and triggers auto‑e‑mail of receipt.
11. Upcoming & Emerging Developments
| Measure | Target Effectivity | Brief Note |
|---|---|---|
| Universal E‑Invoicing (Phase 2) | 1 Jan 2027 (draft RR circulating) | All VAT taxpayers, regardless of size, to migrate; paper invoices retained only as backup. |
| Mandatory e‑Signature & Time‑Stamp Authority (TSA) Integration | 2026 | Digital signature to replace manual “original signed” requirement. |
| Blockchain Pilot | 2025‑2026 | BIR, DICT & BSP consortium testing immutability layer for invoice data. |
| Increased Penalty Floors | Draft House Bill 9845 (2024) proposes ₱5,000 minimum per unissued invoice and removal of imprisonment option for minor first offenses, replacing with higher monetary fine. |
12. Checklist: Are You Compliant Today?
- □ Valid ATP or PTU (not expired).
- □ Invoice/receipt template contains all mandatory fields.
- □ Serial numbers sequential; no gaps.
- □ POS/CRM accredited; daily Z‑read stored.
- □ E‑invoice data transmitted within 3 days of issuance (if covered).
- □ Books and duplicates kept 10 years.
- □ Staff trained; signage displayed.
- □ Supplier invoices vetted before claiming input VAT.
- □ Contingency procedures documented (for system downtime).
- □ Internal audit at least once a year.
13. Conclusion
Failure to comply with the BIR invoice‑issuance requirements is not a mere paperwork lapse. It simultaneously:
- Triggers administrative closure under §115;
- Exposes owners to criminal liability under §264;
- Erodes profitability through disallowed deductions and input‑VAT; and
- Jeopardizes stakeholder relationships, given ripple effects on buyers’ tax positions.
With the Philippines’ continuing migration to end‑to‑end e‑invoicing, the BIR’s audit trails are becoming real‑time and data‑driven. Businesses—even SMEs—must therefore view invoicing controls as a core governance function, not just an accounting chore. Investing early in compliant systems, disciplined staff procedures, and periodic legal audits offers returns far exceeding the heavy costs of non‑compliance.
Prepared 18 April 2025 – This article synthesizes publicly available statutes, regulations, and jurisprudence up to this date. It is not a legal opinion. For specific situations, seek professional advice.