Invoice Types Explained: What Filipino Business Owners Needs to Know

As the Philippine tax system continues to modernize under the Ease of Paying Taxes Act (Republic Act No. 11976), Filipino business owners face a critical need to understand the new invoicing requirements that took effect in 2024. The transition from the traditional dual system of receipts and invoices to a streamlined approach where invoices serve as the primary documentation for all sales transactions represents one of the most significant shifts in Philippine business documentation practices in recent years.

Related Article: Invoice vs Receipt vs Bill: Philippine Business Guide

With the Bureau of Internal Revenue (BIR) implementing stricter enforcement of these new regulations, businesses across all sectors must adapt quickly or risk penalties for non-compliance. The proper issuance of invoices is no longer just a matter of good bookkeeping—it's a legal requirement with specific formats, information requirements, and issuance protocols that vary based on your tax registration status and transaction types.

This comprehensive guide breaks down the essential invoice types every Filipino business owner needs to understand, explaining when to use each type and how to ensure your documentation meets all BIR requirements in this new tax landscape.

Different Invoice Types

Sales Invoice

A sales invoice is a critical document in the Philippine business landscape, serving as official evidence of a transaction for the sale of goods and/or services. Its primary purpose is to provide a detailed record of the sale, including the items or services provided, their quantities, prices, and the total amount due.

As of 2025, with the implementation of Republic Act No. 11976 (Ease of Paying Taxes Act) and Revenue Regulations No. 7-2024, sales invoices have become the primary documentation for both goods and services transactions, replacing the previous dual system of receipts and invoices.

Required Information and Format

To comply with Bureau of Internal Revenue (BIR) regulations, sales invoices in the Philippines must include specific details. According to Revenue Memorandum Order No. 12-2013, which remains relevant in 2025, the following information must be present on a sales invoice:

1. Taxpayer's registered name and business name/style (if any)
2. A statement indicating VAT or Non-VAT registration status, followed by the Taxpayer Identification Number (TIN) and 4-digit Branch Code
3. Complete business address where the sales invoice will be used
4. Date of transaction
5. Serial number of the sales invoice, printed clearly
6. Space for the name, address, and TIN of the buyer
7. Description of the items or services
8. Quantity of the items or services
9. Unit cost and total cost
10. VAT amount (if the transaction is subject to VAT)

For Non-VAT sales invoices, the phrase "THIS DOCUMENT IS NOT VALID FOR CLAIM OF INPUT TAX" must be printed in bold letters on the face of the invoice.

When to Issue a Sales Invoice?

As of 2025, the rules for issuing sales invoices have been clarified and updated. VAT-registered businesses are required to issue a VAT invoice for every sale transaction, regardless of the amount. For Non-VAT registered businesses, the requirements are as follows:

1. An invoice must be issued for every sale, barter, exchange, or lease of goods or properties, and for every sale, barter, or exchange of services valued at Five Hundred Pesos (₱500.00) or more.
2. If a buyer requests an invoice, the seller must issue one regardless of the transaction amount.
3. For transactions less than ₱500, Non-VAT businesses can issue an invoice at the end of the day for the total sales transactions below ₱500.

It's important to note that the ₱500 threshold is subject to adjustment every three years based on the Consumer Price Index, as published by the Philippine Statistics Authority (PSA).

VAT vs. Non-VAT Sales Invoices

The distinction between VAT and Non-VAT sales invoices is crucial for business owners to understand, as it affects both compliance and financial strategies.

• VAT Sales Invoices:
  • Issued by businesses registered for VAT (typically those with annual gross sales exceeding ₱3 million)
  • Include a 12% VAT charge on top of the sale price
  • Allow businesses to claim input VAT credits on their purchases
  • Must be issued for every transaction, regardless of amount
• Non-VAT Sales Invoices:
  • Issued by businesses not registered for VAT (usually those with annual gross sales below ₱3 million)
  • Do not include VAT, but are subject to a 3% percentage tax on gross receipts
  • Cannot be used to claim input VAT credits
  • Must be issued for transactions ₱500 and above, or upon buyer's request

The choice between VAT and Non-VAT status affects pricing, tax obligations, and administrative requirements. VAT-registered businesses generally have more complex compliance procedures but benefit from input tax credits. Non-VAT businesses have simpler compliance requirements but may face limitations as they grow.

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Cash Invoice

A Cash Invoice is a specialized type of invoice used specifically for transactions where payment is received immediately at the point of sale. As clarified in the July 2024 BIR regulations, Cash Invoices serve as official documentation for sales where there is an immediate outflow of cash towards the purchase of goods or services. This type of invoice is particularly common among small businesses that handle numerous cash transactions daily.

With the implementation of Republic Act No. 11976 (Ease of Paying Taxes Act) and Revenue Regulations No. 7-2024, Cash Invoices have become an integral part of the new invoicing system that replaced the previous dual system of receipts and invoices for documenting sales transactions.

Differences from Standard Sales Invoice

The primary distinction between a Cash Invoice and a standard Sales Invoice (often referred to as a Credit or Charge Invoice) lies in the timing of payment. With Cash Invoices, payment is settled immediately at the time of transaction, whereas with standard Sales Invoices, payment is typically deferred to a later date.

This fundamental difference affects how these documents function in business operations. For cash sales, the Cash Invoice serves as both proof of sale and confirmation of payment received, eliminating the need for a separate collection receipt that would be required in credit sales scenarios.

Additionally, Cash Invoices often have simplified payment terms since payment has already been received, while standard Sales Invoices include detailed payment terms, due dates, and sometimes installment schedules.

When to Use a Cash Invoice?

Cash Invoices should be used in the following scenarios:

1. When payment for goods or services is received immediately at the time of transaction
2. For retail transactions where customers pay on the spot
3. For business-to-consumer (B2C) transactions where immediate payment is the norm
4. When there is no credit arrangement between the seller and buyer

As of April 2025, following the implementation of the Ease of Paying Taxes Act, VAT-registered businesses must issue a valid invoice (including Cash Invoices) for every sale transaction regardless of the amount. For non-VAT registered businesses, Cash Invoices must be issued for transactions valued at ₱500 or more, or whenever requested by the buyer regardless of the amount. For transactions below ₱500, non-VAT businesses can issue a consolidated Cash Invoice at the end of the day for the total sales transactions below the threshold.

Required Information and Format

To comply with Bureau of Internal Revenue (BIR) requirements, Cash Invoices must contain specific information similar to standard Sales Invoices. According to the latest BIR guidelines, a compliant Cash Invoice must include:

1. The word "Cash Invoice" clearly printed on the document, with "Invoice" being the more prominent term
2. The seller's registered name as shown in the BIR Certificate of Registration
3. A statement indicating VAT or Non-VAT registration status, followed by the Taxpayer Identification Number (TIN) and 4-digit Branch Code
4. The seller's complete registered business address
5. A unique, sequential serial number
6. Date of transaction
7. Space for the buyer's information (name, TIN, and address) - though for B2C transactions, just the customer's name may be sufficient
8. Detailed description of goods or services provided
9. Quantity of items
10. Unit cost and total cost
11. For VAT-registered businesses, the VAT amount shown as a separate item
12. Total amount of sale (VAT-inclusive for VAT-registered businesses)
13. Authority to Print (ATP) details including ATP number, date issued, BIR Permit Number, and approved inclusive serial numbers

For Non-VAT Cash Invoices, the phrase "THIS DOCUMENT IS NOT VALID FOR CLAIM OF INPUT TAX" must be printed in bold letters on the face of the invoice. Businesses that previously used Official Receipts can convert them to Cash Invoices by striking through the term "Official Receipt" and replacing it with "Cash Invoice" until December 31, 2024, after which new properly formatted Cash Invoices must be used.

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Credit or Charge Invoice

A Charge or Credit Invoice is a specialized type of invoice used for transactions where payment is deferred to a later date. These invoices serve as official documentation for sales where there is an agreement between the seller and buyer for payment to be made after the goods or services have been delivered. This type of invoice is particularly common in business-to-business (B2B) transactions and for companies that offer credit terms to their customers.

When to Issue a Charge/Credit Invoice?

Charge or Credit Invoices should be issued in the following scenarios:

1. When goods or services are provided with an agreement for payment at a later date
2. For transactions where credit terms have been established between the seller and buyer
3. In B2B transactions where deferred payment is the norm
4. When there is a formal credit arrangement between the seller and buyer

Key Components and Required Information

To comply with Bureau of Internal Revenue (BIR) requirements, Charge or Credit Invoices must contain specific information similar to standard Sales Invoices. According to the latest BIR guidelines, a compliant Charge or Credit Invoice must include:

1. The phrase "Charge Invoice" or "Credit Invoice" clearly printed on the document
2. The seller's registered name as shown in the BIR Certificate of Registration
3. A statement indicating VAT or Non-VAT registration status, followed by the Taxpayer Identification Number (TIN) and 4-digit Branch Code
4. The seller's complete registered business address
5. A unique, sequential serial number
6. Date of transaction
7. The buyer's information (name, TIN, and address)
8. Detailed description of goods or services provided
9. Quantity of items
10. Unit cost and total cost
11. For VAT-registered businesses, the VAT amount shown as a separate item
12. Total amount of sale (VAT-inclusive for VAT-registered businesses)
13. Credit terms, including the due date for payment
14. Authority to Print (ATP) details including ATP number, date issued, BIR Permit Number, and approved inclusive serial numbers

For Non-VAT Charge or Credit Invoices, the phrase "THIS DOCUMENT IS NOT VALID FOR CLAIM OF INPUT TAX" must be printed in bold letters on the face of the invoice.

Managing Credit Terms and Documentation

Effective management of credit terms and documentation is crucial when using Charge or Credit Invoices. Here are some best practices:

1. Clearly define credit terms: Establish and communicate clear credit terms to customers, including the payment due date, any early payment discounts, and late payment penalties.
2. Credit limit assessment: Evaluate the creditworthiness of customers and set appropriate credit limits to minimize risk.
3. Proper documentation: Maintain accurate records of all Charge or Credit Invoices issued, including copies of signed agreements and any related correspondence.
4. Monitoring and follow-up: Implement a system to track outstanding invoices and send timely reminders as the due date approaches.
5. Late payment policies: Establish and enforce consistent policies for late payments, including the application of interest charges or late fees as permitted by Philippine law.
6. Regular review: Periodically review and update credit terms based on customer payment history and changing business conditions.
7. Integration with accounting systems: Ensure that Charge or Credit Invoices are properly recorded in the company's accounting system to maintain accurate financial records.

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Service Invoice

A Service Invoice is a specialized billing document used specifically for transactions involving the provision of services rather than the sale of physical goods. This type of invoice serves as official documentation for service-based transactions, providing a detailed record of the services rendered, their costs, and the terms of payment.

Service Invoices are particularly crucial for businesses that primarily offer professional services, consultations, labor, or expertise rather than tangible products. They help service providers maintain accurate financial records, establish professional relationships with clients, and comply with BIR requirements for tax reporting purposes.

Required Information for Service Providers

To comply with Bureau of Internal Revenue (BIR) regulations, Service Invoices in the Philippines must contain specific information. According to the latest guidelines, a compliant Service Invoice must include:

1. The phrase "Service Invoice" clearly printed on the document
2. The service provider's registered name as shown in the BIR Certificate of Registration
3. A statement indicating VAT or Non-VAT registration status, followed by the Taxpayer Identification Number (TIN) and 4-digit Branch Code
4. The service provider's complete registered business address
5. A unique, sequential serial number
6. Date when the service was rendered
7. The client's information (name, TIN, and address)
8. Detailed description of services provided, including the scope and nature of work
9. Rate charged (hourly, daily, project-based, etc.)
10. Total amount due for services rendered
11. For VAT-registered businesses, the VAT amount shown as a separate item
12. Total amount of the invoice (VAT-inclusive for VAT-registered businesses)
13. Payment terms and conditions
14. Authority to Print (ATP) details including ATP number, date issued, BIR Permit Number, and approved inclusive serial numbers

For Non-VAT Service Invoices, the phrase "THIS DOCUMENT IS NOT VALID FOR CLAIM OF INPUT TAX" must be printed in bold letters on the face of the invoice. Additionally, service providers who were previously issuing Official Receipts must now transition to using Service Invoices for all service-based transactions.

Differences from Other Invoice Types

Service Invoices differ from other invoice types in several key ways:

1. Focus on services rather than goods: Unlike Sales Invoices that primarily document the transfer of physical goods, Service Invoices detail intangible services provided. This distinction affects how items are described, with Service Invoices typically including detailed descriptions of the work performed, time spent, and expertise applied rather than product specifications.
2. Billing structure: Service Invoices often use different billing structures compared to other invoice types. They may include hourly rates, retainer fees, project-based pricing, or milestone payments, which are less common in goods-based transactions.
3. Tax treatment: Under Philippine tax law, services may be subject to different tax treatments compared to goods. For example, certain professional services may have specific withholding tax requirements that must be reflected on the invoice.
4. Documentation of deliverables: Service Invoices typically include more detailed descriptions of deliverables and outcomes, often referencing specific agreements, contracts, or statements of work that outline the scope of services.
5. Timing considerations: While Sales Invoices are typically issued at the point of goods delivery, Service Invoices may be issued at various points—upon completion of service, at predetermined milestones, or on a recurring basis for ongoing services.

Common Industries that Use Service Invoices

Service Invoices are widely used across numerous industries in the Philippines where the primary offering is service-based rather than product-based. Some of the most common industries include:

1. Professional Services: Law firms, accounting firms, consultancy businesses, and financial advisors regularly use Service Invoices to bill clients for their expertise and time.
2. Healthcare Services: Medical practitioners, clinics, diagnostic centers, and wellness providers use Service Invoices to document patient consultations, treatments, and procedures.
3. Information Technology: IT consultants, software developers, web designers, and digital marketing agencies rely on Service Invoices to bill for development work, maintenance, and technical support.
4. Creative Industries: Advertising agencies, graphic designers, photographers, and content creators use Service Invoices to bill clients for creative services and intellectual property.
5. Education and Training: Educational institutions, training centers, and individual tutors use Service Invoices when providing educational services, workshops, or specialized training.
6. Real Estate Services: Property managers, real estate brokers, and appraisers use Service Invoices when billing for their services related to property transactions or management.
7. Hospitality and Tourism: Tour operators, event planners, and hospitality consultants use Service Invoices to bill for their coordination and management services.
8. Maintenance and Repair: Mechanics, plumbers, electricians, and other maintenance professionals use Service Invoices to document repair services and labor charges.
9. Transportation and Logistics: Freight forwarders, courier services, and logistics consultants use Service Invoices when billing for transportation and delivery services.
10. Business Process Outsourcing (BPO): Call centers, virtual assistant services, and other outsourcing providers use Service Invoices to bill their clients for the services rendered by their staff.

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Billing Invoice

A Billing Invoice is a primary sales document used specifically for service-based transactions in the Philippines. Following the implementation of Republic Act No. 11976 (Ease of Paying Taxes Act) and Revenue Regulations No. 7-2024 effective April 27, 2024, Billing Invoices have been reclassified from supplementary to primary sales documents. Similar to a Charge Invoice, a Billing Invoice serves as an official request for payment, but it is specifically designed for the sale of services rather than goods.

Its primary purpose is to provide a detailed breakdown of services rendered or to be rendered, along with their corresponding costs. This document is particularly important for businesses that provide ongoing or recurring services, as it helps establish clear payment expectations and maintains proper financial records for both the service provider and the client.

When to Issue Instead of a Statement of Account?

Under the updated regulations of 2024-2025, Billing Invoices should be issued upon billing customers for services rendered or to be rendered. For utility companies and other recurring service providers, a Billing Invoice should be issued at the time of billing instead of a Statement of Account. This represents a significant change from previous practices where Statements of Account were commonly used for service billing.

As of April 2024, Billing Invoices are now considered primary sales documents, while Statements of Account have been relegated to supplementary document status. This means that service providers must issue a Billing Invoice as the official documentation for their services, regardless of whether payment is received immediately or expected at a later date.

Required Information for Billing Invoices

To comply with Bureau of Internal Revenue (BIR) regulations, Billing Invoices in the Philippines must contain specific information. According to the latest guidelines, a compliant Billing Invoice must include:

1. the taxpayer's registered name and business name/style (if any)
2. a statement indicating VAT or Non-VAT registration status, followed by the Taxpayer Identification Number (TIN) and 4-digit Branch Code
3. the phrase "Billing Invoice"
4. the service provider's complete registered business address
5. a unique sequential serial number
6. the date of transaction
7. client's information (name, TIN, and address), along with a detailed description of services provided or to be provided, rates charged, and total amount due

For VAT-registered businesses, the VAT amount (12% in the Philippines) must be shown as a separate item. The invoice should also include payment terms and conditions, and Authority to Print (ATP) details including ATP number, date issued, BIR Permit Number, and approved inclusive serial numbers.

For Non-VAT Billing Invoices, the phrase "THIS DOCUMENT IS NOT VALID FOR CLAIM OF INPUT TAX" must be printed in bold letters on the face of the invoice.

Utility Companies and Recurring Service Providers

Utility companies and recurring service providers in the Philippines have specific considerations when using Billing Invoices. Companies such as electricity providers (like Meralco), water utilities, telecommunications companies, internet service providers, and subscription-based businesses regularly use Billing Invoices to charge their customers for services.

These invoices typically include account information, statement period, previous charges, current charges, due date, and a breakdown of the utility usage or services provided[10]. For example, Meralco's billing documents include detailed information about different charge components such as generation charge, transmission charge, system loss charge, distribution charge, subsidies, metering charge, and supply charge.

With the rise of subscription-based business models in the Philippines, recurring billing has become increasingly important for maintaining steady revenue streams. Companies offering subscription services use Billing Invoices to automate their invoicing processes, reducing administrative workload and improving cash flow management.

Digital solutions for recurring billing, such as HitPay and NextPay's upcoming Invoicing Solution, are helping Filipino businesses streamline their billing processes. Additionally, with the Philippines moving toward mandatory electronic invoicing through the Electronic Invoicing System (EIS) by March 2026, utility companies and recurring service providers will need to ensure their Billing Invoices comply with the new digital requirements. Large taxpayers and e-commerce businesses will be the first affected by these changes, requiring them to issue electronic invoices and report their sales electronically.

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Commercial Invoice

A Commercial Invoice is an essential document in international trade that serves as official proof of a transaction between an exporter (seller) and an importer (buyer). For Filipino businesses engaged in export activities, this document is far more than a simple receipt—it's a critical legal document that formalizes the sale of goods and serves as the foundation for customs clearance processes.

Commercial Invoices function as both a contract and receipt between trading parties, establishing the terms of sale and documenting the transfer of ownership of goods from the Filipino exporter to the foreign buyer. Unlike domestic invoices, Commercial Invoices play a fundamental role in ensuring that logistics and customs operations proceed smoothly across international borders. They serve as the primary basis for customs authorities to verify the nature of goods, calculate duties and taxes, and ensure regulatory compliance in both the country of origin (Philippines) and the destination country.

Required Information for International Trade

To comply with international trade requirements, Filipino exporters must ensure their Commercial Invoices contain specific information. The document must be clearly labeled as "Commercial Invoice" and include a unique invoice number and issue date. Complete contact information for both the seller (Filipino exporter) and buyer (foreign importer) must be provided, including full legal names, addresses, and tax identification numbers. A detailed description of the goods is crucial, including the product name, material composition, quantity, dimensions, and what the item is made of and used for. The Harmonized System (HS) Code for customs classification must be included to facilitate faster customs clearance.

The invoice must clearly state unit prices and total values, along with the currency used for the transaction. Incoterms (terms of sale) such as FOB, CIF, or DDP must be specified to define the responsibilities of each party. Payment terms indicating how and when payment will be made must be included, along with shipping method and destination details. Additional required information includes the time and place where the merchandise was sold, the port of entry to which the merchandise is destined, and for certain products, the grade or quality, and any marks, numbers, or symbols under which the merchandise is sold in the country of exportation.

Customs Compliance Requirements

Commercial Invoices are critical for customs clearance in international trade, and Filipino exporters must ensure strict compliance with requirements to avoid delays and additional costs. Customs authorities in both the Philippines and destination countries use this document to verify the nature of goods through their description, quantity, and declared value. They also use it to calculate duties and taxes based on the value of the goods and the HS code, and to ensure regulatory compliance by confirming that goods meet export and import regulations.

For exports to the United States, for example, Filipino businesses must include specific information required by US Customs, such as the port of entry, detailed product descriptions including common or commercial names, grade or quality, and country of origin markings. Even items with little or no commercial value, such as samples, require proper Commercial Invoices when crossing borders.

Inaccurate or incomplete Commercial Invoices can cause significant delays during customs clearance or result in additional duty charges if goods are incorrectly declared. To ensure compliance, Filipino exporters are advised to work with experienced customs brokers or trade professionals, especially when entering new international markets with unfamiliar requirements.

Foreign Currency Considerations

When issuing Commercial Invoices for international transactions, Filipino exporters must carefully consider currency aspects. Businesses often choose to work in commonly-used currencies such as US dollars or euros to minimize complications, though foreign customers may prefer to pay in their own currency. The Commercial Invoice should clearly indicate the currency used for the transaction, and if different from the destination country's currency, the value should be shown in both currencies.

For accounting purposes, businesses need to manage exchange rate risks when invoicing in foreign currencies. There are typically two approaches: using the current exchange rate (the rate on the day the invoice is sent) or using an average exchange rate over a period. Using the current rate reflects real-time value but exposes the business to exchange rate fluctuations between invoicing and payment dates. Some businesses use forward exchange contracts to lock in current exchange rates and hedge against currency risk while waiting for payment.

When a fixed exchange rate is used for settlement, it should be comparable to rates prevalent at the time of conversion. For record-keeping purposes, Filipino businesses must convert all foreign currency transactions to Philippine Peso (PHP) in their accounting systems, similar to how other countries require conversion to their local currency. Any exchange rate differences that occur between the invoice date and payment date should be properly recorded as exchange rate gains or losses in the company's profit and loss statement.

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Miscellaneous Invoice

A Miscellaneous Invoice is a specialized type of invoice used in the Philippine business context to document income that doesn't fall under the standard categories of goods or services sales. Following the implementation of Republic Act No. 11976 (Ease of Paying Taxes Act) and Revenue Regulations No. 7-2024, Miscellaneous Invoices have been formally recognized as one of the principal invoice types that businesses can use.

According to the Bureau of Internal Revenue (BIR), a Miscellaneous Invoice is "issued for other types of income received by the seller". This type of invoice serves as official documentation for non-standard revenue streams that don't fit neatly into the categories covered by Sales Invoices, Cash Invoices, Charge/Credit Invoices, or Service Invoices. By providing a dedicated invoice type for these transactions, the BIR ensures that all business income is properly documented and reported, regardless of its source or nature.

When to use a Miscellaneous Invoice?

Miscellaneous Invoices should be used when a business receives income that doesn't directly result from the sale of goods or services that constitute its primary business activities. As with other invoice types, VAT-registered businesses must issue a Miscellaneous Invoice for every transaction regardless of the amount, while non-VAT registered businesses must issue one for transactions valued at ₱500 or more.

Required Information and Format

To comply with BIR regulations, Miscellaneous Invoices must contain specific information similar to other invoice types. According to the latest guidelines, it must include:

1. The phrase "Miscellaneous Invoice" clearly printed on the document
2. The service provider's registered name as shown in the BIR Certificate of Registration
3. A statement indicating VAT or Non-VAT registration status, followed by the Taxpayer Identification Number (TIN) and 4-digit Branch Code
4. The seller's complete registered business address
5. A unique, sequential serial number
6. Date of transaction
7. The client's information (name, TIN, and address)
8. Detailed description of the income source, amount, and any applicable taxes
9. For VAT-registered businesses, the VAT amount shown as a separate item
10. Payment terms and conditions
11. Authority to Print (ATP) details including ATP number, date issued, BIR Permit Number, and approved inclusive serial numbers
12. For Non-VAT Miscellaneous Invoices, the phrase "THIS DOCUMENT IS NOT VALID FOR CLAIM OF INPUT TAX" must be printed in bold letters on the face of the invoice.

Examples of Applicable Transactions

Miscellaneous Invoices can be used for a variety of non-standard income sources that businesses might encounter. These include rental income from property or equipment that isn't part of the business's primary operations, commission income received for facilitating transactions between third parties, royalty payments for intellectual property usage, income from the sale of scrap materials or obsolete equipment, interest income from loans or financing arrangements not part of a financial institution's primary business, and penalties or late payment fees collected from clients.

Other examples include income from the sale of promotional items or merchandise that isn't part of the business's main product line, refundable deposits that become income when conditions aren't met, income from subleasing office space or facilities, and miscellaneous fees for administrative services that aren't part of the business's core offerings.

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Supplementary Documents vs. Principal Invoices

With the implementation of Republic Act No. 11976 (Ease of Paying Taxes Act) and its implementing regulations, the distinction between principal invoices and supplementary documents has become crucial for business owners. A principal invoice is the primary document that serves as proof of the sale of goods and/or services issued to customers in the ordinary course of business. These include sales invoices, commercial invoices, cash invoices, charge/credit invoices, service invoices, and miscellaneous invoices.

On the other hand, a supplementary document is a written document, separate from an invoice, that provides financial transaction entries in an individual or company's books of accounts. Supplementary documents support and clarify transactions but do not function as bills themselves. This distinction is particularly important as the Ease of Paying Taxes Act has harmonized the issuance of commercial invoices for both sellers of goods and services, fundamentally changing how businesses document their transactions.

Types of Supplementary Documents

The range of supplementary documents used in Philippine business operations is extensive. According to Revenue Regulations No. 7-2024 dated May 22, 2024, supplementary documents include but are not limited to delivery receipts, order slips, debit and/or credit memos, purchase orders, job orders, provisional/temporary receipts, acknowledgment receipts, collection receipts, cash receipts, bills of lading, billing statements, and statements of account. Additionally, official receipts, which were previously mandatory for service providers, now fall under the supplementary document classification.

These documents can be prepared manually (handwritten), pre-printed/pre-numbered loose-leaf (information typed using excel program or typewriter), or computerized, as long as they are used in the ordinary course of business and issued to customers. Each type of supplementary document serves a specific purpose in supporting the principal invoice and providing additional details about the transaction.

When Supplementary Documents can be used?

Supplementary documents can be used alongside principal invoices to provide additional information about transactions. While invoices are now the primary documents supporting the sale of both goods and services, businesses are not precluded from issuing supplementary documents. These documents are particularly useful for providing detailed information that may not be included in the principal invoice, such as delivery details, order specifications, or payment collection confirmation. For instance, delivery receipts can be used to confirm the receipt of goods, purchase orders to document the buyer's request for goods or services, and collection receipts to acknowledge payment received.

It's important to note that after June 30, 2024, Official Receipts can be used as supplementary documents with the stamp "THIS DOCUMENT IS NOT VALID FOR CLAIM OF INPUT TAX". Furthermore, any manual or looseleaf "Official Receipt" issued without a stamped "Invoice" will be considered a supplementary document.

Limitations of Supplementary Documents for Tax Purposes

The most significant limitation of supplementary documents is their invalidity for claiming input tax credits under the Value-Added Tax (VAT) system. According to the latest regulations, supplementary documents are not valid proof to support the claim of input taxes by buyers of goods and/or services. This means that businesses cannot use supplementary documents such as official receipts, delivery receipts, order slips, or any other supplementary document to claim VAT input tax credits on their purchases. Only principal invoices can be used for this purpose. This limitation has significant implications for VAT-registered businesses, as it affects their ability to reduce their output tax liability.

Additionally, any Official Receipts, whether stamped with "Invoice" or unstamped, issued after December 31, 2024, will be considered supplementary documents. This means that businesses must transition to using proper invoices by the end of 2024 to ensure their customers can claim input tax credits. To comply with these requirements, businesses need to secure an Authority to Print (ATP) using BIR Form No. 1906 for both principal invoices and supplementary documents.

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Conclusion and Next Steps

As of 2025, Filipino business owners must navigate a complex landscape of invoicing requirements to ensure compliance with Bureau of Internal Revenue (BIR) regulations. The primary invoice types include Sales Invoices, Cash Invoices, Charge/Credit Invoices, Service Invoices, Billing Invoices, Commercial Invoices, and Miscellaneous Invoices. Each type serves a specific purpose and must contain essential information such as the seller's registered name, TIN, business address, VAT status, invoice number, date of transaction, buyer's details, item descriptions, quantities, costs, and applicable taxes. VAT-registered businesses must issue invoices for all transactions regardless of amount, while non-VAT registered businesses must do so for transactions of ₱500 or more, with this threshold subject to periodic adjustments.

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Consulting with Accounting Professionals

Given the complexity and frequent updates to invoicing regulations, it is highly advisable for business owners to consult with qualified accounting professionals or tax practitioners. These experts can provide tailored advice based on your specific business situation, ensure that your invoicing practices are fully compliant with current regulations, and help you implement efficient systems for invoice management and record-keeping. They can also assist in navigating the transition to electronic invoicing, which is becoming increasingly important as the Philippines moves towards mandatory e-invoicing for certain taxpayers.

Staying updated on BIR regulations

The invoicing landscape in the Philippines is evolving rapidly, particularly with the push towards electronic invoicing and digital reporting. By March 2026, large taxpayers and e-commerce businesses will be required to issue electronic invoices and report their sales electronically through the Electronic Invoicing System (EIS). To stay compliant, business owners should:

1. Regularly check the BIR website for updates and new issuances.
2. Attend seminars and workshops on tax compliance and invoicing.
3. Subscribe to newsletters from reputable tax and accounting firms.
4. Consider implementing accounting software that can adapt to changing regulations.
5. Plan for the transition to e-invoicing, even if your business is not yet mandated to do so.

By staying informed and proactive, Filipino business owners can ensure they remain compliant with BIR regulations, avoid penalties, and position their businesses for success in an increasingly digital business environment.