BIR has issued Revenue Regulations (RR) No. 3-2024, implementing amendments introduced by EOPT ACT on the relevant provisions of Title IV – Value Added Tax (VAT) and Title V – Percentage Tax of the National Internal Revenue Code of 1997, as amended (Tax Code).

GENERAL AMENDMENTS – Under RR No. 16-05 and its updates, the following changes on terminologies are applied across affected provisions:

  • Gross Sales – All mentions of “gross selling price,” “gross value in money,” and “gross receipts” now become “GROSS SALES,” covering sales of goods and services.
  • Invoice – Sales/Commercial Invoices or Official Receipts are now simply termed “INVOICE” for both goods and services.
  • Billings for service on account – Previously called receipts or payments, these are now termed “BILLING” or “BILLED,” whichever is applicable.
  • VAT-exempt threshold – References to the three million pesos VAT-exempt threshold will now adjust every three years using the Consumer Price Index (CPI).
  • Filing and Payment – Tax returns must be filed electronically, with manual filing allowed only if electronic platforms are unavailable. Payments can be made electronically or manually to authorized banks and revenue collection offices.

SALIENT PROVISION ON SPECIFIC AMENDMENTS

  • Gross sales (of services and the use or lease of properties) refer to the total amount of money or its equivalent representing the contract price, compensation, service fee, rental, or royalty, which the purchaser pays or is obliged to pay to the seller in consideration of the sale, barter, or exchange of services that have already been rendered by the seller and the use or lease of properties that have already been supplied by the seller.
  • For output VAT purposes, only refunds on valid sales, for which allowances were granted by the seller, and sales discounts listed on the invoice at the time of sale, independent of future events, are permitted as deductions from sales.
  • A seller of goods or services may deduct the output VAT pertaining to uncollected receivables from its output VAT on the next quarter, after the lapse of the agreed upon period to pay,as long as the seller has already remitted the VAT on the transaction. Further, the VAT component of the uncollected receivables should not be claimed as allowable deductions for income tax purposes. To be entitled to VAT credit, the following requisites must be present:
  1. The sale or exchange has taken place after the effectivity of these regulations;
  2. The sale is on credit or on account;
  3. There is a written agreement on the period to pay the receivable, i.e. credit terms;
  4. The VAT is separately shown on the invoice;
  5. The sale is specifically reported in the Summary List of Sales covering the period when the sale was made and not reported as part of “various sales”;
  6. The seller, within the period prescribed under existing rules, declared in the tax return the corresponding output VAT indicated in the invoice ;
  7. The period agreed upon, whether extended or not, has elapsed; and
  8. The VAT component of the uncollected receivable was not claimed as a deduction from gross income.
  • In case of recovery of uncollected receivables, the output VAT pertaining thereto shall be added to the taxpayer’s output VAT during the recovery period.

TRANSITORY PROVISIONS

  • Billed but uncollected sale of services – For outstanding receivables on services rendered prior to the effectivity of these Regulations, the corresponding output VAT shall only be declared in the quarterly VAT return when the collection was made. The collection shall be supported with an Invoice following the transitory provisions contained in the RR for invoicing requirements to implement the EOPT Act  (RR 7-2024) or the new BIR-approved set of Invoices, whichever is applicable.
  • Uncollected Receivables from Sale of Goods – In accordance with the provision on output VAT credit on uncollected receivables (Section 4 of RR No. 3-2024), the claim of output VAT credit shall only be applicable to transactions that occurred upon the effectivity of RR No. 3-2024. No output tax credit shall be allowed for outstanding receivables from sale of goods on account prior to the effectivity of the same regulations.

This revenue regulation is effective on April 27, 2024, 15 days after its release on the BIR website last April 12. The BIR reserves the right to issue supplementary memoranda as necessary.