SALES INVOICE or OFFICIAL RECEIPT?

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Sales invoice is issued as a principal evidence in the sale of goods and/or properties while official receipt is issued as principal evidence in the sale of services and/or lease of properties.

 The Tax Code provides that a VAT-registered person shall issue:

(1)  A VAT invoice for every sale, barter or exchange of goods or properties; and

(2)  A VAT official receipt for every lease of goods or properties, and for every sale, barter or exchange of services.

            Although the law is clear, many were still confused on the use of the said documents.  For this reason, Bureau of Internal Revenue (BIR) reiterated the matter through Revenue Memorandum Circular No. 002-14, which states that:

1. Sales Invoice (Cash or Charge) shall be issued as Principal evidence in the sale of goods and/or properties;
2. Official Receipt shall be issued as Principal evidence in the sale of services and/or lease of properties; and
3. Commercial Receipts/Invoices such as delivery receipts, order slips, purchase orders, provisional receipts, acknowledgment receipts, collection receipts, credit/debit memo, job orders and other similar documents that form part of the accounting records of the taxpayer and/or issued to their customers evidencing delivery, agreement to sell or transfer of goods and services, shall be Supplementary evidence only.

Based on the foregoing, the sales invoice shall serve in lieu of Official Receipt in the sale of goods or properties for evidentiary purposes in terms of audit. And official receipts (OR) shall be used as proof only for sale of services. BIR further required its strict observance.

What happens if one interchanged the use of sales invoice and official receipt?

In the case, Kepco Philippines Corp. v. Commissioner of Internal Revenue, Kepco interchanged the use of sales invoice and official receipts for purpose of substantiating its input VAT. And for its failure to follow the invoicing requirement, the Court disallowed it claim of input tax.

Accordingly, the invoicing and substantiation requirements must be strictly followed because it isthe only way to determine the veracity of taxpayer’s claims.

Thus, for the purchase of goods, request for Sales Invoice, not OR.

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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.

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