Philippines: A Step Towards the Mandatory Electronic Invoice
The Bureau of Internal Revenue (BIR) has announced that electronic invoicing will be extended to all major taxpayers in the country beginning in 2024.
We recommend companies to start preparing their systems and transitioning to the electronic model in advance to avoid any penalties from the BIR (Bureau of Internal Revenue).
The Philippines advances the implementation of its new e-Invoicing system (EIS). For the 100 largest taxpayers in the nation, electronic invoicing has been required as of July 1, 2022. Since September 2022, 7.4 million electronic invoices have been sent to the EIS as part of the project that has been carried out with the 100 largest taxpayers.
The organization in charge of implementing the project is the Bureau of Internal Revenue, also known as BIR, which is also in charge of the country's mass adoption of electronic invoices. This implementation could start in January 2023, in accordance with the Tax Code. The electronic invoice will, however, be introduced gradually.
The BIR intends to reduce VAT tax fraud and facilitate tax compliance processes for taxpayers and the tax authority.
The new EIS system is part of the Comprehensive Tax Reform Program (CTRP) introduced by the ministry of finance, which is looking to digitalize the tax and administrative systems in the Philippines.
How does the new electronic invoicing system work in the Phillipines?
The EIS in the Philippines is made up of an invoice report sent to the government’s central platform after invoices have been sent to final clients. Therefore, it is an invoice reporting system called the “Continuous Transaction Control” similar to that of South Korea. In fact the Korean International Cooperation Agency (KOICA) has helped the Philippines to develop its electronic invoice reporting system.
The electronic invoice includes sales invoices, receipts, debit and credit notes and other similar accounting documents issued through the internet.
Documents must be sent to the BIR via API in real or near real time, but never later than 3 days after the transaction is done. The documents exchanged with the BIR must be in JSON format and a JSON Web Signature must be applied once the documents are validated by the BIR. The BIR is in charge of validating the documents and sending the corresponding acceptance or rejection responses.
The information that an electronic invoice must contain is:
- Document number
- Date of issue
- Unique Identification Number: this is linked to the Document Number to prevent the taxpayer from rejecting or claiming that it is a different sales transaction.
- Seller Information
- Buyer's information
- Details of items/nature of service sold
- Amount of the sale
- VAT
- Discounts
The EDICOM platform serves as an integration tool for receiving messages from your ERP, transforming them into the BIR's required schema, and adding an electronic signature. To integrate new documents into the ERP, the solution checks for new documents that need to be sent to the BIR on a regular basis. Finally, we have a platform where, if a business must send invoices to the recipient in PDF format, the EDICOM platform automatically publishes the invoices in PDF and notifies the recipient by email so they can download them.
