Tax Articles

The EOPT Act in Transition

By: Atty. Rodel C. Unciano

Atty. Rodel C. Unciano Partner   +632 8403-2001 loc.380 This email address is being protected from spambots. You need JavaScript enabled to view it. View Profile

By this time and with the effectivity of the Ease of Paying Taxes (EOPT) Act, most taxpayers may have already been able to submit to their respective district offices of the Bureau of Internal Revenue (BIR) inventory of their unused official receipts which will be utilized as invoices. Some may have probably been able to order printing of new set of invoices to be used in their transactions. And probably some may have already been able to request for reconfiguration of their machines in compliance with the provisions of the new law.

Well, there should be no issue with the early and immediate compliance of the new rules since the EOPT Act is already in effect as early as January 22, 2024, fifteen (15) days after its publication in the Official Gazette. But as regards compliance with the value-added tax (VAT) and other percentage tax provisions of the EOPT Act, taxpayers are actually given six (6) months from the effectivity of the regulations to comply.

The law was signed by the President on January 5, 2024. Pursuant to its effectivity clause, the EOPT Act would take effect fifteen (15) days after its publication in the Official Gazette in a newspaper of general circulation. As the law was published in the Official Gazette on January 7, 2024, it therefore took effect on January 22, 2024.

However, pursuant to its transitory provisions, taxpayers are given six (6) months from the effectivity of the implementing revenue regulations to comply with the amendments on VAT and Other Percentage Taxes provisions. The revenue regulations took effect on April 27, 2024, fifteen (15) days following publication in the BIR official website. Therefore, by mandate of the EOPT Act itself, taxpayers are given six (6) months from April 27, 2024, or until October 27, 2024, within which to comply with the amendments to VAT and other percentage taxes provisions.

However, following Revenue Regulations (RR) 7-2024, it would appear that the six-month transitory period provided under the EOPT Act has not been faithfully considered in the implementations.

For one, under RR 7-2024, unused official receipts (OR) may no longer be used to support claim for input tax upon effectivity of the regulations. While it may still be used as supplementary document, it is no longer valid for claim of input tax. In fact, the regulations require that the phrase "THIS DOCUMENT IS NOT VALID FOR CLAIM OF INPUT TAX" be stamped on the face of the document upon effectivity of the regulations.

While the ORs may be used as primary invoice, and therefore, a valid support for claim of input tax, the regulations, however, require a condition to be complied, and that is to strikethrough the word "Official Receipt" on the face of the manual and loose leaf printed receipt and stamp "Invoice", "Cash Invoice", "Charge Invoice", "Credit Invoice", "Billing Invoice", "Service Invoice", or any name describing the transaction. That is allowed only until December 31, 2024.

Also, documents issued by Cash Register Machines (CRM) and Point-of-Sale (POS) machines containing the word "Official Receipt" beginning the effectivity of the regulations shall no longer be considered as valid for claim of input tax by the buyer/purchaser. Taxpayers using CRM/POS will have to reconfigure these machines in order to generate invoice instead of official receipt.

Further, under RR 7-2024, taxpayers that are using duly registered Computerized Accounting System (CAS) or Computerized Books of Accounts (CBA) need to revisit their system to comply with the provisions of the EOPT Act. This is considered a major enhancement which requires BIR approval. Following the regulations, taxpayers are given only until June 30, 2024, to do the reconfiguration. Any extension due to enhancements of system shall likewise be subject to BIR approval but no longer than six (6) months from the effectivity of the regulations.

So, what would be the effect of non-compliance within the six-month transitory period?

Following the regulations, it would appear that the BIR is now on the go to strictly implement the provisions of the EOPT Act, even as we are still within the six-month transitory period. Taxpayers shall now bear the consequences of non-compliance. Official receipts shall no longer be valid support of input tax. Other penalties under the law will already apply.

While the intention of the law is to make tax compliance easier, taxpayers should be given ample time to transition to the new rules. In the first place, the six-month transitory period is a mandate of the EOPT Act itself.

Of course, regulations cannot supersede or modify the mandate of the law it seeks to implement. However, bear in mind that the regulations are presumed valid until declared otherwise. So, as a caution, compliance as early as possible is still the better option to avoid any issue. But hopefully, the BIR will be more lenient for the taxpayers who are yet to comply with the new rules in respect to invoicing as compliance is not yet actually mandatory during the six-month transitory period, pursuant to the mandate of the law itself.