THE Bureau of Internal Revenue (BIR) said it has released the regulations that will govern the small-scale farmer exemption from issuing receipts and invoices.
BIR Revenue Regulations (RR) No. 12-2023 relieves small farmers of the need to issue principal and supplementary receipts or invoices covering the sale of their agricultural food products.
“Through these revenue regulations, we hope to support our small agricultural producers by making it easier for them to comply with the tax laws,” BIR Commissioner Romeo D. Lumagui, Jr. on Thursday.
The RR exempts agricultural producers whose gross sales do not exceed P1 million a year.
It added that small producers are still required to register their principal place of business or residence with the BIR’s Revenue District Office (RDO).
The BIR also classifies agricultural suppliers, sellers, producers, contract growers and millers that do not exceed the P1 million threshold to be small-scale agricultural producers.
The BIR agricultural producer category includes produce, livestock, and poultry farmers, as well as producers of marine products, ordinary salt, and agricultural inputs.
“The agricultural food products shall still be covered by these revenue regulations even if they have undergone the simple process of preparation or preservation for market,” it said.
It added that producers also need to maintain a records of sales for every transaction in a simplified sales book.
If an agricultural producer sells goods or services other than food products, the total value of the other products must not exceed P1 million and be equivalent to up to 30% of total sales per year.
“Should the annual gross sales/receipts of small agricultural producers exceed P1 million at any time…, they will be required to issue official receipts/sales invoices for every subsequent transaction valued at P100 or more,” the BIR said.
It added that those exceeding the threshold can buy and use official printed receipts or invoices from district offices and are required to issue official receipts “pursuant to an Authority to Print (ATP) to be issued by the RDO.”
Buyers are also required to issue a Certificate of Income Payment Not Subject to Withholding Tax (BIR Form No. 2304) or Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) for every transaction.
“These forms will serve as evidence of purchases made to support claims for deductible expenses of the buyers or purchasers of Agricultural Food Products, for tax purposes,” it said.
Producers which do not exceed P300,000 in net income for the tax year are exempt from withholding taxes. Those above the threshold are subject to a 1% withholding tax rate.
Small-scale agricultural producers are still required to pay income taxes and file quarterly and annual income tax returns. — Adrian H. Halili