The electronic invoicing system was first introduced via an amendment to the National Internal Revenue Code (NIRC or Tax Code) through the TRAIN Law, effective January 2018, and further amended by the recently signed CREATE MORE. To implement the updated provisions on electronic invoices, electronic sales reporting and additional allowable deductions, the BIR issued Revenue Regulations (RR) No. 11-2025.
ISSUANCE OF ELECTRONIC INVOICES
In compliance with the BIR’s directive, an Electronic Invoicing/Receipting System (EIS) was established where the data required to be transmitted are stored and processed using the Sales Data Transmission System. From the initial coverage of taxpayers required to issue electronic invoices based on the earlier RR No. 8-2022, the regulations added the following taxpayers to the list of those required to comply: (1) those classified as Large Taxpayers under the Ease of Paying Taxes (EoPT) Act and RR No. 8-2024 and (2) taxpayers using Computerized Accounting Systems (CAS), Computerized Books of Account (CBA) with electronic invoicing and other invoicing software.
Meanwhile, certain taxpayers are required to issue electronic invoices upon the BIR’s establishment of a system capable of storing and processing transmitted data: (1) Registered Business Enterprises (RBE) availing of tax incentives, except those using CAS, CBA with accounting records and other invoicing software; (2) taxpayers using point-of-sale systems (POS); and (3) other taxpayers as may be required by the Commissioner to issue electronic invoices.
Taxpayers classified as micro taxpayers in line with the EoPT Law are excluded from the requirement. Nonetheless, they may voluntarily issue or continue to issue electronic invoices (if already doing so). In such cases, they can avail of the additional deductions provided under CREATE MORE.
ELECTRONIC SALES REPORTING REQUIREMENTS
The Electronic Sales Reporting System (ESRS) is the electronic reporting or process of storing, transmitting and/or receiving the electronic invoice data, through direct system-to-system data transfer without manual entry, to the BIR in a structured electronic format. The purpose of the system is for the taxpayers to electronically report their sales data to the BIR.
The same taxpayers required to issue electronic invoices are also required to comply with the ESRS, once the BIR has established a system capable of storing and processing the data that must be transmitted to it. Separate rules and regulations will be issued for this.
TAX INCENTIVES — ADDITIONAL DEDUCTION
As an incentive to taxpayers required or those who voluntarily comply with the electronic invoicing and sales data reporting requirements, an additional deduction from the taxable income will be allowed to help offset the cost of setting up the electronic reporting sales system. Micro and small taxpayers can additionally claim up to 100% of their total cost, while medium and large taxpayers can claim an additional deduction based on 50% of their total cost. This additional deduction may be availed of only once within the taxable year when the electronic sales reporting system is completed or when final payment for such a system is made. Additionally, imports connected with the electronic sales reporting system are exempt from taxes.
The expansion in the coverage of taxpayers highlights the importance of addressing significant concerns that require the BIR’s quick resolution in future issuances. One major concern remains: the establishment of a robust system for electronic sales reporting. Taxpayers need clear guidelines on how to transition from manual to electronic reporting and assurance that the BIR’s system can handle the required data. Additionally, there is a need for ongoing support and training to help taxpayers, especially the newly added ones, navigate and effectively comply with the new requirements.
In 2022, when RR No. 8-2022 was issued to promulgate the e-invoicing and electronic sales reporting provisions of the TRAIN Law, the EIS was put in place and a platform was made available to taxpayers who joined the BIR’s pilot program. Other covered taxpayers have been waiting for developments on when the e-invoicing/sales reporting would be rolled out for the rest of them. This RR No. 11-2025 seems to have answered that long-hanging question. Under RR No. 11-2025, covered taxpayers are given one year from the effectivity of the regulations (i.e., until March 14, 2026) to comply with the electronic invoicing requirements.
When this RR first came out, two and a half years after the issuance of the first regulations relating to e-invoicing, it did not clearly mention the connection with the previous issuance (2022 RR). But from the provisions, it appears to supplement RR No. 8-2022 by expanding the coverage of taxpayers required to comply and laying down the additional deductions. CREATE MORE did not provide for the expansion of covered taxpayers; this was the prerogative of the Department of Finance and the BIR. With this development, it would seem that the BIR is confident that it is now in a better position to establish a robust EIS and ESRS capable of taking in more sales data from even more taxpayers, leveraging the lessons from the pilot program in the previous years.
With the increasing digitalization in Philippine business and the economy, a shift from paper-based to paperless system of invoicing and sales reporting is a welcome development. During tax audits/investigations, refuting an assessment boils down to the taxpayers producing substantial and relevant pieces of evidence and documents sufficient to justify the cancellation or reduction of the tax assessment issues. The same goes for tax refund cases where the entitlement to the claim is mainly dictated by the level of documentation taxpayers can produce to support the refund sought. Currently, taxpayers need to manually retrieve the necessary documents required to support their claims. These efforts from the BIR, once substantially implemented, gives us an opportunity to maximize digitalization for audit and refund claims, and move forward from the previous status quo.
The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.
Mary Rose Lara is a manager at the Tax group of Isla Lipana & Co., the Philippine member firm of the PricewaterhouseCoopers global network.
