EXPLAINER: When to require Sales Invoice and Official Receipt as proof of payment?
Have you ever experienced being required by your Auditor to provide an Official Receipt (OR) for the goods which you purchased because according to him/her a Sales Invoice (SI) is not an Official Receipt?
Consequently, fearing that this might signal the issuance of an Audit Observation Memorandum (AOM) you stressed yourself out and called the store where you bought the item.
Unfortunately, you were told by the Store Supervisor that they cannot issue an Official Receipt because they are only required by the Bureau of Internal Revenue (BIR) to issue Sales Invoice.
As a result, you were very worried because the Auditor threatened you that he will issue an AOM if you will not be able to provide the Official Receipt that he needs.
It’s sad to say but this situation shows that both of you apparently do not know the difference between an Official Receipt and a Sales Invoice. But don’t you worry because you are not alone.
In fact in 2014, the BIR deemed necessary to issue a clarificatory Circular on this matter because seemingly many government Accountants and Auditors alike are confused as to when to require an Official Receipt and when to require a Sales Invoice?
Some Auditors insist that only Official Receipts are acceptable as proof of payment. They insist that a Sales Invoice must still be supported by an Official Receipt.
On the other hand, some Government Accountants fall into needless stresses because they cannot provide the required Official Receipt for the Sales Invoice issued to them by the seller of goods.
Nonetheless, they are not having the same difficulty for the services they purchased because they are issued Official Receipts by the service provider as proof of payment.
In Revenue Memorandum Circular No. 2-2014 the BIR states this:
“The Bureau has been receiving numerous queries regarding the requirement of Government Auditors on the issuance of Official Receipt as the acceptable evidence of receipt of payment for disbursements where the payee/recipient is a dealer, supplier or business establishment required by the BIR to issue the same in the sale/lease of goods or properties, and/or sale of services. That Sales Invoices are demanded as evidence of delivery, agreement to sell or transfer of goods and services, and Official Receipt as evidence of payment. In fine, both Sales Invoices and Official Receipt are required on one transaction by some government agencies.”
Foregoing considered, it is clear that there is confusion among Government Accountants and State Auditors as to when to require an Official Receipt and when to require a Sales Invoice as proof of purchase.
Unfortunately, some Auditors still require Official Receipt even if the Accountant already provided a Sales Invoice as proof of purchase.
It is essential to point out that the term “Official Receipt” has been understood by some Government Accountants and State Auditors as the sole evidence of payment, regardless of what is being purchased.
Thus, the BIR issued the aforementioned clarificatory Circular on this matter to stop the confusion.
In the Circular, the BIR clearly clarifies the difference between an Official Receipt and a Sales Invoice and identify when to require each of them, as shown below:
It is noted that a Sales Invoice and an Official Receipt are both Principal evidence/proof of purchase. The difference lies on what is being purchased — Sales Invoice is for the purchase of goods and Official Receipt is for the puchase of services/lease of properties.
Now, is a Sales Invoice a Proof of Payment?
Now, is a Sales Invoice a Proof of Payment?
If the seller is engaged in the sale of goods or properties, it will need to issue a Sales Invoice when the goods are sold to the buyer, whether cash or on credit.
If the sale was on credit, the seller will then issue a collection receipt upon receipt of cash from the buyer.
If the sale was paid on cash, a Cash Invoice is enough. Under BIR Revenue Regulation No. 18-2012, a Cash Sales Invoice or Cash Invoice fall under the definition of Sales Invoice.
What about an Official Receipt? Is it a Proof of Payment?
What about an Official Receipt? Is it a Proof of Payment?
Official receipt is issued by the seller to the buyer as a written evidence on sale of services or leasing of properties, as well as acknowledgement on collection of cash payment on services rendered.
It is no longer necessary to issue a Sales Invoice because there are no items or goods involved. Instead, the seller/service provider can issue a Service Invoice or Billing Statement if the service was on credit.
Upon receipt of cash, the service provider will then issue an Official Receipt to the buyer.
The BIR clarifies that Commercial Receipts/Invoices such as delivery receipts, order slips, purchase orders, provisional receipts, acknowledgement receipts, collection receipts, credit/debit memo, job orders, and other similar documents that form part of the accounting records of the taxpayer (i.e., seller) and/or issued to their customers evidencing delivery, agreement to sell or transfer of goods and services shall be supplementary evidence only.
Going back to the aforementioned scenario, foregoing considered, the Sales Invoice shall serve in lieu of Official Receipt in the sale of goods or properties for evidentiary purposes in terms of audit. On the other hand, an Official shall serve as proof of payment for the purchase of services.
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Government Accountants, Budget Officers, Treasurers and Auditors’ Forum
Good day po.
Pano po kung ung payor ay manggagaling sa ibang bnsa, ipapadala nya ang bayad via paypal or transferwise, ano po ang efekto kapag humihingi sha ng proof of receipt,
Service rendered: website developmnt
Payor: europe
Ano po dapat gawin. Salamat po.
WHAT IF THEY JUST GIVE A DELIVERY RECEIPT?
If you sell a property as an individual and buyer is a corporation which requires an official receipt, is that right? Do you really need an ofdicial receipt when you sell to a corporation? Wjat if you as an inidivdual don’t have official receipt?
For claiming of input tax credit, do we have to present Statement of account or billing statement only to support the claim in addition to official receipt for purchase of services? Thanks in advance for your input!
I have been to many stores who provide only sales invoice, and they’ve told me it is the equivalent of an OR. This is the sad reality.
If the seller is engaged in the sale of goods or properties, it will need to issue a Sales Invoice when the goods are sold to the buyer, whether cash or on credit. If the sale was on credit, the seller will then issue a collection receipt upon receipt of cash from the buyer. If the sale was paid on cash, a Cash Invoice is enough. Under BIR Revenue Regulation No. 18-2012, a Cash Sales Invoice or Cash Invoice fall under the definition of Sales Invoice
How about if the supplier has no Sales Invoice or Official Receipt issued by the BIR, what proof of payment can be acceptable by the COA?
A company engaged in selling of motor vehicles issues sales invoices upon delivery of goods to our LGU. But upon payment the company issues ACKNOWLEDGMENT RECEIPT only not collection receipt.. because according to the company representative they don’t have collection receipt. Is acknowledgment receipt enough as evidence of payment?
Hi. I am selling SERVICE. My accountant told me that I should require TIN from my customer before I issue OR. No customer TIN, no OR. Is this correct?
yes.
Is the collection receipt is valid without any issuance of sales invoice or official reciept?
Yay, this is so helpful. Thanks!
I just bought assoerted medicines for our RHU. The supplier issued us collection receipt as proof of payment. Is this acceptable? No sales invoice issued nor OR issued. Salamt sa magsagot.
Hi, I have a travel agency. For instance, a plane ticket costs P10,000 and my mark up for that is P300. I was informed that I should issue an Acknowledgment Receipt of P10,300 to the client and the OR should be P300 which is needed to be filed to BIR. Will the AR be enough for them to liquidate it as their expenses to their companies? Because if I issue an OR of 10,300, I would be required to pay 3% of 10,300 which is supposedly 3% of my income (P309) which is higher than my actual income of P300! That should only be .03 x 300 = P90.
Hi,
I have a beverage kiosk accredited inside a BPO as subcon vendor, initially BIR provided me cash invoice but the BPO where my cart is located required me OR as part of their requirements, when i went back to BIR, they told me I have to destroy the cash invoice before issuing me OR as i cant maintain 2 diff receipts, now that im claiming payment for a bulk order made, they are looking for sales invoice. Was it correct for BIR to destroy the cash invoice?
What about if you are a contractor, what will you issue if you are going to collect payments from the client, official receipt or sales invoice?
Generally, contractors render services. Hence, they should issue an official receipt. Nonetheless, this will be properly identified when you get your Authority To Print (ATP) from the BIR. For more information on how to do this, may we refer you to this article: https://www.google.com.ph/amp/www.full-suite.com/blog/everything-you-need-to-know-about-the-new-bir-ruling-on-official-receipts-and-invoices/amp/
Hi, I have a question. Don’t know if this is applicable but this has been bugging me for quite some time now. We purchase raw materials from public markets like chilis and onions. They have no receipts. What can be used to show BIR as proof of our purchase? For quarterlytaxation purposes. Thanks!
May we refer you to this COA Circular on this matter: https://www.coa.gov.ph/index.php/2013-06-19-13-06-41/1-circulars/category/4462-cy-2004?download=16817:cy-2004
My experience and practice as an employee of a supply and service company, We issue both SI and OR whether the mode of payment is cash/check or charge. SI is is issued as a proof of goods purchased, and OR is issued as a proof of payment for the goods and services purchased.
My question is: Why is it they only issue a receipt when we buy goods in a grocery store and when we eat or takeout foods in a restaurant? Are they also required to issue Sales Invoice as required by the circular issued by the BIR? It is quite confusing because these stores don’t issue SI’s.
This was not replied. I want to here an explanation on your question sir Renato
You may be thinking that the tape receipt that they are issuing in grocery stores are official receipts, but when you read the details carefully they are actually invoices. Again, sales invoices are issued for the sale of goods.
As to restaurants, it is proper that they issue Official Receipts as the same is for the sale of services. Restaurants do not sell goods, they sell services. Hence, Official Receipt is the appropriate document that they should issue.
in paying quarterly taxes for small/micro businesses, are transactions on sales invoices taxable? i understand OR transactions are subject to tax. im not sure on invoices. thanks
As a chief of the client support section of the BIR, RMC 2-2014 clearly explains difference between the issuance of the SI and OR. Because as a businessman, you don’t have to issue both for the same transaction, because you will be recording both in your cash receipt journal. Malulugi ang negosyo pag ganun. Hence, we explicitly explain to our taxpayers on what to apply for the Authority to Print. For sale of goods, SI. For sale of services, OR. and if there are insistent customers, I tell our Taxpayers to let them come to the office and I will personally explain to them the issue in question. And so far, we are doing it right and they are satisfied with our explanations.
Thank you for your inputs on this matter, Sir! We appreciate it!
Hi! Just a quick question on the billings of a service entity specifically a trucking business. Can their billing statement merely prepared in a clean bond paper with their services rendered okay or suffice the requirement of the BIR? The trucker has an official receipt to issue however their billing statements is just merely a summary of what they have serviced. Thanks
Billing Statements or Service Invoice are just supplementary documents. What BIR requires is the Official Receipt.
I work before in Government agency. Just curious is the agency have right to require the supplier to issue a official receipts or collection receipts even though the agency is still processing the paper for the delivery they made and official and collection reciepts is already required? And if the supplier won’t issue an official receipt the agency will not process there papers unless the supplier will issue because they don’t have any choice because their delivery will not be paid. Is there any violation in this situation ? Thank you.
The issuance of an Official Receipt or Sales Invoice is only required when the goods delivered or the service rendered have been actually paid. However, delivery receipts and billing statements should not be confused with Official Receipt and Sales Invoice as the former are evidences of delivery of goods or rendition of services, respectively, while the former are evidences of payment. In practice, the delivery receipts/billing statements are required by government offices before the supplier’s claim can be processed.
The BIR rule is applicable to Sellers’ recognition of income or Sales, but for the government transactions, the COA Rules and regulations shall apply ( with constitutional provision to promulgate accounting and auditing rules). Had BIR consulted COA before the issuance of this Rule? BIR may be steeping over the jurisdiction of other government agencies.
May we know what particular COA rule did the BIR violate on this?
In our case, we issue Bill Invoice first, and when cash payment is available, we issue official receipt.
May we know if you are selling goods or services?
Is there a need to indicate the vat and final tax in the sales invoice? Supposed I will reimburse an amount worth P 15,000.00 for the purchased of an office supplies, can I get the whole amount when the issued SI is also P 15,000.00?
Usually the actual amount paid in cash or other forms of payment is the amount that is reimbursed by the Agency/Office regardless of the amount of tax appearing in the Sales Invoice (if goods were purchased) or Official Receipt (if services were purchased).
Its not Official Receipt, but collection receipt which is one of the supplementary receipt. Its a proof that such charge invoice relative to the purchase of GOODS is already paid.😊 but the income on the part of the supplier of goods is already recognize in their books upon issuance of invoice (be it charge invoice or cash invoice) considering that theres actual delivery of goods.
Official receipt is issued upon payment of the services you availed. The reason for this is that Companies whose nature of business is services recognize the income only upon issuance of official receipt. Other difference also is that official receipt and invoice are the principal receipts which are the basis to substantiate the taxpayer’s claiming input taxes, or expenses if its part of their expenses.
Charge invoice is not a form of proof of payment. It is an evidence of sale of goods but t is a proof that the buyer has acquired payable, thus the buyer still need to require an OR if the buyer has already paid his obligations.
False. When you are issued with charge invoice upon purchase of goods on credit, you will be issued collection receipt upon payment.