Difference Between a Sales Invoice and an Official Receipt

Sales invoice vs. an official receipt

Section 237 of the Tax Code of the Philippines mandates every taxpayer engaged in trade or business to issue an official receipt and/or a sales invoice for each sale and transfer of goods and services to the purchaser, at the time the transaction is effected.

What’s the difference between invoices and official receipts?

  • Invoices or sales invoices are used for the sale of goods.
  • Official receipts are used for the sale of services

Definition for tax purposes

Revenue Regulation No. 18-2012 classifies sales invoices and official receipts into principal and supplementary.

  • Principal receipts/invoices

There are four kinds of principal receipts or invoices that can either be VAT or Non-VAT. These written acknowledgments” can come from cash registers duly registered with the BIR, or from BIR-approved receipt books.

  1. VAT sales invoice

Used for either cash or credit, this invoice shows:

  • How much output VAT a seller owes for that particular transaction
  • Input tax claim of the buyer
  1. VAT official receipt

Used as reference for seller’s output VAT and the input VAT claim of the buyer. It shows:

  • How much output VAT a seller owes for that particular transaction
  • Input VAT claim of the buyer
  1. Non-VAT sales invoice

It shows how much percentage tax a seller owes for that particular transaction. The percentage tax is a type of business tax levied on businesses whose gross annual sales do not exceed PHP 1,919,500 and are not VAT registered. See full official description here.

  1. Non-VAT official receipt

Issued by the seller to the buyer proving the sale of a service or the leasing of property. It shows how much percentage tax the seller owes for that particular transaction.

In the Philippines, sellers are required to charge their customers the requisite VAT on purchased items; this is called input VAT. In turn, sellers need to remit this VAT to the BIR as output VAT.

  • Output VAT is the percentage of VAT that comes from a seller’s revenue. This is what businesses record in their balance sheets as a liability account and is passed on to customers in the form of input VAT, an asset.
  • Input VAT is VAT that is passed on to buyers. It is incurred from a customer’s expenses.

Learn more about VAT and NonVAT here.

  • Supplementary receipts/invoices

 

Also known as commercial invoices, supplementary receipts

show the transaction that occurs between the seller and buyer of goods and/or services. It is used for recording, monitoring, and control purposes in the book of accounts of a business taxpayer. Also proves that an agreement to deliver, sell, or transfer goods and services has been made.

A supplementary receipt or invoice come in many types, including:

  • Delivery receipts
  • Order slips
  • Debit and/or credit memo
  • Purchase order
  • Job order
  • Provisional/temporary receipt
  • Acknowledgement receipt
  • Collection receipt
  • Cash receipt
  • Bill of lading
  • Billing statement
  • Statement of account

The receipt or invoice can be handwritten, digitally produced, or typed – as long as it is issued to customers in the ordinary course of business.

Supplementary receipts/invoices cannot be used for VAT purposes as proof of input VAT owed by customers.

For more details, refer to the BIR’s Revenue Regulations No. 18-2012