Here's a quick explanation of the whole hullabaloo with the BIR's requirement to change official receipts to invoices.
Background: Before April of this year, the "primary evidence" for services rendered/expenses in tax returns is an "Official Receipt" (OR).
From context clues, it's a document issued to the one paying money for services AFTER THE COLLECTION of the money owed.
Moreover, before April 2024, service providers are required to have ORs but not Sales Invoices (SINV).
New Rule: RR 7-2024
Last April 11, the BIR issued a new rule changing the "primary evidence" from ORs to "SALES INVOICES” (SINV).
The difference is that a SINV (in theory) is a document issued AFTER services are rendered but MAY be BEFORE the collection of the sum owed.
For example, you had your AC cleaned. You wanted to pay the service provider (SP) after the cleaning to ensure they did it properly. After the cleaning, the SP sends you a SINV. Whether or not you've paid the SP, you can already claim the service as an expense.
So why is this important for brokers?
Brokers (including all SPs) are now required to have SINVs in lieu of ORs. SPs may choose to continue to issue ORs, but the BIR will no longer require this document.
Without SINVs, Developers (paying the brokers' professional fee) will not be able to claim the payment as an expense. Thus, developers would likely refuse to release their commission without the issuance of SINVs.
What to do now?
Brokers have to have SINVs printed. While waiting for new SINVs, brokers may convert their existing ORs into SINVs through this process:
1. Submit an inventory of unused ORs to the BIR
2. Strike through the word "Official Receipt" and stamp "Sales Invoice"
These converted ORs may be used until the end of 2024.
Let me reiterate: this requirement applies to ALL SERVICE PROVIDERS including lessors and corporations.
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