Tax Articles

In 2018, Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion (TRAIN) Law, introduced the mandatory use of electronic receipts, sales and commercial invoices, in lieu of manual receipts, sales and commercial invoices, subject to rules and regulations to be issued by the Secretary of Finance. TRAIN law likewise introduced the mandatory electronic reporting of sales data to the Bureau of Internal Revenue (BIR) through the use of electronic point of sales system within five (5) years from the effectivity of the law, and upon the BIR’s establishment of a system capable of storing and processing the required data.

However, five (5) years after the effectivity of the TRAIN Law, the use of electronic invoicing and electronic sales reporting system has not been fully implemented. While certain taxpayers were identified for the pilot implementation of the system in 2022, we have not heard of any successful development since then.

The pilot implementation has faced challenges and technical issues with the BIR’s electronic invoicing platform. For one, no pertinent guidelines were issued to guide the taxpayers in complying with their obligations under the program. Participant-taxpayers have raised concerns on costs and technical integration to resolve system compatibility issues. And for those who initially complied, they have experienced errors and/or delays in the response of the system on their sales data transmission.

When CREATE MORE was subsequently passed into law in 2024, it retained the proposed shift from the use of manual invoicing system to the use of electronic invoicing and electronic sales reporting system envisioned in TRAIN Law, and retained as well essentially the same conditions for its full implementation as set forth in TRAIN Law.

In implementing the provisions of CREATE MORE, the Department of Finance (DOF) thus issued Revenue Regulations (RR) 11-2025 under which certain taxpayers are already made to mandatorily comply with the use of electronic invoicing within one (1) year from the effectivity of the said regulations, or until March next year. Ony recently, the DOF however extended the mandatory compliance to December next year citing as reasons the operational adjustments required of taxpayers, including system reconfiguration and transition to electronic invoicing.

Electronic Invoicing is defined as the automated process of generating an electronic invoice in a structured invoice data which can be easily extracted electronically from the invoice, allowing automated electronic data processing. It involves the electronic exchange of an electronic invoice that records a transaction between a seller and a buyer. An electronic invoice is a system-generated invoice in a structured invoice data which can be easily extracted electronically and its data can be readily transmitted electronically to the BIR for electronic sales reporting.

On the other hand, Electronic Sales Reporting System is defined as 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 question to ask now is, how well are we ready to fully implement this envisioned shift from the manual invoicing system to the use of electronic invoicing and electronic sales reporting system? How ready is the BIR to fully establish a system capable of storing and processing the required data for the full implementation of electronic sales reporting system? This is the very condition laid down by law as a requirement for the full implementation of the system.

Apparently, our experience with the pilot implementation of the automated system would suggest, to a considerable extent, that we are not yet capable, at least for the time being, for its full implementation. The BIR itself appears to acknowledge this limitation, as evidenced by its decision to extend the deadline for full implementation by another year.

In fact, even in more technologically advanced countries, the adoption of electronic invoicing and electronic sales reporting system has not been seamless. Many jurisdictions have confined implementation to specific transactions or designated covered taxpayers due to the complexities and challenges involved in applying the system across all sectors and transaction types.

There is no doubt that automation enhances efficiency in the documentation of business transactions and tax reporting. Real-time data capture, improved audit trails, and streamlined compliance processes are certainly among its perceived advantages. However, our experience with the pilot implementation demonstrates that we are not yet ready for full automation.

Perhaps, we may need to improve our technical infrastructure, institutional capacity, and taxpayer preparedness. We need more time and strategic approach for system testing, stakeholder education, infrastructure enhancement, and the issuance of clear and comprehensive implementation guidelines before we can fully avail of the benefits of full automation without unduly burdening taxpayers or overwhelming the tax administration system.