Special InTAX: June 2024 Issue 1 | Volume 2

Bureau of Internal Revenue

The Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular (RMC) No. 65-2024, dated 14 June 2024, clarifying certain issues relative to the amendment introduced by Republic Act (RA) No. 11976 or the "Ease of Paying Taxes Act" (EoPT Law) on Output Vat Credit on uncollected receivables [Section 110(D) of the National Internal Revenue Code of 1997, as amended (Tax Code)]. 

• The phrase "after the lapse of the agreed upon period to pay" means that the buyer, to whom goods or properties were sold, bartered or exchanged or to whom a property has been leased, or to whom service has been rendered upon written promise to pay the money owed and the passed on VAT at a certain period and where such period or extended date, as the case may be, has lapsed without the buyer having fulfilled the promise. (Q&A No. 2)
• Only the seller of goods and/or services may deduct the output VAT which corresponds to the uncollected receivables originating from the sales on account that transpired upon the effectivity of RR No. 3-2024 from the output VAT of the next quarter after the lapse of the agreed upon period to pay. (Q&A No. 3)
• Q&A No. 4 provides for the requisites that must be present before a seller can credit on uncollected receivables. On the other hand, Q&A No. 5 provides that for purposes of claiming output VAT credit on uncollected receivables, mere lapse of the agreed upon period to pay even without any effort on the part of the seller to collect the sales on account shall entitle the seller of output VAT credit (subject to the conditions under Q&A No. 4).
• The seller may not necessarily automatically claim the output VAT credit on the uncollected receivable especially so if the likelihood of collectability is high. (Q&A No. 6)
• The claim for output VAT credit on uncollected receivables shall be on the next quarter, after the lapse of the agreed upon period to pay (see illustrative example in Q&A No. 7).
• The corresponding output VAT of the subsequently collected or recovered receivables previously claimed as VAT credit shall be reported and declared in the taxable quarter in which the recovery or collection is made (see illustrative example in Q&A No. 8). In case of failure to declare, the penalties under existing rules and regulations shall apply. 
• The corresponding input tax claimed by the delinquent buyer shall not be allowed as input VAT credit the moment the seller claims output VAT credit on such uncollected receivable. (Q&A No. 9)
• Q&A No. 10 provides that the seller shall stamp "Claimed Output VAT Credit" on the duplicate/triplicate copy/ies (seller's copy) of the corresponding invoice issued for the uncollected receivable. In case there is a partial payment on the said uncollected receivable, the amount collected therefrom, and the balance of the uncollected receivable shall also be indicated. The seller is not precluded from issuing supplementary sales documents on top of the stamping of “Claimed Output VAT Credit” on the invoice to serve as proof and basis of recording the same in the books of accounts of the seller. On the other hand, Q&A No. 11 provides that the seller is required to provide the buyer a copy of the invoice stamped with the phrase "Claimed Output VAT Credit" and credit memo or credit note to the buyer so that the latter can adjust and deduct the corresponding input VAT claimed accordingly. In case the seller failed to provide such documents, the buyer can voluntarily reverse its claimed input VAT in the QVR.
• The buyer shall be liable for the deficiency VAT due including applicable statutory penalties if it was found out during audit by the BIR or if the buyer decides to amend its QVR to reflect such adjustment. (Q&A No. 12)
• Q&A No. 13 provides for the work-around presentation of the output VAT credit in the QVR of the seller and the buyer while Q&A No. 14 provides how should the sale be declared on the Summary List of Sales (SLS). On the other hand, Q&A No. 20 provides for the work-around presentation of the output VAT of recovered or subsequently collected receivables in the QVR.
• Q&A No. 15 provides who are disqualified to avail output VAT tax credit on uncollected receivables.
• If the goods were returned during the agreed upon period to pay and the output VAT is not yet paid, the return is treated as a sales return and therefore a deduction from gross sales in the quarter where the goods were returned. (Q&A No. 16)
• If the goods were returned and accepted by the seller but the claim for output VAT credit has been made, such shall be treated as sales return but for purposes of VAT, no deduction on sales and output VAT shall be allowed since the claim for output VAT credit has already been made. (Q&A No. 17)
• In case of partial or full recovery of uncollected receivable, the output VAT pertaining to that partial collection shall accrue and must be added to the output VAT of the seller during the period of recovery. (Q&A No. 18)
• The seller is not required to issue an invoice upon the recovery of previously uncollected receivable. The seller shall stamp the phrase "Recovered" in the Invoice that is the origin of the transaction that was previously declared as uncollected and the amount collected, if partial, on the same duplicate/triplicate copy/ies (seller's copy) of the corresponding invoice issued for the uncollected receivable. (Q&A No. 19)
• The output VAT credit on uncollected receivables shall only apply to sales of goods and/or services on account that transpired upon the effectivity of RR No. 3-2024. (Q&A No. 21)

On the same day, the BIR issued RMC No. 66-2024 to clarify that taxpayers can convert unused Official Receipts/Billing Statement/Statement of Account/Statement of Charges into Invoices/Billing Invoices. They are also required to submit Inventory Report related to these conversions on or before July 31, 2024; and Notice on the renaming of Official Receipt/Billing Statement/Statement of Account/Statement of Charges within 30 days from the completion of machine/system reconfiguration/ enhancement or on December 31, 2024, whichever comes first. 

• Taxpayers shall have the option to submit their Inventory Report and/or Notice being required under RR No. 7-2024 electronically: a) via email through Taxpayer Registration-Related Applications (TRRA) Portal which is accessible in the BIR Website under the eServices section (refer to Annex A or Annex B) via direct email of the Inventory Report and Notice to the Compliance Section of the Revenue District Office (RDO).
• Taxpayers without email or internet access may still manually submit their Inventory Report and Notice to the Compliance Section of the RDO where the concerned Head Office or Branch is registered.

Here are the links to the full text of the issuances: RMC No. 65-2024 and RMC No. 66-2024.