Let’s Not Get Into Double-Trouble

Tax laws say VAT-registered taxpayers need to provide:
1. VAT invoice for every sale, barter, or exchange of goods or properties; and
2. VAT official receipt for every lease of goods or properties and every sale, barter or exchange of services.

Supreme Court has concluded, in various cases, these documents should not be confused to refer to the same thing or be used interchangeably.

Failure to comply with these requirements may result in drawbacks from the Bureau of Internal Revenue (BIR); they may disallow the input tax claimed as credits against output tax due. BIR may impose penalties, which can lead to an investigation known as “Oplan Kandado” conducted on those who have deliberately failed to issue invoices or official receipts to document their transactions.

VAT advice always says: taxpayers must submit relevant documents necessary to support all covered transactions. Sometimes that means two documents were issued but in essence both documents pertain to the same transaction. People are asking “If you have issued both an official receipt and an invoice for the same transaction, can the taxing authorities hold the taxpayer liable for deficiency taxes or penalties?”

The answer is, double documents may raise red flags. Obviously completely illegal for two parties to issue an invoice with a lower value for tax purposes and issue a second one with a higher value for billing purposes. However, it is a different case where the taxpayer has rightfully declared transactions (in two documents) and paid what is due to the government.

Euro VAT Refund, Inc. is here navigate your legal questions and assist your business with the correct VAT invoicing procedures. Contact our VAT experts today for more details.

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