The Bureau of Internal Revenue (BIR) eased compliance with the new creditable withholding tax (CWT) invoicing requirements by allowing taxpayers to continue using their existing unused invoices until fully consumed.
In a statement Thursday, BIR said Revenue Memorandum Circular (RMC) No. 112-2026, dated Oct. 22, clarified the implementation of Revenue Regulations (RR) No. 006-2026, which requires separate presentation of CWT in sales invoices when applicable.
Under the circular, existing unused manual and loose-leaf invoices may continue to be used until fully consumed.
For transactions subject to CWT, taxpayers need only stamp, print, or legibly write “Less: Withholding Tax”, “Less: Creditable Withholding Tax”, or “Less: CWT” and the corresponding amount on the invoice.
No such notation is required for ordinary business-to-consumer sales and other transactions not subject to CWT.
Taxpayers are also not required to stamp all remaining invoice booklets in advance, surrender unused invoices, or secure a new Authority to Print (ATP) solely because their existing invoices lack a separate CWT field.
However, newly printed manual and loose-leaf invoices must include the prescribed CWT line item.
For businesses using computerized accounting systems (CAS), computerized books of accounts (CBA), and other electronic invoicing systems covered by mandatory electronic invoicing, the deadline to incorporate the required CWT functionality is December 31, 2026, unless a later date is prescribed.
Meanwhile, taxpayers using existing cash register machines (CRMs), point-of-sale (POS) systems, and other invoicing systems not yet covered by mandatory electronic invoicing generally have until March 31, 2027, to complete the necessary modifications, subject to any earlier compliance date prescribed by the BIR.
During the transition, businesses may continue using their existing registered systems, provided that the required CWT information is stamped, printed, or written on invoices for transactions subject to withholding.
The circular also allows modifications made solely to accommodate CWT information to be treated as limited system changes, which do not automatically require new registration or accreditation, provided that the changes do not materially affect the system’s core functions.
Applicable notification and reporting requirements for minor system modifications remain in effect.
The BIR further clarified that not all business-to-business transactions are automatically subject to CWT.
The requirement depends on whether the buyer or payor is legally required to withhold tax. For transactions not subject to CWT, no withholding tax amount needs to be indicated in the invoice.
The circular provides that the absence of a CWT amount does not, by itself, invalidate an invoice or result in the disallowance of input VAT or otherwise allowable business expenses, provided that the applicable legal and documentary requirements are satisfied.
To ensure proper disclosure of withholding tax information, buyers or payors required to withhold CWT must communicate the applicable withholding details to sellers before invoices are finalized. Sellers may rely in good faith on the information provided, unless they know or have reasonable grounds to believe it is incorrect.
This clarifies the respective responsibilities of buyers and sellers and helps prevent unwarranted compliance findings arising from incomplete or incorrect information.
BIR Commissioner Charlito Martin Mendoza said the clarification seeks to prevent unnecessary costs and administrative burdens while giving businesses reasonable time to comply with the new invoicing requirements.
“We want taxpayers to comply with the rules without unnecessary difficulty or expense. Businesses should not have to discard unused invoices or immediately replace their existing systems just to meet a new requirement. At the BIR, we must make compliance straightforward and practical for taxpayers,” Mendoza said. (PNA)
