BIR Ruling [DA-268-06]

April 21, 2006 BIR RULING [DA-268-06] Ms. Cecile R. Patricio SM Corporate Offices Building A 1000 Bay Boulevard, SM Central Business Park Bay City, Pasay City M a d a m : This refers to your letter dated December 23, 2005 requesting permission to use the current receipt format generated by your Point of Sale (POS) machines, whereby the price of an item is inclusive of VAT and the details of the VATable transactions are indicated in the footer of the tape receipt, while for VAT-exempt item, the details of its transaction are printed after the subtotal and before the total of all the items purchased. It appears that the current format of your POS tape receipt as a requirement for the accreditation of POS software, James P. Magee and Associates (JPMA) POS Designer, version 3.2F51 was submitted to the National Machine Office Accreditation Board (NMAB) prior to the implementation of Revenue Regulations No. 16-2005; that NMAB has already approved the accreditation of SM Mart, Inc., as a "pseudo-supplier" of said POS software under Accreditation No. 116-21354858-000105 since JPMA has no legal personality to act as the supplier of the software and the format of the receipts/invoices the software generates; that it is your understanding that the invoicing requirement provided under Revenue Regulations No. 16-2005 requires that all taxpayer-users who have been issued Permit to Use Sales Machine to re-configure their machines in conformity with the new VAT law until December 31, 2005, i.e., the amount of tax to be shown as a separate item in the invoice or receipt; that you believe that the current receipt format generated by your POS machines substantially complies with the subject requirement, in the sense that it can print the amount of output tax shown as a separate item and can indicate separately the items which are VATable and VAT-exempt in the invoice, which is common to most local retailers; that furthermore, the following concerns can be addressed by the aforesaid format, since a) Consumers are already aware that prices displayed are complete, and that there are no added charges included; b) Consumers have enough information on prices to make comparison between products; and c) Consumers can immediately determine the actual price especially for items on promotion. that different revenue district offices during Tax Mapping Verification Drive prescribed different formats; that any enhancement to be made in your POS machines will be tested and approved by JPMA, which is based in Colorado, USA; and that it will take some time for testing and evaluation as well as the application and deployment of the enhanced system to all your stores nationwide using the same software, such that a) Individual items that are strictly tax exclusive require major adjustment on the merchandise system and POS to effect new prices; and b) There is a need to retag all items with new barcodes to present that the item price is tax exclusive. In reply thereto, please be informed that Section 11(B)(2)(a) of Republic Act (R.A.) No. 9337 Section 4.113-1(B) of Revenue Regulations No. 16-2005 provides that "Sec. 11. Section 113 of the same Code, as amended, is hereby further amended to read as follows : "Sec. 113. Invoicing and Accounting Requirements for VAT-registered Persons . "(A) . . . "(B) Information Contained in the VAT Invoice or VAT Official Receipt. The following information shall be indicated in the VAT invoice or VAT official receipt: "(1) A statement that the seller is a VAT-registered person, followed by his Taxpayer's Identification Number (TIN); ESCTIA "(2) The total amount which the purchaser pays or is obligated to pay to the seller with the indication that such amount includes the value-added tax: Provided, That: "(a) The amount of the tax shall be shown as a separate item in the invoice or receipt; "(b) If the sale is exempt from value-added tax, the term 'VAT-exempt sale' shall be written or printed prominently on the invoice or receipt: "xxx xxx xxx" A careful scrutiny of the above-cited section vis--vis the current receipt format adopted by the SM Mart, Inc. reveals that all the information required in Section 11 of R.A. No. 9337 are indicated in the current receipt format generated by SM's POS machines except that the details of the VATable transactions as well as the amount of the tax are indicated in the footer of the tape receipt. On the other hand, for VAT-exempt item, the details of its transaction are printed after the subtotal and before the total of all the items purchased. This Office holds that there is indeed substantial compliance with the law. SUCH BEING THE CASE, this will therefore serve as an authority and permission for SM Mart, Inc. to use the current receipt format generated by its POS machines as accredited by the National Machine Office Accreditation Board. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service