Use of the VAT invoice by VAT-Registered Persons Who Are Also Engaged in Exempt Transactions

March 3, 1988 REVENUE MEMORANDUM CIRCULAR NO. 12-88 SUBJECT : Use of the VAT invoice by VAT-Registered Persons Who Are Also Engaged in Exempt Transactions TO : All Internal Revenue Officers and Others Concerned A VAT-registered person who is also engaged in non-taxable (exempt) transactions, is not allowed to issue VAT invoice on said non-taxable (exempt) transactions. He should use separate invoices or receipts for the taxable and exempt operations. A VAT INVOICE can be used only for sales of goods or services subject to VAT. The invoicing requirements are prescribed in Section 21 of Revenue Regulations No. 5-87 which is quoted hereunder for the guidance of all concerned: "Sec. 21. Invoicing requirements . (a) Invoices and/or receipts . All VAT-registered persons who sell goods or services shall, for every sale, issue an invoice or receipt . The invoice should contain the information prescribed in Sections 108(a) and 238. Only VAT-registered persons can print the VAT registration number in their invoice or receipt. Any invoice bearing the VAT registration number of the seller shall be considered as a "VAT Invoice" . Value-added tax, whether indicated as a separate item or not in the "VAT Invoice" shall be allowed as input tax credit to those liable to value-added tax . All purchases covered by invoices other than "Vat Invoice" shall not be entitled to input taxes . " The output tax may or may not be billed separately in the invoice or receipt . If the tax was not billed separately in the invoice or receipt, the total amount shown in the invoice or receipt shall consist of the gross selling price or gross receipts, as the case may be, and the amount intended to cover the tax . The seller is obligated to bill separately the tax if required to do so by the buyer. " If the taxable person is also engaged in exempt operations, he should issue separate invoices or receipts for the taxable and exempt operations . A "VAT Invoice" shall be issued only for sales of goods or services subject to value-added tax imposed in Sections 100 and 102. However, a BOI-registered pioneer enterprise can consolidate its sales in the VAT invoice and compute the value-added tax in accordance with Section 6(b), these regulations . The invoice of a BOI-registered enterprise should also indicate the percentage of exemption . " The invoice or receipt shall be prepared at least in duplicate, the original to be given to the buyer and the duplicate to be retained by the seller as part of his accounting records ." acd It is desired that this Circular be given as wide a publicity as possible. (SGD.) BIENVENIDO A. TAN, JR. Commissioner