VAT and invoicing in the Philippines (2026): rates, rules, EIS

Value-added tax (VAT) in the Philippines is charged on sales of goods and services and on imports, under the National Internal Revenue Code (the Tax Code), and administered by the Bureau of Internal Revenue (BIR, Kawanihan ng Rentas Internas) of the Department of Finance. The Ease of Paying Taxes (EOPT) Act, Republic Act No. 11976, which took effect on 22 January 2024, changed invoicing and filing for every business. This guide covers what applies in 2026: rates, registration, returns, invoice rules and the move to electronic invoicing. Figures are as of October 2026.

VAT in the Philippines at a glance

Since the EOPT Act, VAT on services is based on gross sales and billing, not on payments received, so you account for VAT when you bill, the same as for goods.

Foreign digital services: under Republic Act No. 12023, non-resident digital service providers selling to customers in the Philippines must register for VAT. If the customer is VAT-registered, the customer accounts for the VAT under the reverse charge; otherwise the provider remits it.

Who must register for VAT

• Threshold: you must register for VAT if your gross sales in the past 12 months exceeded PHP 3,000,000, or are expected to exceed it in the next 12 months. The threshold is adjusted to its present value every three years using the consumer price index.
• Below the threshold: you pay 3% percentage tax on gross quarterly sales instead of VAT, and you issue non-VAT invoices.
• How: register with the BIR, online through the Online Registration and Update System (ORUS) or at your Revenue District Office (RDO).

Returns, payment and penalties

• Quarterly VAT return: BIR Form 2550Q, filed and paid within 25 days after the end of each quarter (for example by 25 October for July to September). Monthly VAT declarations are no longer required.
• Electronic filing: returns are filed electronically (through eFPS or eBIRForms); manual filing is allowed when the electronic platforms are unavailable. Under the EOPT Act you can file and pay anywhere, and the 25% penalty for filing with the wrong office no longer applies.
• Late payment: micro and small taxpayers pay a 10% civil penalty instead of the regular 25%, and interest of 6% a year, half the regular rate of 12%. Information returns filed late cost them PHP 500 each, up to PHP 12,500 a year.

There is no separate annual VAT return: the four quarterly returns are the whole cycle.

Invoices after the EOPT Act

From 27 April 2024, the invoice is the primary evidence of a sale of goods or services, and the official receipt became a supplementary document. An official receipt issued for a sale is treated as no invoice at all, unless an unused receipt was converted by stamping it “Invoice” and adding the required details. Non-issuance of an invoice can bring a fine of PHP 1,000 to PHP 50,000 and two to four years’ imprisonment.

When to issue one:

• VAT-registered sellers: a VAT invoice for every sale, lease or exchange of goods and services, whatever the amount.
• Non-VAT sellers: a non-VAT invoice for every sale of PHP 500 or more, whenever the buyer asks for one, and at the end of the day if small sales below PHP 500 add up to more than PHP 500.

What a VAT invoice must show (Section 113 of the Tax Code, as amended, and Revenue Regulations No. 7-2024):

1. 1the word “Invoice” printed prominently (you may call it “Sales Invoice”, “Service Invoice”, “Billing Invoice” and so on); each type has its own serial numbers
2. 2a statement that the seller is VAT-registered, followed by its TIN
3. 3the date, the serial number and the seller’s registered name and business address
4. 4the description, quantity and unit cost of the goods or the nature of the service
5. 5the total amount, with a statement that it includes VAT and the VAT shown as a separate item
6. 6for sales of PHP 1,000 or more to a VAT-registered buyer, the buyer’s name, address and TIN
7. 7if one invoice covers VATable, VAT-exempt and zero-rated sales, a breakdown of each; separate invoices must be marked “VAT-Exempt Sale” or “Zero-Rated Sale”
8. 8from mid-October 2026, under Revenue Regulations No. 6-2026, the creditable withholding tax, if any, as a separate item; old stock may be used up if stamped “Less: Withholding Tax”

Printed invoices need an Authority to Print (ATP) and must be printed by an accredited printer. A buyer can still claim input VAT from an invoice with minor gaps, but not if it lacks the sales amount, the VAT amount, both parties’ registered names and TINs, the description, or the date. A seller that is not VAT-registered but issues a VAT invoice owes the VAT without input credit plus a 50% surcharge.

Record keeping: keep books of accounts and other records for five years from the day after the filing deadline of the return concerned.

Electronic invoicing and sales reporting (EIS)

Section 237-A of the Tax Code, as amended by the CREATE MORE Act (Republic Act No. 12066), and Revenue Regulations No. 11-2025 require certain taxpayers to issue electronic invoices in structured data that can be transmitted to the BIR, and later to report sales electronically.

The deadline was extended to 31 December 2026 by Revenue Regulations No. 26-2025, and the Commissioner may extend it again. Invoices printed from software that cannot report the data electronically count as ordinary manual invoices. Taxpayers that comply can deduct an extra 100% (micro and small) or 50% (medium and large) of the cost of setting up their electronic sales reporting system.

The BIR runs an Electronic Invoicing and Sales Reporting System, with a taxpayer portal, a certification portal and an API transmission service. On 14 September 2026 it warned that it had not accredited any e-invoicing service provider, so be wary of anyone claiming to be “BIR-accredited”; the accreditation requirements for providers are set out in Revenue Memorandum Circular No. 110-2026.

Calculation example in pesos

A VAT-registered trading company has this quarter:

Output VAT PHP 60,000 minus input VAT PHP 24,000 = PHP 36,000, payable with Form 2550Q within 25 days after the quarter. To find the VAT inside a price that includes it: PHP 112,000 × 12 ÷ 112 = PHP 12,000.

A non-VAT business with quarterly sales of PHP 400,000 pays 3% percentage tax: PHP 12,000.

Late payment between businesses

When a contract sets no interest, Philippine courts generally award legal interest of 6% a year on sums due, counted from judicial or extrajudicial demand where the amount can be established with reasonable certainty (the Supreme Court’s guidelines in Nacar v. Gallery Frames, applying since 1 July 2013). Put an interest clause in your terms if you want a different rate, and send a written demand when an invoice is overdue.

Common mistakes

1. 1Still issuing official receipts for sales instead of invoices.
2. 2Leaving out the buyer’s TIN on sales of PHP 1,000 or more to VAT-registered clients.
3. 3Charging VAT without being VAT-registered, which brings the VAT plus a 50% surcharge.
4. 4Mixing VATable and exempt sales on one invoice without a breakdown.
5. 5Missing the 25-day deadline for Form 2550Q.
6. 6Assuming software invoices are electronic invoices. Without electronic reporting to the BIR, they count as manual invoices.

How Clientlly helps

Clientlly numbers invoices sequentially per series and puts your country’s VAT rate on every invoice, with credit notes linked to the original invoice. You can invoice in multiple currencies, add a card payment link, see when a client opened the invoice, set up recurring invoices and let automatic reminders go out 3, 14 and 30 days after the due date. Scanned receipts have the VAT read automatically, sales and purchase VAT books are kept per rate, including exports, and VAT reports with Excel and PDF exports are ready for you and your accountant. See invoicing and how to get paid faster.

Clientlly is not accredited by the BIR as an e-invoicing service provider and is not connected to its Electronic Invoicing and Sales Reporting System. If you are covered by the e-invoicing mandate, you need a BIR-compliant solution for that part; ask your RDO what registration your invoicing system needs.