Revenue Regulations · RROther

RR No. 12-2023

Bureau of Internal RevenueIndependent research copyOpen source document

Document type: RR
Number: 12
Year: 2023
Text quality: ok

Source PDF

Official document hosted by the Bureau of Internal Revenue

Document text

Reference copy · verify against the official source

REVENUE REGULATIONS NO. 12-2023 issued on October 2, 2023 implements Section 237 of the National Internal Revenue Code (NIRC) of 1997, as amended, relative to the issuance of receipts or sales or commercial invoices by Agricultural Producers. All persons subject to an internal revenue tax shall, at a point of each sale and transfer of merchandise or for services rendered valued at One Hundred Pesos (₱ 100.00) or more, issue duly registered receipts or sales or commercial invoices. However, the Commissioner of Internal Revenue may, in meritorious cases, exempt any person subject to internal revenue tax from compliance with the issuance of receipts or sales or commercial invoices. For ease of doing business, the Commissioner exempts Agricultural Producers from the issuance of principal and supplementary receipts or invoices on their sale of Agricultural Food Products, provided, that the gross sales/receipts for the year shall not exceed One Million Pesos (₱ 1,000,000.00). Provided, further, however, that Agricultural Producers shall record each sale transaction in a Simplified Sales Book containing the following information: a. date of transaction; b. description of goods sold or services rendered; c. registered name, registered address, and Taxpayer Identification Number (TIN) of the purchaser if engaged in business; d. amount of sales; e. amount of tax withheld, if any, and the f. net amount received Provided, finally, if the annual gross sales/receipts exceed One Million Pesos (₱ 1,000,000.00) at any time during the taxable year, the Agricultural Producer shall be required to issue official receipts/sales invoices for every subsequent transaction valued at ₱ 100.00 or more. For this purpose, the Agricultural Producer, for the first year of business operations or one year from registration, shall be allowed to purchase and use BIR-printed receipts or BIR-printed invoices from the Revenue District Office (RDO) where they will register pursuant to Section 6 of the Regulations. The Agricultural Producer shall thereafter be required to issue official receipts/sales invoices printed pursuant to an Authority to Print (ATP). The Agricultural Producer shall still be exempt from the issuance of receipt or invoice even if he or she derives income from the sale of goods or services other than Agricultural Food Products as described in the Regulations, provided that, the annual aggregate gross sales/receipts shall not exceed One Million Pesos (₱ 1,000,000.00). Provided further, the primary activity of the Agricultural Producer shall be the sale of Agricultural Food Products and that the amount of sales from other goods or services shall not exceed thirty percent (30%) of the aggregate sales or receipts of the Agricultural Producer for a given taxable year. The buyer or purchaser who is engaged in trade or business shall issue a Certificate of Income Payment Not Subject to Withholding Tax (BIR Form No. 2304) or Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) for each purchase transaction, in accordance with Section 9 of the Regulations, to the Agricultural Producer in two (2) copies indicating the transaction date, registered name, address, TIN of the payor (buyer) and payee (seller). The issued BIR Form No. 2304 or 2307 shall be constituted and treated as the substituted official receipt/sales invoice for purposes of the Regulations. It shall likewise serve as evidence of purchases made to substantiate claims for deductible expenses of the buyer or purchaser engaged in trade or business for tax purposes. Agricultural Producers shall register once with the BIR pursuant to Section 236 of the Tax Code, as amended. In addition, the Simplified Sales Book to be used by the Agricultural Producers in recording the details of sale transactions (in accordance with Section 4 of the Regulations) shall likewise be registered with the BIR within the prescribed period to register as indicated in Revenue Memorandum Circular (RMC) Nos. 29-2019 and 3-2023, as may be applicable. A simple logbook or notebook can be used as a Simplified Sales Book. All Simplified Sales Books shall be kept and preserved by the Agricultural Producer for a period of ten (10) years reckoned from the day following the deadline in filing a return, or if the return is filed after the deadline, from the day from the date of the filing of the return, for the taxable year when the last entry was made in the books of accounts. Provided that, within the first five (5) years reckoned from the day following the deadline in filing a return, or if filed after the deadline, from the date of the filing of the return, for the taxable year when the last entry was made in the books of accounts, the taxpayer shall retain hardcopies of the books of accounts, including subsidiary books and other accounting records. Thereafter, the taxpayer may retain only an electronic copy of the hardcopy (paper) of the books of accounts, subsidiary books and other accounting records in an electronic storage system which complies with the requirements set forth under Section 2-A of Revenue Regulations (RR) No. 5-2014. Agricultural Producers shall file Quarterly and Annual Income Tax Return and pay Income Tax due, if any, on the prescribed deadline. Any taxes withheld by the buyer or purchaser as supported by a BIR Form No. 2307 can be used as tax credit by the Agricultural Producer. Income payments made by buyers or purchasers engaged in trade or business to Agricultural Producers not exceeding the cumulative amount of Three Hundred Thousand Pesos (₱ 300,000.00) within the same taxable year shall be exempt from Withholding Tax. In this case, the buyer or purchaser engaged in trade or business is required to issue BIR Form No. 2304 to Agricultural Producers per purchase transaction. Income payments made to Agricultural Producers which will exceed the cumulative amount of Three Hundred Thousand Pesos (₱ 300,000.00) within the same taxable year, shall be subject to Withholding Tax at a rate of One Percent (1%). In this case, the buyer or purchaser engaged in trade or business shall issue a BIR Form No. 2307 to Agricultural Producers pursuant to pertinent existing revenue issuances. The buyer or purchaser engaged in trade or business shall file Quarterly Remittance Return of Creditable Income Taxes Withheld (Expanded) [BIR Form No. 1601-EQ], together with the Quarterly Alphabetical List of Payees (QAP), whether actually subjected to or exempted from Withholding Tax in accordance with RR No. 11-2018.

Research aid

Issuance analysis

Structured from the available issuance text · Other

RR No. 12-2023 exempts Agricultural Producers whose annual gross sales/receipts do not exceed ₱1,000,000 from issuing principal and supplementary receipts or invoices on sales of Agricultural Food Products; instead, they must record each sale in a Simplified Sales Book. If annual gross sales exceed ₱1,000,000, they must issue official receipts/sales invoices for subsequent transactions of ₱100 or more. Buyers engaged in trade or business must issue BIR Form 2304 or 2307 per purchase, and income payments to Agricultural Producers are exempt from withholding tax up to ₱300,000 cumulative per taxable year, with payments above that subject to 1% withholding tax.

Purpose

To implement Section 237 of the NIRC of 1997, as amended, by exempting qualifying Agricultural Producers from the requirement to issue receipts or sales/commercial invoices for ease of doing business, and to prescribe the substitute recording, registration, withholding, and filing rules that apply instead.

In brief

Exempts Agricultural Producers with annual gross sales up to ₱1 million from issuing receipts/invoices on sales of Agricultural Food Products if they record sales in a Simplified Sales Book, and sets ₱300,000/1% withholding tax rules and BIR Form 2304/2307 requirements for buyers.

Keywords

Agricultural ProducersAgricultural Food Productsreceipts or sales or commercial invoicesSimplified Sales Book₱1,000,000 gross sales threshold₱300,000 withholding tax exemption1% withholding taxBIR Form No. 2304BIR Form No. 2307BIR Form No. 1601-EQAuthority to Print (ATP)BIR-printed receipts or invoices

Key points

Agricultural Producers are exempt from issuing principal and supplementary receipts or invoices on sales of Agricultural Food Products, provided their gross sales/receipts for the year do not exceed ₱1,000,000.
While exempt, Agricultural Producers must record each sale transaction in a Simplified Sales Book showing the date, description of goods/services, purchaser's registered name, address and TIN (if engaged in business), amount of sales, tax withheld (if any), and net amount received; a simple logbook or notebook may be used.
If annual gross sales/receipts exceed ₱1,000,000 at any time during the taxable year, the Agricultural Producer must issue official receipts/sales invoices for every subsequent transaction of ₱100 or more; in the first year of operations they may use BIR-printed receipts/invoices from the RDO, and thereafter ATP-printed invoices are required.
The exemption also covers income from goods or services other than Agricultural Food Products, provided annual aggregate gross sales/receipts do not exceed ₱1,000,000, the primary activity is the sale of Agricultural Food Products, and sales from other goods or services do not exceed 30% of aggregate sales for the taxable year.
Buyers or purchasers engaged in trade or business must issue BIR Form No. 2304 or BIR Form No. 2307 (in two copies) for each purchase transaction; these certificates are treated as the substituted official receipt/sales invoice and serve as evidence of purchases to substantiate the buyer's deductible expenses.
Income payments by buyers engaged in trade or business to Agricultural Producers up to ₱300,000 cumulative within the same taxable year are exempt from withholding tax (buyer issues BIR Form 2304 per transaction); payments exceeding that cumulative amount are subject to 1% withholding tax (buyer issues BIR Form 2307).
Agricultural Producers must register once with the BIR under Section 236 of the Tax Code, register their Simplified Sales Book with the BIR within the prescribed period under RMC Nos. 29-2019 and 3-2023, and preserve the book for ten years (hardcopies for the first five years, electronic copy thereafter per RR No. 5-2014).
Agricultural Producers must file Quarterly and Annual Income Tax Returns and pay any income tax due; taxes withheld by buyers as supported by BIR Form 2307 may be claimed as tax credit.

Forms referenced

BIR Form No. 2304 (Certificate of Income Payment Not Subject to Withholding Tax) — issued by buyers in two copies per purchase transaction when income payments do not exceed the ₱300,000 cumulative threshold; treated as substituted official receipt/sales invoice.
BIR Form No. 2307 (Certificate of Creditable Tax Withheld at Source) — issued by buyers when cumulative income payments exceed ₱300,000 (1% withholding); supports the Agricultural Producer's tax credit and the buyer's deductible expense claims.
BIR Form No. 1601-EQ (Quarterly Remittance Return of Creditable Income Taxes Withheld (Expanded)) — filed by the buyer together with the Quarterly Alphabetical List of Payees (QAP), covering payees whether actually subjected to or exempted from withholding tax, per RR No. 11-2018.

Tax types

Income tax — Agricultural Producers must file Quarterly and Annual Income Tax Returns and pay any income tax due; creditable withholding evidenced by BIR Form 2307 may be applied as tax credit.
Withholding tax (creditable/expanded) — income payments to Agricultural Producers up to ₱300,000 cumulative per taxable year are exempt; payments exceeding that are subject to 1% withholding tax, with the buyer filing BIR Form 1601-EQ.

Affected taxpayers

Agricultural Producers subject to internal revenue tax whose gross sales/receipts for the year do not exceed ₱1,000,000.
Agricultural Producers whose annual gross sales/receipts exceed ₱1,000,000 at any time during the taxable year, who must issue official receipts/sales invoices for subsequent transactions.
Buyers or purchasers engaged in trade or business that purchase from Agricultural Producers, who must issue BIR Forms 2304/2307 and file BIR Form 1601-EQ with the QAP.