Economy

Posted on October 12, 2015 09:25:00 PM

BIR now focusing on POS systems,

cash registers Let’s Talk
Tax
Edward L.
Roguel

Last month, the Bureau of Internal Revenue (BIR) padlocked 33 branches

being operated by a subsidiary of popular cargo and courier services
provider for allegedly unpaid taxes. According to a news report, the BIR
said that the company “modified point-of-sale (POS) machines without
prior notification.”

Issuing BIR-registered official receipts and invoices is very important to

the BIR since this is one of its methods to ensure that the sales of
businesses are properly subjected to tax.

In 2012, the BIR issued a regulation on the accreditation of printers of invoices and official
receipts, and in 2013, it required to all taxpayers engaged in business to issue new sets of manual
official receipts (OR) and invoices. This year, one of the focuses of the BIR is monitoring cash
register machines (CRM), point of sale (POS) systems and other sales machine/receipting
software.

Last month, the BIR issued Revenue Memorandum Circular (RMC) No.56-2015 which clarified
that CRMs/POS are required to be tamper-proof. Sales records contained therein are not allowed
to be altered or amended, except in some cases. Accordingly, the taxpayer is required to submit a
written justification along with supporting journal entries to
the BIR in cases involving amendments in the monthly sales
report generated by these machines.

On the other hand, in June 2015, the BIR issued RMC No. 30-2015 which prohibits the issuance
of Provisional Permit to Use (PTU) to prospective and new CRMs, POS and other sales
machines/receipting software. In line with this, all BIR offices concerned were directed to
process all Provisional PTUs and covert the same to Final PTUs on or before July 31, 2015.
Accordingly, if taxpayers are still using provisional PTU, they will be considered invalid.
Moreover, new applications for accreditation of said suppliers, distributors, dealers and vendors
shall now be processed by the BIR national office only.

Likewise, to ensure that all POS/CRMs in use by business establishments are properly registered,
the BIR issued RMC No. 36-2015. This RMC requires all concerned taxpayers to submit an
Inventory List, as of June 30, 2015, of all CRMs, POS, Special Purpose Machines (SPMs) and/or
any other machine generating sales invoices/receipts. The deadline for the submission of the said
list was July 31. Failure to comply will not only result in penalties provided under the Tax Code,
but also revocation of the PTU, immediate post evaluation of CRM/POS/SPM and inclusion in
the priority audit of the BIR.

The BIR is not only concerned about registration and accreditation of POS/CRM/SPM but also
with the types of paper and information contained therein.

Since most of the POS/CRMs use thermal paper, which means the information printed on them
may disappear after days or months. Taxpayers engaged in business, however, are required to
maintain their books of accounts and other documents supporting their reported levels of income
and expenses for a period of 10 years. To address this, the BIR issued Revenue Regulations (RR)
No. 10-2015 that mandates the use of non-thermal paper for all POS, CRMs and other
invoice/receipt generating machine. Accordingly, all new business registrants are barred from
using thermal paper.

Those currently using thermal paper are required to transition to non-thermal paper. The BIR
recognizes the cost involved in transitioning and provides a grace period, depending on the date
of registration of the machines. Those machines registered starting July 1, 2014 onwards shall
have until July 1, 2018 to comply. Those registered between July 1, 2013 to June 30, 2014 are
given until July 1, 2017, and those registered prior to July 1, 2013 must comply by Sept. 1, 2016.

While a transition period has been provided, many taxpayers, especially owners of convenience
stores, groceries and supermarkets, among others, are concerned because this would significantly
affect their businesses since the cost of converting to non-thermal paper is quite high. They argue
that most of their customers are not engaged in business, and therefore, not required to maintain
ORs for 10 years. Moreover, the information contained in the thermal paper that they issue to
customers lasts for months, serving the needs of a consumer who may want to keep a receipt
only long enough to complain about goods they purchased. Likewise, most establishments using
CRMs/POS could issue BIR-related manual invoices and ORs if requested by their customers.
With these arguments, they hope the BIR gives them some consideration.

In addition, I understand that there are thermal papers that are capable of retaining their data for
10 years. The question now is whether the BIR would allow those taxpayers to continue using
the same.

On the other hand, Section 5 of RR No. 10-2015 also provides that the information required to be
indicated on the ORs/ invoices generated from CRM/POS/other similar machines includes (1)
taxpayer’s (TP) registered name; (2) TP’s business name/style; (3) a statement that the taxpayer
is VAT- or non-VAT-registered, followed by the TIN and 4-digit branch code; (4) machine
identification number; (5) detailed business address where such ORs/invoices shall be used; (6)
date of transaction; (7) serial number of the ORs/invoices printed prominently; (8) a space
provided for the name, address and TIN of the buyer; (9) description of the items/goods or nature
of service; (10) quantity; (11) unit cost; (12) total cost; (13) VAT amount; (14) for mixed
transactions, the breakdown of VATable sales, VAT amount, zero rated sales, and VAT- exempt
sales; (15) The phrase “This document is not valid for claim of input tax” in bold letters shall be
conspicuously printed at the bottom of the non-VAT ORs/invoices; (16) the word “exempt” shall
be indicated prominently at the face of the non-VAT principal ORs/invoices whose transactions
are not subject to VAT or percentage tax; and (17) the breakdown of sales subject to percentage
tax and exempt sales on the non-VAT principal ORs/invoices, if applicable.

The information on the accredited suppliers is also required to be printed at the bottom of
invoices or official receipts such as: (1) name, address and TIN of the accredited supplier of
CRM/POS/other similar machines; (2) accreditation number and the date of accreditation of the
accredited supplier; and (3) BIR final permit to use number. Even the phrase “This
invoice/receipt shall be valid for five years from the date of the permit to use” and a space to
write certain information with regard to senior citizen customers, if applicable, are also required
to be indicated in OR/invoices generated from POS/CRM.

Basically, all information required to be contained in manual OR/invoices is also required from
those generated by the POS/CRM. This settles the issue of whether the OR/invoices generated
from POS/CRMs could be validly used by the purchasers as support for their expenses and
especially, input VAT.

Taxpayers using POS/CRM are given until Oct 31 to reconfigure their machines and software to
comply with Section 5 of RR No. 10-2015. However, some taxpayers are complaining about the
additional cost involved in modifying the POS system. A one-month grace period may also not
be sufficient to modify their systems. Another concern is whether affected taxpayers may request
an extension. The regulations provide for an extension of the not more than six months subject to
the approval of the concerned BIR office but, so far, this applies if the enhancements of the
systems are required to be undertaken abroad.

Taxpayers do understand that there is a need to improve our tax system to expand government
revenue. The changes in our tax system, however, should be in manner that will not impose an
added burden on taxpayers on top of their duty to pay taxes. We can only hope that the BIR in
performing its duties always bears in mind that a good tax system should meet the basic
conditions of simplicity, adequacy, fairness, transparency, and administrative ease.

Edward L. Roguel is a partner with the Tax Advisory and Compliance division of Punongbayan
& Araullo.