The Philippines' Bureau of Internal Revenue (BIR) has relaxed requirements for businesses updating their invoicing systems to comply with new creditable withholding tax (CWT) rules, allowing certain modifications to proceed without fresh registration or accreditation. Creditable withholding tax is tax withheld at source on income payments that the income recipient may claim as a credit against its own income tax due.

Under Revenue Memorandum Circular No. 112-2026, companies making modifications solely to incorporate CWT information will be classified as making limited system changes, provided the alterations do not materially affect core system functions. The circular clarifies Revenue Regulations No. 6-2026, which requires the separate presentation of CWT on sales invoices where applicable.

"We understand that updating invoicing systems requires time and resources," BIR Commissioner Charlito Martin R. Mendoza said in a statement on Thursday. "That is why we are giving businesses reasonable transition periods to make the necessary adjustments, comply with the new requirements, and avoid unnecessary disruption to their operations," he added.

Transition Timelines

Businesses using computerized accounting systems, computerized books of account, and other electronic invoicing systems have until Dec. 31 to incorporate the required CWT functionality, unless a later date is prescribed. Businesses using cash register machines, point-of-sale systems, and other invoicing systems not covered by mandatory electronic invoicing have until March 31, 2027, to complete the modifications — a cutoff that falls three months after the year-end deadline for electronic systems.

"Businesses may continue using their existing registered invoicing systems during the transition," the BIR said. "For transactions subject to CWT, the prescribed withholding tax phrase and corresponding amount must be stamped, printed, or legibly written on the face of the system-generated invoice before issuance. No such notation is required for transactions not subject to CWT," it added.

The "unless a later date is prescribed" qualifier leaves open the possibility that the bureau will adjust the year-end cutoff for electronic systems, a detail taxpayers with computerized setups will be monitoring.

Manual and Loose-Leaf Invoices

The bureau also clarified that taxpayers using manual and loose-leaf invoices may continue using their unused invoices until fully consumed. "The prescribed CWT phrase and corresponding amount need to be stamped, printed, or written only for transactions subject to withholding," it said. "Taxpayers are not required to surrender unused invoices or obtain a new Authority to Print (ATP) solely because their existing invoice layouts lack a separate CWT field," it added. The ATP clarification spares businesses a step that would otherwise be required to add a CWT field to existing invoice layouts.

Tax Amnesty Bill

Separately, Finance Undersecretary Rolando T. Ligon, Jr. said the Department of Finance (DoF) is fine-tuning the draft general tax amnesty bill. "We still need more information to make sure that the amnesty is successful. We need to address the additional taxes that we need to collect," he told reporters on Monday. The DoF aims to file the bill this year, "and then next year, the hearings will start," he said. General tax amnesties typically allow taxpayers to settle prior tax obligations under eased penalty terms, and Ligon's comments indicate the bill's final terms are still taking shape ahead of filing and next year's hearings.

— Justine Irish D. Tabile, BusinessWorld

Source: BusinessWorld