Difference Between a Sales Invoice and an Official Receipt

Every business entity is mandated by the Bureau of Internal Revenue (BIR) to issue an official receipt and/or sales invoice for every sale of goods, properties or services. The purpose of which is to ensure that the appropriate tax will be remitted to the government.

In this article, we will discuss the difference between a sales invoice and official receipt, as well as when to issue one.

VAT vs Non-VAT

Before we discuss the difference between a sales invoice and an official receipt, let’s first understand the two (2) types of taxpayers: (1) VAT and (2) Non-VAT. To learn the difference between VAT and Non-VAT, you may read this article Difference Between VAT and Non-VAT.

Types of Transaction

Once you understand the difference between VAT and Non-VAT, the next step is to know the type of transaction that your business is engaged to, such as:

  1. Sale of goods or properties
  2. Sale of services or lease of properties

For better understanding, we divided this article into two (2) sections. The first one is for VAT Taxpayers and the second one is for Non-VAT Taxpayers.

VAT Taxpayers

1. Engaged in Sale of Goods or Properties

If you are a VAT registered taxpayer engaged in sale of goods or properties, you will need to issue the following:

a. VAT Sales Invoice

  • Sales invoice is issued by the seller to the buyer as written evidence on sale of goods or properties in an ordinary course of business, whether cash or on account (credit).
  • Sales invoice list down the details of the items or goods sold. It will also be the basis of the output tax liability of the seller and the input tax claim of the buyer.

b. VAT Official Receipt

  • Official receipt is issued by the seller to the buyer as acknowledgement on receipt of cash and/or payment of goods sold.
  • When you issue an official receipt, indicate the sales invoice number to which the collection pertains to.

Note: When the taxpayer is engaged in sale of goods or properties, it will need to issue a sales invoice when the goods is sold to the buyer, whether cash or on credit. If the sale was on credit, the seller will then issue an official receipt upon receipt of cash as payment from the buyer. If the sale was paid on cash, the cash invoice is enough.

2. Engaged in Sale of Services

If you are a VAT registered taxpayer engaged in sales of services, you will need to issue the following:

a. VAT Official Receipt

  • Official receipt is issued by the seller to the buyer as written evidence on sale of services or leasing of properties, as well as acknowledgement on collection of cash payment on services rendered.
  • It serves as basis of the output tax liability of the seller and input tax claim of the buyer.

Note: When the taxpayer is engaged in sale of services or leasing of property, it is not necessary to issue a sales invoice since there are no items or goods involved.

Non-VAT Taxpayers

1. Engaged in Sale of Goods or Properties

If you are a Non-VAT registered taxpayer engaged in sale of goods or properties, you will need to issue the following:

a. Non-VAT Sales Invoice

  • Sales invoice is issued by the seller to the buyer as written evidence on sale of goods or properties in an ordinary course of business, whether cash or on account (credit).
  • Sales invoice list down the details of the items or goods sold. It will also be the basis of the percentage tax liability of the seller.

b. Non-VAT Official Receipt

  • Official receipt is issued by the seller to the buyer as acknowledgement on receipt of cash and/or payment of goods sold.
  • When you issue an official receipt, indicate the sales invoice number to which the collection pertains to.

Note: When the taxpayer is engaged in sale of goods or properties, it will need to issue a sales invoice when the goods is sold to the buyer, whether cash or on credit. If the sale was on credit, the seller will then issue an official receipt upon receipt of cash as payment from the buyer. If the sale was paid on cash, the cash invoice is enough.

2. Engaged in Sale of Services

If you are a Non-VAT registered taxpayer engaged in sale of services, you will need to issue the following:

a. Non-VAT Official Receipt

  • Official receipt is issued by the seller to the buyer as written evidence on sale of services or leasing of properties, as well as acknowledgement on collection of cash payment on services rendered.
  • It serves as basis of the percentage tax liability of the seller.

Note: When the taxpayer is engaged in sale of services or leasing of property, it is not necessary to issue a sales invoice since there are no items or goods involved.

I hope this article has been helpful for you. Feel free to leave your questions or clarifications in the comment box below.

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Comments

  1. Cindy Tipones says:

    What if the business is in line with Services. and we issued Sales Invoice for such services. Can we issue a collection receipt if the above transaction was paid? Will there be a difference between collection receipt and an Official Receipt?

  2. pauliza f. calsa says:

    my business permit says i’m a retailer although my company name includes services. bir issued atp to us “service invoice” instead of “sales invoice”. now i would like to know how to fill-up the service invoice whenever we have a 1-lot transaction for civil works.
    thank you.

    • Hi Ms. Pauliza, thank you for your question. What’s the nature of your business, is it sale of goods or services? If you are engaged in sale of service, you are going to issue “Official Receipt” and not invoice. Invoice applies to businesses engaged in sale of goods.

  3. Romeo L. Yusi Jr. says:

    Hi,
    Above you mentioned that when the taxpayer is engaged in sale of goods or properties, it will need to issue a sales invoice when the goods is sold to the buyer, whether cash or on credit. If the sale was on credit, the seller will then issue an official receipt upon receipt of cash as payment from the buyer. My question is: Is it really mandatory to issue an official receipt even though a sales invoice has already been issued during the sale of goods on credit? If yes, is there any legal justification for the said requirement? What if the company is no longer existing and has surrendered the official receipts to the BIR what document can the said closed company issue as proof of payment of its receivables before closure? Thank you in advance.

    • Hi Mr Romeo L. Yusi, Jr
      Thank you for raising the questions. We updated our article for some changes based on our understanding of Revenue Regulation No 18 – 2012 of the Bureau of Internal Revenue and inputs from the BIR Seminar we attended. If you’re a seller of goods, you may issue either cash invoice (for cash sales of goods) or charge invoice (for sale of goods on credit). For charge invoice, you may issue either collection or cash receipt upon receipt of payment. Without valid official receipt and/or sales invoice, you cannot claim the payment as expense or deduction.
      We hope we were able to answer your questions. Thank you.

      • Romeo L. Yusi Jr. says:

        Thank you for your reply. However, my problem has something to do with the issuance of a Sales Invoice for sale of goods on credit. Now, the buyer wants to pay but the seller can no longer issue an official receipt because according to the seller all its official receipts have been destroyed during a flood and it already stopped its operation and did not print new sets of official receipts. My question now is: How can the seller claim the payment as deductible expense if the no official receipt will be issued by the seller? Will it be sufficient if the seller would just issue an acknowledgement receipt or quitclaim and sign the buyer’s check voucher? I ask this because according to your above article there is a need for the issuance of an official receipt and I quote “Note: When the taxpayer is engaged in sale of goods or properties, it will need to issue a sales invoice when the goods is sold to the buyer, whether cash or on credit. If the sale was on credit, the seller will then issue an official receipt upon receipt of cash as payment from the buyer. If the sale was paid on cash, the cash invoice is enough.”

  4. What Revenue Regulation No? is the basis for the industry engage in services issued only official receipts and if industry engage in goods will issue a Sales Invoice and Official Receipt upon payment received?

  5. Is there any problem if I bought office supplies and the supplier did not issue official receipt, just delivery receipt only?

    • Hi Len. It depends, you may claim it as expense or deduction as long as the delivery receipt is registered to the BIR. Otherwise, it’s not valid as expense if its not registered with the BIR and not valid for input tax. Hope that helps

  6. Mary Rose Gatlabayan says:

    There are a lot of receipts mentioned from your answers to above queries but what are the receipts that non-VAT businesses, in line with sales of goods, can exist without? I am non-VAT and my business is in line with sales of goods. The printer told me that what I need are SALES INVOICE & COLLECTION RECEIPTS. As I understand, I should issue sales invoice (whether cash payments or on credit) and official receipt (upon receipt of cash if sale is on credit).
    1.) Can a small-scale business use sales invoice alone for all transactions?Is the official receipt REQUIRED after the sales invoice?
    2.) Is cash invoice equivalent to sales invoice?
    3.) Is charge invoice similar to collection receipt?

    Thanks for your help

    • Hi Ms Mary Rose, thank you for your comment/question. Our article is based on the general rule. To answer your questions:
      1) You may issue collection receipt upon collection.
      2) Cash invoice is equivalent to cash sale of goods. Sales Invoice is equivalent to sale of goods on credit.
      3) No. collection receipt is issued upon receipt/collection of payment.

  7. Hi,

    Whats the difference between collection receipt and official receipt? , i was issued initially with official receipt from bir then my accountant told me i should change it to collection receipt, i’m engaged with sales of good (general merchandise). is there a new ruling?

  8. Hello Sir/Madam,

    What if received rental deposit and rental advance, what is the form to be issued, if we issue an OR it will become a VATable transaction thus, collected rental deposit and advance will become a revenue while in reality its still a liability. Also should the tenant withhold tax on the rental deposit/advances? Could we issue an acknowledgment receipt only since this is just an advance payment?

    • Hi Ms Benny, thank you for your comment/question. You may issue a BIR Registered Acknowledgement or Collection Receipt for the amount received on the deposit. For the advance payment, as a general rule, it is already subject to withholding tax upon receipt of payment.

  9. Sir, one of our customers argued that based on RR No. 18-2012 Section 2.2, when issuing the official receipt, we need to indicate the total amount based on our sales invoice issued (we give them a 30-day payment term, thus the issuance of charge sales invoice). This means that, even though upon collection they have already taken the 1% withholding tax, which means the check payment is less than 1% W/Tax, they still require us to issue an official receipt which is equivalent to our charge sales invoice amount. Is it correct? The way I see it, if our official receipt indicates the gross amount (including the W/Tax amount), then this total amount is again subjected to the income tax which would mean we are paying remitting tax more than what we are supposed to do so. I hope you can enlighten us on this concern. Thank you.

  10. mary joy sta.ana says:

    Hello Sir,

    I am engaged in a non-vat business in line with the sale of goods. my printer printed Sales Invoice and Collection Receipt. I am not engaged in credit of goods, as everything is sold in cash. Is the collection receipt mandatory? Please clarify. Thanks!

  11. Hi! I am newly hire employee, in-charge in recording our company expenses, i was just confused about claiming of input tax to an official receipt? Is official receipt valid for claiming input tax. ?

    • Hi Azeneth, thank you for leaving a question. According to the recent BIR Seminar we’ve attended from a private accounting organization, when the sale is service and official receipt is issued, then you may claim the input tax if it’s VAT registered. If the sale is goods which issues sales invoice and official/collection receipt, the input tax claimed comes from the sales invoice.

  12. hi good day, what if a supplier was a NON-Vat Registered Company Provider of Services, delivers goods to us but they only issued Delivery Receipt (w/o TIN details) and Official Receipt (indicating “not allowed to claim input tax”), is that allowed? and what would be the impact on books? thank you and more power.

  13. We are Non-VAT registered taxpayer engaged in Sale of Services. I would like to know what Tax Code can I find this statement

    “ When the taxpayer is engaged in sale of services or leasing of property, it is not necessary to issue a sales invoice since there are no items or goods involved.”

    I hope you can help us on this.

  14. hello po and good day! i just want to know if the OR we issued upon payment of our clients’ accounts will also be subject to tax? said account was already reported to bir through the issuance of a charge invoice..
    we are quite confused because one bir personnel informed us that we should pay tax for both the OR and CI we issued. parang doble ata po babayaran since we have already reported the CI and OR was only for the receipt of the said payment..
    hope to hear from you..thanks po and more power.

  15. Karen Clavio says:

    Hi! I would like to ask if a business in line w/ room rentals specifically bedspacing / dormitory should issue an official receipt to tenants? If so, do tenants need to provide a bir form 2307 before they issue an O.R.?

Your inputs and questions are always welcome. Please use the comment box below..

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