NINETEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
)
S.B. No.
SENATE
1721
fei'iinir
of t!)f cvfinr^
23 JAN 23 PI2:0I
RECEIVED
Introduced by SENATOR IMEE R. MARCOS
AN ACT
AMENDING SECTIONS 34, 110, 113, 237-A, 255, 256, AND 257 OF THE 
NATIONAL INTERNAL REVENUE CODE, AS AMENDED, AND FOR OTHER
PURPOSES
EXPLANATORY NOTE
Taxation is the lifeblood of the government, and improving tax collection and 
revenue generation, while eliminating corruption and inefficiency, provide impetus for 
a more perfect state capable of fulfilling the social contract and upholding the welfare 
of the Filipino public.
To ensure that businesses pay their fair share, this measure seeks to implement 
Value-Added Tax Electronic Billing (VAT e-Billing) which shall provide proof that (1) a 
legitimate transaction has taken place; and (2) the business has complied with the tax 
requirements. This compels businesses to pay the VAT in advance, and has the 
advantage of allowing the deduction of implicit VAT payments on purchases from 
overall tax liability, thus avoiding payment of VAT multiple times as an input to other 
goods or services. Adopted from China's fapiao system, VAT e-Billing will ensure 
compliance among businesses in paying VAT and enable real-time monitoring of 
business transactions among enterprises, plugging more than P5 Billion in tax leakages 
at the source.
VAT e-Billing will streamline the Bureau of Internal Revenue (BIR) and allow it 
to re-organize and re-allocate its resources. Further, this system shall increase the 
competitiveness of firms engaged in the productions of intermediary goods and 
services. Further, the use of VAT e-Billing makes the payment of revenue all year round, 
thus, eliminating the traditional peak period, and ultimately allowing for sustainable 
revenue generation to fund vital programs aimed at poverty alleviation and economic 
development.


To ensure the success of VAT e-Billing, the use of blockchain technology is 
sought in order to safeguard the process and protect it from counterfeiting. The use of 
distributed electronic ledgers based on blocks, each of which record a transaction, is 
tamper-proof and transparent. Using an invoicing system on the blockchain will allow 
for seamless payments made automatically between the BIR and the businesses using 
VAT e-Billing.
In view of the foregoing, the immediate passage of this measure is earnestly 
sought.
MARCOS


Iffcf;) ^cnair
of liie r Jiviip
NINETEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
)
SENATE
J 21 
S.B. No. ± (
23 JAN 23 R2:01
RECEIVLOBY;
Introduced by SENATOR IMEE R. MARCOS
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AN ACT
AMENDING SECTIONS 34, 110, 113, 237-A, 255, 256, AND 257 OF THE 
NATIONAL INTERNAL REVENUE CODE, AS AMENDED, AND FOR OTHER
PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled:
SECTION 1. Short Title. - This Act shall be known as the "VAT e-BillIng Act". 
SEC. 2. Declaration of Policy. -
1) To establish an electronic single billing system for value-added tax (VAT) 
purposes and to streamline the requirements for the issuance of invoices
whether for income tax or VAT purposes.
2) To provide for a more uniform billing system for VAT that effectively address 
substantiation requirements and help avoid fraudulent business transactions 
by facilitating audit by the tax collectors.
3) To lay the foundation for a more sophisticated system of tax compliance and 
monitoring of business transactions at the point-of-sale leading to the 
deterrence of tax evasion and development of an institutional framework for 
incentives to taxpayers who will utilize the electronic system and front load 
their tax liabilities.
SEC. 3. Section 34 (A) (1) (b) of the National Internal Revenue Code (NIRC) of 
1997, as amended, is hereby amended to read as follows:
"SEC. 34. XXX:
(A) Expenses. - xxx
(1) Ordinary and Necessary Trade, Business or Professional 
Expenses. -


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(a) In General. - XXX
(b) Substantiation Requirements. - No deduction from gross 
income shall be allowed under Subsection (A) hereof unless the 
taxpayer shall substantiate with [sufficient evidence such os 
officiol receipts and other adequate records] A VAT / NONVAT 
OFFICIAL BILLS AS PROVIDED FOR IN SECTION 113 OF 
THIS CODE, (i) the amount of the expense being deducted, and 
(ii) the direct connection or relation of the expense being deducted 
to the development, management, operation and/or conduct of 
the trade, business or profession of the taxpayer."
SEC 4. Section 114 of the NIRC, as amended, is hereby amended to read as
follows:
"SEC. 110. Tax Credits.
A.
(1)
(a)
(1)
(ii)
(iii)
(iv) 
(V)
(b)
(2)
(a)
(b)
(3)
(a)
Creditable Input Tax. -
Any input tax evidenced by a [VAT invoice or official 
receipt] VAT OFFICIAL BILL issued in accordance with 
Section 113 hereof on the following transactions shall be 
creditable against the output tax:
Purchase or importation of goods:
For sale; or
For conversion into or intended to form part of a finished 
product for sale including packaging materials; or 
For use as supplies in the course of business; or 
For use as materials supplied in the sale of service; or 
For use in trade or business for which deduction for 
depreciation or amortization is allowed under this Code. 
Purchase of services on which a value-added tax has 
been actually paid.
The input tax on domestic purchase or importation of 
goods or properties by VAT-registered person shall be 
creditable:
To the purchaser upon consummation of sale and on 
importation of goods or properties; and 
To importer upon payment of the value-added tax prior 
to the release of goods from the custody of the Bureau 
of Customs.
XXX
A VAT-registered person who is also engaged in 
transactions not subject to the value-added tax shall be 
allowed tax credit as follows:
Total input tax which can be directly attributed to 
transactions subject to value-added tax; and


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(b) A ratable portion of any input tax which cannot be 
directly attributed to either activity.
The term "input tax" means the value-added tax due from or 
paid by a VAT-registered person in the course of his 
trade or business on importation of goods or local 
purchase of goods or services, including lease or use of 
property, from a VAT-registered person, SUBJECT TO 
THE PROVISIONS OF SECTION 113.
The term "output tax" means the value-added tax due on the 
sale or lease of taxable goods or properties or services 
by any person registered or required to register under 
Section 236 of this Code.
(B) 
Excess Output or Input Tax. - If at the end of any taxable 
quarter the output tax exceeds the input tax, the excess 
shall be paid by the VAT-registered person. If the input 
tax exceeds the output tax, the excess shall be carried 
over the succeeding quarter or quarters. Provided, 
however. That any input tax attributable to zero-rated 
sales by a VAT-registered person may at his option be 
refunded or credited against other internal revenue 
taxes, subject to the provisions of Section 112.
(C) 
Determination of Creditable Input Tax. - xxx"
SEC. 5. Sections 113 (A) and (B) of the NIRC, as amended, are hereby amended 
to read as follows:
"SEC.113. Billing and Accounting Requirements for VAT- 
Registered Persons. -
(A) Billing Requirements. - A VAT-registered person shall issue
[1) A VAT bill for every single sale, barter or exchange of goods
or properties; and
(2) A VAT official receipt for every lease of goods or properties,
and for every sale, barter or exchange of services]
1. AN OFFICIAL VAT BILL FOR EVERY SALE, BARTER OR 
EXCHANGE OF GOODS OR PROPERTIES, EVERY LEASE 
OF GOODS OR PROPERTIES, AND FOR EVERY SALE,
BARTER OR EXCHANGE OF SERVICES.
2. SAID OFFICIAL BILL SHALL BE PURCHASED OR 
SOURCED ELECTRONICALLY FROM THE BUREAU OF 
INTERNAL REVENUE AND NO OTHER DOCUMENT 
OTHER THAN SAID OFFICIAL BILL SHALL BE ALLOWED


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AS CLAIM OF INPUT TAX CREDIT. PROVIDED, THAT 
THOSE UNDER THE COMPUTERIZED ACCOUNTING 
SYSTEM OR E-BILLING SHALL BE REQUIRED TO 
CONNECT ELECTRONICALLY TO THE SYSTEM OF THE 
BUREAU OF INTERNAL REVENUE IN ORDER TO ISSUE 
THE OFFICIAL VAT BILL.
(B) Information Contained in the Official VAT bill. - The 
following shall be indicated in the [VAT invoice or VAT offic4al 
receipt] OFFICIAL VAT BILL:
(1) A statement that the seller is a VAT-registered persons, 
followed by his Taxpayer's Identification Number (TIN); and
(2) The total amount which the purchase pays or is obligated 
to pay to the seller with the indication that such amount 
included the value-added tax. Provided, That:
(a) The amount of the tax shall be known as a separate item in
the bill [or receipt];
(b) If the sale is exempt from value-added tax, the term "VAT- 
exempt sale" shall be written or printed prominently on the bill 
[or receipt];
(c) If the sale is subject to zero percent (0%) value-added tax, 
the term "zero-rated sale" shall be written or printed 
prominently on the bill [or receipt};
(d) If the sale involved goods, properties or services some of 
which are subject to and some of which are VAT zero-rated or 
VAT exempt, the bill [or receipt] shall clearly indicate the break­
down of the sale price between its taxable, exempt and zero­
rated components, and the calculation of the value-added tax 
on each portion of the sale shall be known on the invoice [of 
receipt]: Provided, That the seller may issue separate bills [of 
receipts] for the taxable, exempt, and zero-rated components 
of the sale.
(3) The date of transaction, quantity, unit cost and description 
of the goods or properties or nature of the service; and
(4) The name, business style, if any, address and Taxpayer 
Identification Number (TIN) of the purchaser, customer or 
client.
(C) Accounting Requirements. - xxx ^ 
,
[(D) Consequence of Issuing Erroneous VAT Bill or VAT Official
Rcccipt.-
(1) If a person who is not □ VAT registered person issues aft
invoice or receipt showing his Taxpayer Identification Number
(TIN), followed by the word "VAT!!t
(a) The issuer shall, in addition to any liability to other 
percentage taxes, be liable ter


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(1) The tax imposed in Section 106 or 108 without the benefit 
of any input tax credit; and
(ii) A 50% surcharge under Section 248(B) of this Code;
(b) The VAT shall, if the other requiGite information required
under Subsection (B) hereof is shown on thcfnvoicc or receipt^ 
be recognized og on input tox credit to the purchaser under 
Section 110 of this Coder
(2) If a VAT rogistered person issues □ VAT bill or VAT official
receipt for a VAT exempt tronsaction, but foils to display
prominently on the bill or receipt the term 'VAT exempt sale,' 
the issuer shall be liable to account for the tox impooed in
section 106 or 108 as if Section 109 did not appfyv]
(D) Transitional Period. - Notwithstanding Subsection (B) 
hereof, taxpayers may continue to issue VAT bills and VAT 
official receipt for the period [July 1, 2005 to December 31/
2605] JULY 1, 2023 TO DECEMBER 31, 2023 in accordance 
with Bureau of Internal Revenue administrative practices that 
existed [as-ef December 31, 2004].
SEC. 6. Section 237 (A) of the NIRC, as amended, is hereby amended to read 
as follows:
"SEC. 237-A. Electronic Sales Reporting System. - Within five (5) 
years from the effectivity of this Act and upon the establishment 
of a system capable of storing and processing the required data, 
the Bureau shall require taxpayers engaged in the export of 
goods and services, and taxpayers engaged in e-commerce and 
taxpayers under the jurisdiction of the Large Taxpayers Service 
to USE A SYSTEM CAPABLE OF ISSUING ELECTRONIC 
RECEIPTS OR SALES OR COMMERCIAL INVOICES,
COLLECT TRANSACTION RECORDS, AND TRANSMIT THE 
SAME THROUGH THE DESIGNATED ELECTRONIC 
CHANNELS OF THE BUREAU IN THE STANDARD FORMAT 
REQUIRED [electronically report their sales data to the Bureatt 
through the use of electronic point of sales systems,] subject to 
the rules and regulations to be issued by the Secretary of Finance 
upon recommendation of the Commissioner of Internal Revenue:
Provided, That the POINT OF SALE (POS) machines, VALUE- 
ADDED NETWORK (VAN) TERMINALS, fiscal devices, and 
fiscal memory devices WITH CAPACITY TO MAKE SUCH 
TRANSMISSION shall be at the expense of the taxpayers: 
PROVIDED, FURTHER, SUBJECT TO THE RULES AND 
REGULATIONS TO BE ISSUED BY THE SECRETARY OF


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FINANCE, THE COMMISSIONER MAY REQUIRE ANY 
TAXPAYER TO COMPLY WITH THE PROVISIONS OF THIS 
SECTION.
IN SUPPORT OF THE ELECTRONIC SALES REPORTING 
SYSTEM, THE BUREAU OF INTERNAL REVENUE MAY 
GRANT TAX INCENTIVES FOR ELECTRONICALLY 
TRACEABLE PAYMENTS (ETP) IN THE FORM OF 
ALLOWABLE DEDUCTIBLE EXPENSE OF UP TO FIFTEEN 
PERCENT (15 %) OF THE ETP MADE BY THE TAXPAYER.
AN ANNUAL LIMIT ON THE ALLOWED ETP DEDUCTIBLE 
EXPENSE PER TAXPAYER MAY BE SET BY THE 
COMMISSIONER WITH THE APPROVAL OF THE 
SECRETARY OF FINANCE.
ELECTRONICALLY TRACEABLE PAYMENTS REFER TO 
CREDIT CARD, DEBIT CARD, OR OTHER METHODS OF 
PAYMENT WITH A SYSTEM TO VERIFY OR LINK THE 
PAYMENT TO THE IDENTITY OF PAYOR.
"The data processing of sales and purchase data shall comply 
with the provisions of Republic Act No. 10173, otherwise known 
as the 'Data Privacy Act' and Section 270 of the NmC, as 
amended, on unlawful divulgence of taxpayer information and 
such other laws relating to the confidentiality of information.
"The Bureau shall also establish policies, risk management 
approaches, actions, trainings, and technologies to protect the 
cyber environment, organization, and data in compliance with 
Republic Act No. 10175 or the 'Cybercrime Prevention Act of 
2012."
SEC. 7. Section 255 of the NIRC, as amended, is hereby amended to read as
follows:
"SEC. 255. Failure to File Return, Supply Correct and Accurate 
Information, Pay Tax Withhold and Remit Tax and Refund Excess 
Taxes Withheld on Compensation. - Any person required under 
this Code or by rules and regulations promulgated thereunder to 
pay any tax, make a return, keep any record, or supply correct 
and accurate information, who willfully fails to pay such tax, 
make such return, keep such record, or supply correct and 
accurate information, or withhold or remit taxes withheld, or 
refund excess taxes withheld on compensation, at the time or


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times required by law or rules and regulations shall, in addition 
to other penalties provided by law, upon conviction thereof, be 
punished by a fine of not less than [Ten thousand pesos 
(P10,000)l ONE HUNDRED THOUSAND PESOS (P100,000)
BUT NOT MORE THAN TWO MILLION TWO HUNDRED 
THOUSAND PESOS (P2,200,000) and suffer imprisonment of 
not less than one (1) year but not more than ten (10) years.
"Any person who attempts to make it appear for any reason that 
he or another has in fact filed a return or statement, or actually 
files a return or statement and subsequently withdraws the same 
return or statement after securing the official receiving seal or 
stamp of receipt of internal revenue office wherein the same was 
actually filed shall, upon conviction therefore, be punished by a 
fine of not less than [Ten thousand pcGOO (P10,000) but not more 
than Twenty thousand pesos (P20,00Q)] ONE HUNDRED 
THOUSAND PESOS (P100,000) BUT NOT MORE THAN 
TWO MILLION TWO HUNDRED THOUSAND PESOS 
(P2/200,000) and suffer imprisonment of not less than one (1) 
year but not more than three (3) years."
SEC. 8. Section 256 of the NIRC, as amended, is hereby amended to read as 
follows:
"SEC. 256. Penal Liability of Corporations. - Any corporation, 
association or general co-partnership liable for any of the acts or 
omissions penalized under this Code, in addition to the penalties 
imposed herein upon the responsible corporate officers, 
partners, or employees shall, upon conviction for each act or 
omission, be punished by a fine of not less than [Fifty thousand 
pesos (P50,000) but not more than One hundred thousand pesos
(P100,09Q)] TWO HUNDRED THOUSAND PESOS 
(P200,000) BUT NOT MORE THAN TWO MILLION FOUR 
HUNDRED THOUSAND PESOS (P2,400,000)."
SEC. 9. Section 257 of the NIRC, as amended, is hereby amended to 
read as follows:
"SEC. 257. Penal Liability for Making False Entries, Records or 
Reports, or Using Falsified or Fake Accountable Forms. —
"(A) Any financial officer or independent Certified Public 
Accountant engaged to examine and audit books of accounts of 
taxpayers under Section 232 (A) and any person under his 
direction who:


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"(1) Willfully falsifies any report or statement bearing on any 
examination or audit, or renders a report, including exhibits, 
statements, schedules or other forms of accountancy work which 
has not been verified by him personally or under his supervision 
or by a member of his firm or by a member of his staff in 
accordance with sound auditing practices; or 
"(2) Certifies financial statements of a business enterprise 
containing an essential misstatement of facts or omission in 
respect of the transactions, taxable income, deduction and 
exemption of his client; or 
"(B) Any person who:
"(1) Not being an independent Certified Public Accountant 
according to Section 232(B) or a financial officer, examines and 
audits books of accounts of taxpayers; or 
"(2) Offers to sign and certify financial statements without audit;
or
"(3) Offers any taxpayer the use of accounting bookkeeping 
records for internal revenue purposes not in conformity with the 
requirements prescribed in this Code or rules and regulations 
promulgated thereunder; or
"(4) Knowingly makes any false entry or enters any false or 
fictitious name in the books of accounts or record mentioned in 
the preceding paragraphs; or
"(5) Keeps two (2) or more sets of such records or books of 
accounts; or
"(6) In any way commits an act or omission, in violation of the 
provisions of this Section; or
"(7) Fails to keep the books of accounts or records mentioned in 
Section 232 in a native language, English [or Spanish], or to 
make a true and complete translation as required in Section 234 
of this Code, or whose books of accounts or records kept in a 
native language, English [-], and found to be at material variance 
with books or records kept by him in another language; or 
"(8) Willfully attempts in any manner to evade or defeat any tax 
imposed under this Code, or knowingly uses fake or falsified 
revenue official BILLS, receipts. Letters of Authority, certificates 
authorizing registration. Tax Credit Certificates, Tax Debit 
Memoranda and other accountable forms shall, upon conviction 
for each act or omission, be punished by a fine not less than 
[Fifty thousand pesos (P50,000) but not more than One hundred 
thousand pesos (P100,QQQ)] THREE HUNDRED THOUSAND 
PESOS (P300,000) BUT NOT MORE THAN ONE MILLION 
TWO HUNDRED THOUSAND PESOS (Pl,200,000) and suffer


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imprisonment of not less than two (2) years but not more than 
six (6) years.
"If the offender is a Certified Public Accountant, his [certificate]
LICENSE as a Certified Public Accountant shall be automatically 
revoked or cancelled upon conviction.
"In the case of foreigners, conviction under this Code shall result 
in [bis] THEIR immediate deportation after serving sentence, 
without further proceedings for deportation."
SEC. 10. Integration of Block Chain Technology in the Electronic Sates Reporting 
System. - A "blockchain" is a mathematically secured, chronological, and decentralized 
ledger or database. The Bureau of Internal Revenue shall appoint a Technical Working 
Group (TWG) to evaluate and formulate a plan to integrate Block Chain Technology into 
the Electronic Sales Reporting System. The TWG shall include participants from all of 
the following: Three resource persons from the technology industry; three resource 
persons from private sector accounting firms who are lawyers; two resource persons 
from Civil Society Organizations representing consumer rights and/or privacy concerns; 
a resource person from the Department on Information Communications Technology, 
and a resource person from the National Privacy Commission.
SEC. 11. Separability Clause. - If any provision or part hereof, is held invalid or 
unconstitutional, the remainder of the Act or the provision not otherwise affected shall 
remain subsisting.
SEC. 12. Repealing Clause. - Any law, presidential decree or issuance, executive 
order, letter of instruction, administrative order, rule or regulation contrary to, or 
inconsistent with the provisions of this Act is hereby repealed, modified, or amended 
accordingly.
SEC. 13. Effectivity. - This Act shall take effect following its complete publication 
in the Official Gazette or in two (2) newspaper of general circulation.
Approved,