E-Invoicing in Asia Pacific: Preparing for the BIR’s 2026 Electronic Invoice System Compliance Deadline in the Philippines

What Businesses Operating in the Philippines Must Know Regarding the Adoption of e-Invoicing

The Philippines is advancing with the implementation of the Electronic Invoicing System (EIS), led by the Bureau of Internal Revenue (BIR) to promote widespread use of e-Invoicing. In late 2024, Republic Act 12066, or CREATE MORE, was passed to enhance the country’s appeal as a business hub by making its tax incentive system more competitive, transparent, and investment friendly. Following this, BIR issued Revenue Regulation No. 011-2025 on February 27, 2025, outlining new rules for electronic invoicing and sales reporting. Effective 15 days after publication, the regulation gives large taxpayers and e-commerce businesses until March 2026 to achieve compliance.

Understanding Mandatory E-Invoicing in the Philippines

Decoding the Terminology of the Philippines' New E-Invoicing Regulations

The new regulation aims to modernise the country’s tax system by requiring certain businesses to issue electronic invoices and electronically report their sales data to the BIR. These regulations are issued pursuant to Sections 237 and 237-A of the National Internal Revenue Code of 1997, as amended.

According to the Regulation, an electronic invoice can be defined as "a written account evidencing the sale, exchange or transfer of goods, properties, services and/or lease or the use of properties, issued in the ordinary course of trade or business, using an accounting/invoicing software or system with invoice management tools that is registered and accredited with the Bureau of Internal Revenue (BIR),  containing the vital information as prescribed in the existing rules and regulations."

It further explains that it is a system-generated invoice issued to the buyers electronically in a digital or electronic format. A photo or scanned copy (in any file format) of a paper invoice (physical/manual copy) is not an electronic invoice. 

The act of electronic invoicing refers to the automated process of generating an electronic invoice in a structured invoice data which can be easily extracted electronically from the invoice allowing for automated electronic data processing. It involves the electronic exchange of an electronic invoice that records a transaction between a seller and a buyer. This can be a one-way electronic exchange where the seller sends the electronic invoice to the buyer.

How the E-Invoicing System (EIS) and the Electronic Sales Reporting System work in the Philippines

The Electronic Sales Reporting System refers to the electronic reporting or process of storing, transmitting and/or receiving the electronic invoice data, through direct system-to-system data transfer without manual entry, to the BIR in a structured electronic format.

The EIS portal serves as the platform where businesses electronically submit their sales data. The system requires:

• E-invoices and receipts to be issued through a BIR-compliant electronic invoicing system
• Submission of invoice data in JSON format to allow seamless digitisation and processing by tax authorities
• Validation of invoices through the EIS portal before finalising transactions

The BIR’s upcoming Electronic Sales Reporting System will require certain taxpayers to electronically report their sales data. Head Offices and Branches will also need to comply once the system is in place, based on rules the BIR is yet to release, and must ensure that they implement an invoice reporting system. 

Who Must e-Invoice according to the regulations in the Philippines?

Businesses mandated to issue electronic invoices in a structured invoice data which can be easily extracted electronically from the invoice and can be readily transmitted to the BIR for electronic sales reporting include:

1. Large taxpayers under the BIR’s Large Taxpayers Service
2. Businesses engaged in e-commerce or digital transactions
3. Exporters of goods and services
4. Taxpayers using Computerised Accounting Systems (CAS) or invoicing software
5. Businesses using Point-of-Sales (POS) systems

These taxpayers must issue e-invoices using a BIR-accredited invoice system that allows invoice validation and submission of invoice data in a structured JSON format.

How Taxpayers Engaged in E-commerce in the Philippines are affected by the new mandate

VAT Registration Obligations for Foreign Digital Service Providers

On 2 October 2024, the Philippine Congress enacted Republic Act (R.A.) No. 12023, expanding VAT obligations to include non-residential digital service providers without physical presence in the country. These providers will be subject to a 12% VAT if their services are automated, consumed within the Philippines, and their taxable gross sales exceed 3 million pesos (approximately EUR 47,900) over the past 12 months or are expected to do so in the next 12 months. Educational and financial services are exempt.

For B2B transactions, VAT is remitted by the buyer under a reverse charge scheme, while non-residential providers are directly liable for VAT in B2C transactions. Non-resident marketplaces are also accountable if they oversee key aspects of supply. Affected providers must register for VAT, issue invoices for each sale, and comply with additional regulations set to be announced 90 days after the law takes effect.

e-Invoicing Compliance Requirements for Foreign Digital Service Providers

Similar to other regions in the Asia-Pacific, like Taiwan, e-commerce taxpayers are significantly impacted by the new e-invoicing mandate. E-commerce taxpayers in the Philippines include anyone involved in online businesses, whether formal or informal. These covers selling physical or digital goods (like game items), offering digital services, running platforms like e-marketplaces, or providing on-demand services such as ridesharing or food delivery. It also includes digital content creators earning from ads, subscriptions, or commissions, as well as businesses selling, leasing, or delivering goods and services through online platforms. Essentially, if your business operates online, it’s likely to fall under this category.

Additional Allowable Deductions for Taxpayers using Both Electronic Invoices and Electronic Sales Reporting System

Taxpayers covered under Section 3(A) and 3(B) of these Regulations, including those voluntarily issuing electronic invoices and reporting sales data to the BIR, can claim additional deductions from taxable income. Micro and small taxpayers may deduct 100% of the cost of setting up an electronic sales reporting system, while medium and large taxpayers may deduct 50%. This deduction can only be used once in the taxable year when the system is completed or fully paid. Additionally, importing the electronic sales reporting system will be exempt from taxes.

Penalties for Non-Compliance with the requirement to issue an electronic invoice in the Philippines

Failure to comply with mandatory e-invoicing can result in penalties under Sections 264 and 264-A of the Tax Code. Businesses must issue electronic invoices and report sales data through the EIS portal to avoid legal repercussions.

Compliance and Benefits of E-Invoicing in the APAC Region

Implementing a digital transformation of invoicing processes helps businesses:

• Ensure tax compliance and avoid penalties
• Digitise and automate their invoice system
• Improve real-time reporting of sales data to the BIR
• Reduce administrative costs and paperwork
• Streamline operations through service providers offering e-invoicing solutions (such as eezi)

Preparing for the March 2026 Deadline

Since 1 July 2024, the BIR has been expanding the implementation of its electronic invoicing system, and businesses should take the following steps to ensure compliance:

1. Determine if your business is required to issue electronic invoices
2. Register with the BIR’s EIS portal and integrate a compliant invoice system
3. Ensure that all issued e-invoices follow the JSON format for seamless validation
4. Work with accredited service providers to implement an effective e-invoicing system
5. Train employees on how to issue electronic invoices and report invoice data

By preparing early, businesses in the Philippines can smoothly transition to the mandatory e-invoicing system and improve their overall tax compliance.

Final Thoughts on the e-Invoicing System in the Philippines

The shift to electronic invoicing marks a significant digital transformation in the Philippines’ tax system. Businesses that embrace e-invoices and adopt a compliant e-invoicing system will benefit from improved efficiency, reduced administrative burdens, and seamless invoice reporting. With the March 2026 deadline approaching, businesses must act now to ensure they are ready for the future of tax compliance. Reach out to the eezi team to ensure compliance for your business in the APAC region.