Completing the digital trail: Understanding e-invoicing compliance

Gone are the days when keeping up with invoices meant keeping up with piles of paper. The Bureau of Internal Revenue (BIR) continues to embrace digitalization by taking another step toward a more technology-driven tax compliance system through Revenue Memorandum Circular (RMC) 98-2026.

Understanding the key provisions of RMC 98-26 can help businesses prepare for the electronic invoicing requirements and support timely compliance with applicable tax regulations.

Revenue Regulations (RR) 8-2022 first laid down the guidelines for implementing Section 237 of the Tax Code, covering electronic receipts and invoices and the electronic transmission of sales data to the BIR. It also introduced the Electronic Invoicing/Receipting System (EIS), under which covered taxpayers would develop a Sales Data Transmission System capable of transmitting the prescribed sales data.

Following the enactment of the CREATE MORE Act, RR 11-2025 further refined the rules. It requires electronic invoices to contain structured data that can be readily extracted and electronically transmitted to the BIR. It also clarified that an invoice generated by a computerized system but merely printed on paper does not qualify as an electronic invoice if the system cannot electronically report the relevant sales and invoice data. In short, digital creation alone does not make an invoice truly electronic.

RMC 98-26 now draws the line more clearly by identifying the features an invoice must have before it may properly be called “electronic.” Under RMC 98-26, an invoice qualifies as electronic only if three requirements are met. First, it must be generated in a structured electronic format through duly registered, approved or accredited accounting or invoicing software.

Second, it must be issued and transmitted to the customer digitally, for example, by email, online access, QR code, mobile application or web-based platform. Third, its data must be capable of electronic extraction, processing and transmission to the BIR for sales-reporting purposes.

Accordingly, creating an invoice in Microsoft Word, Microsoft Excel, Google Docs, Google Sheets or a similar productivity application does not make it an electronic invoice for tax purposes. A system-generated invoice that is simply printed and handed to the customer likewise falls short if the system cannot issue it electronically to the buyer and report the required sales data electronically to the BIR. A PDF may look digital, but appearances do not satisfy the rules.

The BIR recognizes that electronic invoices may still be printed for reference or record-keeping, including business-to-consumer transactions where electronic transmission is impracticable, inconvenient or impossible, provided that the original invoice was generated and can be issued electronically and the other requirements are satisfied.

Furthermore, RMC 98-26 reiterates the 31 December 2026 deadline for covered taxpayers to comply with the electronic invoicing requirement. These include small, medium and large taxpayers engaged in e-commerce or internet transactions, taxpayers under the Large Taxpayers Service; taxpayers classified as large under the Ease of Paying Taxes Act and RR 8-2024, and taxpayers using a Computerized Accounting System (CAS), a Computerized Books of Accounts with electronic invoicing or other invoicing software. However, micro taxpayers are not covered by the mandate.

It also makes an important distinction between electronic invoicing and electronic sales reporting as separate obligations.

Covered taxpayers must comply with electronic sales reporting only once the BIR issues the implementing policies, guidelines and procedures for that requirement.

RMC 98-26 also introduces important administrative steps. Taxpayers required to issue electronic invoices must first secure a Permit to Issue (PTI) Electronic Invoice from the BIR. The PTI is distinct from the Permit to Use or Acknowledgment Certificate for a CAS, since authority to operate a computerized system does not, by itself, authorize the issuance of electronic invoices. As of writing, no issuance concerning the PTI requirements has yet been published.

Covered taxpayers must also obtain an EIS Certification confirming that their systems can electronically extract, process and transmit sales data in accordance with BIR technical standards. The certification must be secured within six months from the issuance of the PTI. Otherwise, the PTI may be revoked. A Permit to Transmit, meanwhile, becomes relevant only when the BIR notifies or directs taxpayers to comply with electronic sales reporting under Section 237-A.

Digitalization does not remove the basic obligation to issue an invoice. When electronic invoicing is prevented by system downtime, internet connectivity problems, power interruptions, cybersecurity incidents, force majeure, or similar circumstances prevent electronic invoicing, taxpayers must issue a duly authorized manual invoice.

Once the system is restored, these manual invoices must be replaced with corresponding electronic invoices bearing the reference numbers of the manual invoices.

Corrections also require a clear audit trail. An issued electronic invoice cannot simply be deleted, altered or modified. Decreases must be documented through a duly authorized Credit Note/Memo, while increases require a new electronic invoice.

RMC 98-26 therefore makes the direction clear: e-invoicing is not simply about going paperless. It requires a structured, digitally transferable and BIR-ready invoicing environment. With the Dec. 31, 2026 deadline approaching, covered taxpayers should start preparing now, because in digital tax compliance, being system-ready is far better than being caught offline.

Treb Jersey Basco is a supervisor from the Tax Group of R.G. Manabat & Co. (KPMG in the Philippines), a Philippine partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. The firm has been recognized as a Tier 1 in Transfer Pricing Practice and in General Corporate Tax Practice by the International Tax Review. For more information, you may reach out to Treb Jersey Basco or Eugene Pulga through [email protected], social media or visit https://kpmg.com/ph/en.

This article is for general information purposes only and should not be considered as professional advice to a specific issue or entity. The views and opinions expressed herein are those of the author and do not necessarily represent KPMG International or KPMG in the Philippines.