Philippines e-invoicing: Countdown to compliance under the BIR EIS

The Philippines’ journey toward a mandatory digital tax environment has reached a critical stage. Initially driven by the Tax Reform for Acceleration and Inclusion (TRAIN) Act and recently formalised by the Bureau of Internal Revenue (BIR), the country is moving from paper-based transactions to a centralised electronic system.

This transition is anchored in the Electronic Invoicing System (EIS), a digital reporting model similar to South Korea’s, where invoice data must be transmitted to the government for review.

The mandate model: E-reporting

The Philippines utilises a Continuous Transaction Control (CTC) model focused on real-time data reporting.

• System: The central platform is the BIR Electronic Invoicing System (EIS).

• Format: Documents must be generated in a structured data format, primarily JSON (or sometimes XML).

• Process: After a business creates an electronic invoice using BIR-compliant software, the invoice data (including sales, receipts, credit/debit notes) must be transmitted to the BIR via API or the EIS portal. This submission must occur within a maximum of three calendar days from the date of the transaction.

• Security: To ensure authenticity, all documents must be secured with a JSON Web Signature (JWS).

Dynamic timeline and the latest extension

Initial pilot and its setbacks

The initial pilot phase for the Philippines' e-invoicing system began in July 2022 with the top 100 large taxpayers. This followed the TRAIN Act, which took effect on 1 January 2018, and originally mandated e-invoicing and e-reporting for taxpayers in e-commerce, large taxpayers, and exporters within the next five years from the TRAIN Law’s effective date, or on or before 1 January 2023.

However, the pilot encountered numerous setbacks, including difficulties with taxpayer onboarding and technical issues with the EIS platform. On 15 November 2023, the BIR therefore issued an advisory to all EIS platform stakeholders, effectively pausing the pilot until further notice.

Resumption of the pilot and rollout of the first mandate phase

Despite the initial challenges encountered, the BIR resumed its B2B e-invoicing pilot at the end of February 2025. According to Revenue Regulation RR 011-2025, issued on 27 February, the expanded pilot now incorporates the Large Taxpayers Service (LTS), as well as e-commerce businesses and exporters of goods and services, and more. The mandatory rollout for Phase 1, incorporating these additional categories, was initially scheduled for 14 March 2026. However, this deadline was extended to 31 December 2026 by Revenue Regulation No. 26-2025 in September 2025. This extension was granted in recognition of the operational adjustments, system reconfiguration and complex transition required by taxpayers.

Businesses, particularly those in the mandated groups, should make use of this extension period to complete their system upgrades, partner with certified software solutions, and ensure they meet the BIR's technical requirements well ahead of the December 2026 deadline.

Future compliance for other taxpayer groups

Compliance for all other taxpayer groups (including POS users and Registered Business Enterprises availing of tax incentives) will follow once the BIR establishes its system capability, with subsequent deadlines determined by future regulations.

What businesses need to know about the new e-invoicing requirements

Understanding the full scope

If a company's branch office falls under the obligation, the requirement extends to the Head Office and all other branch offices. Micro-taxpayers are currently exempted.

Incentives

The BIR offers tax deductions to encourage adoption. Micro and small taxpayers can deduct 100% of their system setup costs, while medium and large taxpayers can deduct 50%.

Other digitalisation initiatives in the Philippines

New customs clearance and cross-border e-invoicing procedures

In parallel to the progress being made on introducing domestic B2B e-invoicing, the Bureau of Customs (BOC) in May 2024 is introducing Pre-border Technical Verification (PTV) and a Cross-border E-Invoicing (CEI) system with the aim of further streamlining customs clearance and invoicing*.

Under these new procedures, foreign exporters will be required to register and issue invoices through the government-operated CEI system for all goods imported by sea or air. Additionally, the PTV system will verify goods' characteristics and ensure compliance with regulatory requirements before imports reach the Philippine border, requiring foreign exporters to engage with accredited testing companies.

Non-compliance with either the CEI or PTV requirements may lead to penalties such as fines, revocation of importer accreditation, and slower customs processing. The full implementation of these systems is expected within two years of the effective date for AO 23-2024.

New VAT obligations for foreign digital service providers

In October 2024, the Philippine Congress passed Republic Act No. 12023, legislation which makes foreign digital service providers liable for a 12% value-added tax (VAT) on services consumed within the Philippines for business-to-consumer (B2C) and B2B transactions. This applies if their gross sales exceed a specified threshold (currently 3 million Philippine pesos or around €44.000). Educational and financial service providers are exempt.

For B2B transactions, the buyer must withhold and remit VAT; for B2C transactions, however, the liability lies with the non-resident digital service provider. Non-resident online marketplaces may also be liable if they control key aspects of the supply chain.

Affected providers must register for VAT and issue invoices. The implementing regulations are expected 90 days after the law takes effect, with VAT obligations commencing 120 days after the regulations are announced. Failure to comply could result in operations being suspended in the Philippines.

To ensure your business remains compliant and to stay informed on the latest developments in all things e-invoicing and e-reporting, we encourage you to sign up for our tax compliance newsletter. For even more timely announcements and insights, be sure to follow us on LinkedIn.

_{*Administrative Order (AO) 23-2024 and the associated guidelines issued in February 2025 by means of Customs Administrative Order (CAO) 001-2025}