Formal Requirements for Export Sales Invoices to Qualify for VAT Exemption
Context
In the Philippines, the sale of goods and services for export may qualify for VAT zero-rating, provided that the strict requirements of the Bureau of Internal Revenue (BIR) are met.
Invoicing requirements
To qualify for VAT exemption, an export sales invoice must:
– Be issued in foreign currency (USD, EUR, etc.),
– Clearly state that it is an export sale (zero-rated),
– Contain all mandatory details (customer’s name, address, and TIN if applicable, description of goods/services, amount, zero VAT rate),
– Date of transaction
– Comply with the BIR-approved invoice numbering sequence (with the information printed at the bottom portion either ATP, Permit Number or AC Number).
Foreign currency collection
The exemption is only valid if:
– Payment is received in foreign currency through an authorized bank,
– Proof of inward remittance (Bank Certificate of Inward Remittance) is available,
– Export proceeds are properly recorded in the accounts.
Supporting documentation
The company must retain:
– The commercial contract or customer’s purchase order,
– Customs documents (Bill of Lading, Export Declaration, etc.),
– Bank statements confirming receipt in foreign currency,
– The export sales invoice compliant with BIR requirements.
✅ Key takeaways
– Invoice exclusively in foreign currency,
– Ensure collection through an authorized bank,
– Clearly indicate zero-rated nature of the invoice,
– Keep all commercial, banking, and customs documentation.
In summary
The benefit of VAT exemption relies on two essential conditions: invoicing in foreign currency and collecting in foreign currency, with complete and compliant documentation.
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