PROOF OF PURCHASE

It's always a good business practice to issue receipts. Here's why.

The Reformed Value Added Tax Law (Republic Act 9337) requires all VAT-registered sellers to issue receipts even when the customers are not asking for them. Under the law, receipts must be issued for every sale of goods or services regardless of the amount.

The Bureau of Internal Revenue has the authority to suspend the operations of businesses found violating the law. The temporary closure, the shortest of which is for five days, may be lifted only upon compliance of the requirements in the closure order.

The issuance of receipts protects the interest of both the seller and the consumer, and promotes transparency as all purchases are officially documented. This documentation is the sellers' evidence when applying for input tax credits against output taxes.

Another advantage to issuing receipts is the speed with which complaints can be addressed because there is proof of purchase. Receipts also come in handy when a defective item needs to be repaired, replaced, or refunded.

To consumers who are being charged for the taxes, the official receipt shows them how much of the transaction goes to taxes. This is why in addition to the total amount of purchase, the RVAT Law also requires retailers to show the amount of tax as a separate item in the receipt and to clearly label VAT-exempt and zero-rated items.

The best way to illustrate this is in the grocery list, which typically includes both VAT-able items like canned goods and VAT-exempt ones such as fresh vegetables and eggs. Proper receipts classify VAT-able and VAT-exempt items, and clarify how much tax is being paid. Note too that the VAT is not added on top of the purchase price but incorporated in it. So if the purchase price of VAT-able items is P500, the official receipt breakdown should show that the base price is P446.43 and the VAT is P53.57.

Receipts show consumers if the amount in the price tag is the same as what they paid for. When there is a discrepancy between the price tag and the encoding in the cash register, the Price Tag Law says the consumer should always pay for the lower price.


By Roselynn Jane Villa