Invoicing for Overseas Transactions

Invoicing for overseas transactions in the Philippines involves several additional considerations compared to domestic invoicing. Here's a detailed guide to ensure compliance and efficiency:

Steps for Invoicing Overseas Transactions

1. Obtain Necessary Registrations:
   • Ensure your business is registered with the BIR and has the necessary export licenses from relevant authorities, such as the Department of Trade and Industry (DTI) or the Philippine Economic Zone Authority (PEZA).
2. Understand VAT Implications:
   • Under Revenue Regulations No. 13-2018, export sales are typically zero-rated for VAT purposes. This means that while no VAT is charged to the overseas customer, the sale must be reported as zero-rated.
3. Use BIR-Approved Sales Invoice:
   • Even for overseas transactions, use a BIR-approved sales invoice. Ensure your invoices comply with the format and details required by the BIR.

Key Details to Include on an Overseas Sales Invoice

A BIR-approved sales invoice for overseas transactions should include the following details:

• Taxpayer’s Registered Name and Business Name/Style (if any)
• A statement indicating the taxpayer is VAT or Non-VAT registered, followed by the TIN and 4-digit Branch Code
• Business Address
• Date of Transaction
• Serial Number of the sales invoice
• Name, Address, and TIN of the Buyer (if available)
• Description of the Items/Goods
• Quantity of the Items/Goods
• Unit Cost
• Total Cost
• VAT Amount (indicate zero-rated for export sales)
• Breakdown of Sales (clearly indicate zero-rated sales)
• Currency and Exchange Rate (if applicable)
• Shipping and Handling Details
• Terms of Payment
• Customs and Import Duty Information (if applicable)

Additional Considerations

1. Currency and Exchange Rates:
   • Clearly state the currency used for the transaction and the applicable exchange rate if the invoice amount is converted into Philippine Pesos for reporting purposes.
2. Shipping Details:
   • Include details such as shipping method, shipping terms (e.g., FOB, CIF), estimated delivery date, and any applicable shipping charges.
3. Payment Terms:
   • Specify the payment terms, including the payment due date, method of payment (e.g., wire transfer, letter of credit), and any applicable bank details for international transactions.
4. Customs and Duties:
   • Provide information on any customs duties, import taxes, or additional charges that may be incurred by the buyer upon receipt of the goods.
5. Compliance with International Trade Regulations:
   • Ensure that the invoicing practices comply with international trade regulations and the import requirements of the destination country.

Record-Keeping and Reporting

• Maintain Records:
  • Keep copies of all sales invoices for overseas transactions, along with relevant shipping and customs documentation, for at least three years.
• Report Zero-Rated Sales:
  • Accurately report zero-rated sales in your VAT returns and other relevant tax filings. Ensure that your accounting records reflect these transactions correctly.

By following these steps and including the required details, you can ensure that your invoices for overseas transactions are compliant with BIR regulations and meet the needs of your international customers.