The Bureau of Internal Revenue (BIR), under the leadership of Commissioner Romeo D. Lumagui, Jr., has issued Revenue Regulations (RR) No. 12-2023 to define the tax compliance requirements of small Agricultural Producers.
Per Section 237 of the Tax Code, as amended, all individuals subject to an internal revenue tax are required to issue duly registered receipts or sales or commercial invoices at each point of sale and transfer of merchandise or for services rendered valued at One Hundred Pesos
(₱ 100.00) or more.
In line with the BIR’s commitment to Ease of Doing Business, the Commissioner has exempted the Agricultural Producers from the requirement of issuance of principal and supplementary receipts or invoices for their sale of Agricultural Food Products (as defined in RR No. 12-2023), provided that the following conditions are met:
1. Agricultural Producer’s gross sales/receipts for the year do not exceed One Million Pesos (₱ 1,000,000.00);
2. Agricultural Producer maintains a simplified sales book where he/she will record each of his/her sale transaction; and
3. In case the Agricultural Producer sells goods/services other than the Agricultural Food Products (as defined in RR No. 12-2023), the aggregate gross sales/receipts must not exceed One Million Pesos (₱ 1,000,000.00) and the primary activity of the Agricultural Producer must be the sale of Agricultural Food Products, with sales from other goods/services not exceeding 30% of the aggregate sales/receipts for a given taxable year.
Agricultural Producers are required to register with the BIR at the Revenue District Office (RDO) that has jurisdiction on the principal place of business or residence of small Agricultural Producers. The Simplified Sales Book to be used must also be registered with the BIR RDO within the prescribed period specified in Revenue Memorandum Circular (RMC) No. 29-2019 and RMC No. 3-2023.
Should the annual gross sales/receipts of small Agricultural Producers exceed One Million Pesos (₱ 1,000,000.00) at any time during the taxable year, they will be required to issue official receipts/sales invoices for every subsequent transaction valued at P100.00 or more. For this purpose, during the first year of business operations or one year from BIR registration, Agricultural Producers who exceeded the ₱ 1 Million-threshold in gross sales/receipts can buy and use BIR-printed receipts or BIR-printed invoices from the RDO where they are registered. Thereafter, they will be required to issue official receipts/sales invoices printed pursuant to an Authority to Print (ATP) to be issued by the RDO.
Buyers or purchasers of Agricultural Food Products who are engaged in trade or business shall issue to the Agricultural Producers a Certificate of Income Payment Not Subject to Withholding Tax (BIR Form No. 2304) or Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) for each purchase transaction. These forms will serve as evidence of purchases made to support claims for deductible expenses of the buyers or purchasers of Agricultural Food Products, for tax purposes.
Income payments made to Agricultural Producers by buyers or purchasers engaged in trade or business not exceeding the cumulative amount of Three Hundred Thousand Pesos (₱ 300,000.00) within the taxable year are exempt from withholding tax. In this case, the buyer or purchaser is required to issue BIR Form No. 2304 to Agricultural Producers per purchase transaction. Income payments exceeding the said threshold amount will be subjected to a withholding tax rate of One Percent (1%), and in this case, BIR Form No. 2307 must be issued to the Agricultural Producer by the buyer or purchaser engaged in trade or business.
Buyers or purchasers engaged in trade or business shall file the Quarterly Remittance Return of Creditable Income Taxes Withheld (Expanded) [BIR Form No. 1601-EQ], together with the Quarterly Alphabetical List of Payees (QAP), whether actually subjected to or exempted from withholding tax.
Agricultural Producers, on the other hand, are required to file Quarterly and Annual Income Tax Returns and pay the Income Tax due, if any, on the prescribed deadlines. Any taxes withheld by buyers or purchasers of Agricultural Food Products, as supported by a BIR Form No. 2307, can be used as tax credit by the Agricultural Producer.
“Through this Revenue Regulations, we hope to support our small Agricultural Producers by making it easier for them to comply with the tax laws”, said Commissioner Lumagui.