BIR Grants exemption to small agricultural producers from Receipt Issuance Requirements

The Bureau of Internal Revenue (BIR) has introduced Revenue Regulations (RR) 12-2023, exempting small-scale farmers from issuing receipts and invoices for the sale of agricultural food products, provided their gross sales don’t exceed P1 million annually. Effective 15 days after its publication, this regulation simplifies record-keeping for agricultural producers.

Agricultural producers must now maintain a simplified sales book containing transaction date, goods description, purchaser’s details, sales amount, tax withheld (if any), and net received amount. This logbook, which can be a basic notebook, must be preserved for a decade.

RR 12-2023 defines agricultural producers as those involved in supplying, producing, or selling agricultural food products, including contract growers and millers, with annual gross sales below P1 million. Agricultural products encompass farm produce, livestock, poultry, marine items, ordinary salt, and agricultural inputs.

Even if these products undergo minimal processing, they remain subject to these regulations. If annual sales surpass P1 million, official receipts or sales invoices are required for transactions valued at P100 or higher.

To remain exempt from receipt issuance for non-agricultural income, the primary activity must be the sale of agricultural food products, and non-food sales should not exceed 30 percent of total receipts. Producers must register once with the BIR and register their simplified sales book. They should file quarterly and annual income tax returns, with any buyer-withheld taxes serving as a tax credit.

Buyers in business must issue BIR Form 2304 for payments up to P300,000 in a taxable year. Payments exceeding this threshold face a one percent withholding tax, necessitating BIR Form No. 2307 issuance. Quarterly filing of BIR Form 1601-EQ is also mandatory for buyers.

For more information: BIR RR No. 12 – 2023