RBEs: Relabel Your POS to "VAT on Local Sales" by 31 December 2026
If you are a Registered Business Enterprise running a POS, cash register, CAS or other registered invoicing system, you have until 31 December 2026 to change how VAT appears on your documents — replacing "VAT" or "VAT Amount" in the sales breakdown with "VAT on Local Sales", or adding that line where no VAT line exists.
The extension comes from Revenue Regulations No. 1-2026, issued 16 February 2026 and effective 3 March 2026, which amends Sections 3, 4 and 7 of RR No. 9-2025.
The requirement, verbatim
"The effectivity of the provision under Section 7 of RR No. 9-2025, which requires RBEs using registered Cash Register Machines/Point-of-Sales (CRM/POS), Computerized Accounting System (CAS), Computerized Books of Accounts with Accounting Records or other registered invoicing system/software to reconfigure or rename their system by replacing the term 'VAT/VAT Amount' in the breakdown of sales with 'VAT on Local Sales', or adding the same where 'VAT/VAT Amount' is not applicable, is hereby extended until December 31, 2026. The Commissioner may further extend the deadline as may be necessary."
Note the final sentence. The deadline has already moved once, and the Commissioner retains discretion to move it again — so treat 31 December 2026 as the operative date while watching for further issuances.
Does this apply to you?
This is the part worth being careful about, because the audience is narrower than "any business with a POS."
It applies to Registered Business Enterprises — entities registered with an Investment Promotion Agency such as PEZA, BOI, or another IPA — whose local sales fall under Section 295(D) of the Tax Code, as amended by Section 18 of RA 12066 (CREATE MORE).
It does not apply to an ordinary restaurant, retailer or pharmacy that is not IPA-registered. If you are a regular VAT taxpayer with no incentive registration, this particular relabelling requirement is not yours.
If you are unsure whether your entity is an RBE for these purposes, that is a question for your accountant or your IPA, not something to infer from a POS screen.
What RR 1-2026 changed besides the deadline
The extension is the operationally urgent part, but the regulation also reshaped who is covered — which affects whether you need to relabel at all.
Optional VAT registration
An RBE availing of the 5% Special Corporate Income Tax or the Gross Income Earned regime, whose registered activities all sit under the same income tax incentive, "may opt to register as a VAT taxpayer solely for purposes of its local sales."
Importantly, that election "shall not affect the RBE's entitlement to its existing fiscal and non-fiscal incentives, including VAT zero-rating on local purchases and VAT exemption on importation," provided those are directly attributable to the registered activities.
One condition to plan around: an RBE electing VAT registration under this provision cannot cancel it for three years from the date of registration, under Section 236(G) of the Tax Code.
Exclusions from Section 295(D)
RR 1-2026 carves out several categories. The reasoning is stated in the regulation itself: applying Section 295(D) to certain VAT-registered Domestic Market Enterprises — those that do not qualify for VAT zero-rating on local purchases or VAT exemption on importation despite IPA registration — "would result in accumulated unutilized input VAT from local purchases and importations, which are not eligible for refund under Section 112(A)."
So for those DMEs, local sales are not subject to the buyer's payment and remittance of VAT under Section 295(D). Instead, "the RBE-seller shall file and pay the corresponding VAT to the BIR as a regular VAT taxpayer."
Also excluded:
- Sales of VAT zero-rated goods under Section 106(A)(2); VAT zero-rated services under Section 108(B); VAT-exempt transactions under Section 109; and VAT-exempt or zero-rated transactions under Title XIII.
- Entities registered with the Board of Investments by virtue of a special law and not availing of incentives under Title XIII.
- Local sales pertaining to business activities not registered with any IPA, including sales of scraps such as materials, machinery, and property, plant and equipment — these are subject to regular VAT at 12%, with the RBE-seller filing and paying as a regular VAT taxpayer.
That last exclusion is a practical trap. An RBE can be inside Section 295(D) for its registered activity and outside it for unregistered activity or scrap sales in the same period — which means the document treatment may differ by transaction type, not just by entity.
Why a label change matters at all
It is reasonable to ask why the BIR cares what a line on a receipt is called. The answer is that under Section 295(D), the VAT on these sales is not remitted by the seller in the ordinary way.
For local sales by an RBE falling within Section 295(D), the mechanism places the obligation to pay and remit the corresponding VAT on the buyer. That is a genuine departure from the normal pattern, where the seller collects output VAT and remits it.
A document that simply says "VAT" does not tell the buyer which regime they are in — whether they are looking at ordinary output VAT already accounted for by the seller, or at an amount they are themselves obliged to pay and remit. Labelling it "VAT on Local Sales" makes the distinction visible on the face of the document, to the buyer and to any examiner.
That is also why the exclusions in RR 1-2026 matter so much operationally. Where an exclusion applies — a Domestic Market Enterprise that would otherwise accumulate unrefundable input VAT, a sale of VAT-exempt or zero-rated goods, an unregistered activity, a scrap sale — the RBE-seller "shall file and pay the corresponding VAT to the BIR as a regular VAT taxpayer." The normal mechanism applies, and the special label does not describe what is happening.
So the label is carrying real information, and applying it indiscriminately to every transaction can be as wrong as not applying it at all. This is why the configuration question above is a conversation with your accountant rather than a setting your POS supplier can decide for you.
What to actually change in the system
The change itself is a label in the sales breakdown, but it needs handling as a controlled reconfiguration:
Identify every affected system. CRM/POS terminals, CAS, computerised books of accounts with accounting records, and any other registered invoicing software. Include machines at every branch, and roving machines currently deployed elsewhere.
Change the label. Replace "VAT" or "VAT Amount" in the breakdown of sales with "VAT on Local Sales" — or add that line where no VAT line currently appears.
Check whether transaction types need to be distinguished. Given the exclusions above, a system that applies one label to every transaction may misstate scrap sales, unregistered-activity sales, or excluded categories. Work through this with your accountant before configuring.
Talk to your POS supplier early. A label change of this kind will normally be a minor enhancement — but under RMO 24-2023 it is the supplier who knows whether a given change is minor (RDO notification) or major (a new accreditation application with a comparative feature matrix). Do not assume; ask.
Document what you changed and when. Keep the configuration record and the date. With a deadline that has already moved once, being able to evidence the date you complied is worth the two minutes it takes.
Why this is worth doing before December
Three reasons.
Everything else about your documents still has to be right. The relabel does not sit on its own — the document must still carry the RMO 24-2023 accreditation block, the correct Invoice designation under RR 7-2024, and the senior citizen and PWD discount fields. A reconfiguration is a good moment to verify all of them, and a bad moment to discover one is broken.
Reconfiguration windows get crowded. Every affected RBE is working to the same date with a finite pool of POS suppliers and integrators. The businesses that moved early on the 2024 OR-to-Invoice transition had a materially easier time than those that waited.
The Commissioner's discretion cuts both ways. The deadline may be extended again. It may not. Planning around an extension that has not been granted is not a plan.
Frequently asked questions
What is the deadline? 31 December 2026, per RR 1-2026. The Commissioner may extend it further.
What exactly has to change? The term "VAT" or "VAT Amount" in the breakdown of sales becomes "VAT on Local Sales" — or that line is added where "VAT/VAT Amount" is not applicable.
Which systems are covered? Registered CRM/POS, CAS, Computerized Books of Accounts with Accounting Records, and other registered invoicing systems or software.
Does this apply to my restaurant? Only if it is a Registered Business Enterprise registered with an Investment Promotion Agency and its local sales fall under Section 295(D). An ordinary VAT-registered business without IPA registration is not covered by this requirement.
Can I register for VAT just for local sales? RR 1-2026 permits an RBE on the 5% SCIT or GIE regime, with all registered activities under the same income tax incentive, to register as a VAT taxpayer solely for local sales — without losing existing incentives directly attributable to registered activities. The registration cannot be cancelled for three years.
What about our scrap sales? Local sales pertaining to activities not registered with an IPA, including sales of scraps, are subject to regular VAT at 12%, with the RBE-seller filing and paying as a regular VAT taxpayer.
Will this require re-accreditation of our POS? Ask your supplier. Under RMO 24-2023 minor enhancements need only RDO notification, while major enhancements require a new accreditation application. A label change would normally be minor, but the supplier makes that call.
Why does the label matter — isn't VAT just VAT? Not here. Under Section 295(D), the obligation to pay and remit the VAT on covered local sales sits with the buyer, not the seller. A line simply marked "VAT" does not tell the buyer which regime applies. "VAT on Local Sales" makes it visible on the face of the document.
Should we apply the new label to every transaction? Not necessarily. Where an exclusion applies — VAT-exempt or zero-rated sales, unregistered activities, scrap sales — the RBE-seller files and pays as a regular VAT taxpayer, and the special label does not describe what is happening. Work the configuration through with your accountant.
What happens if the deadline is extended again? RR 1-2026 preserves the Commissioner's power to extend. Plan to 31 December 2026 regardless; an extension that has not been granted is not a plan.
Where can I read RR 1-2026? It is published on bir.gov.ph, amending RR 9-2025.
This article summarises Revenue Regulations No. 1-2026 (issued 16 February 2026, effective 3 March 2026), amending RR No. 9-2025, with reference to Section 295(D) of the Tax Code as amended by Section 18 of RA 12066 and to Revenue Memorandum Order No. 24-2023, as published by the Bureau of Internal Revenue. It is general information, not tax advice. Confirm your own position with your accountant, your Investment Promotion Agency, or your Revenue District Office.
Alex de Leon is the President and Co-Founder of KwikPOS, a leading POS solutions provider in the Philippines specializing in one-time-payment systems for food and beverage, retail, and service businesses.
Last reviewed: 3 September 2026.
Related reading
This is one of two reconfiguration jobs POS users have faced recently. The other is the move from Official Receipt to Invoice, which changed the document your machine issues. For the underlying permissions, see BIR POS accreditation, and why it costs nothing.
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This article is general information, not tax or legal advice. Confirm your own obligations with your accountant or Revenue District Office. Regulations are linked to the Bureau of Internal Revenue’s own published PDFs so you can check the wording yourself.