Special InTAX: August 2023 Issue 1 | Volume 1

Bureau of Internal Revenue

The Bureau of Internal Revenue (BIR) issued the following:

Revenue Memorandum Circular (RMC) No. 80-2023, dated 09 August 2023, to clarify issues relative to the implementation of Revenue Regulations (RR) No. 03-2023 and other related concerns of value-added tax (VAT) zero-rate transactions on local purchases of the Registered Export Enterprises (REEs) and other entities granted the VAT zero-rate incentives under special laws and international agreements.

Pertinent clarifications on transactions with REEs are as follows:

1. RR No. 03-2023 took effect on 28 April 2023.
2. Upon effectivity of RR No. 03-2023, local supplier of goods and/or services of REEs shall no longer be required to secure prior approval for VAT zero-rating with the BIR.
3. The local purchase of the REE must be directly and exclusively used in the registered project or activity, and not included in the negative list provided in RR No. 03-2023.
4. A VAT Zero-Rate Certificate shall be issued by the concerned IPA for goods and/or services falling within the negative list but are proven to be directly and exclusively used in a registered project or activity.
5. The documentary requirements to be secured by local supplier from the REE-buyer for VAT-zero rating purposes.
6. The applications for VAT zero-rating received prior 28 April 2023 but not have been acted upon shall be accorded VAT zero-rating treatment from the date of filing of such application subject to post audit by BIR.
7. Transactions entitled to VAT zero-rating and the REE is duly endorsed by the concerned IPA, but the seller failed to secure approved application for VAT zero-rate, such sale shall be subject to 12% VAT.
8. If the transaction is already not qualified for VAT zero-rate (based on previously disapproved application for VAT zero-rating), the sale shall be subject to 12% VAT notwithstanding issuance of RR No. 03-2023.
9. The corresponding input VAT from transactions subjected to VAT in Q&A No. 8 can be utilized as a deduction against future output VAT liability after the incentive period or may be claimed as VAT refund under Section 112(B) of the Tax Code in relation to Q&A No. 40 of RMC No. 24-2022.
10. The elements to be considered for VAT zero-rating purposes during audit of transactions with REE.
11. The goods and/or services directly and exclusively attributable to the registered project/activity of the REE should be enumerated in Section III, Annex "A" of the prescribed template for VAT Zero-Rate Certification per RMC No. 36-2022 and declared in the REE’s sworn undertaking.
12. The VAT zero-rating shall not extend to HMO plans procured for employee’s dependent as well as HMO plans for employees not directly involved in the operations of the registered projects or activities of the REE.
13. The supplier of HMO plans needs to secure from the REE-buyer a detailed information on the plans acquired as provided in RMC No.127-2022.

Pertinent clarifications on transactions with entities granted with VAT zero-rate incentives under special laws and international agreements:

a. There is no need to submit application for VAT zero-rate of local supplies of other entities granted with VAT zero-rate incentives under special laws and international agreements.

b. The documentary requirements to be secured by the local supplier of goods and/or services of other entities granted with VAT zero-rate incentives under special laws and international agreements.

c. The elements to be considered for VAT zero-rating purposes during audit of transactions with entities granted VAT zero-rate incentives under special laws and international agreements.

RMC No. 80-2023 also provides for the template of the VAT Zero-Rate Certificate to be issued by the concerned IPA to compliant REEs under CREATE and Pre-CREATE, as prescribed in RMC No. 36-2022, which contains basic information needed in the audit investigation/verification of the concerned investigating BIR office.

The RMC shall take effect immediately.

RMC No. 83-2023, dated 14 August 2023, circularizes Republic Act (RA) No. 11956 entitled an Act further amends RA No. 11213 (Tax Amnesty Act) by extending the period of availment of the Estate Tax Amnesty until 14 June 2025 and for other purposes.

Here are the links to the full text of the issuances: RMC No. 80-2023, RMC No. 80-2023 Annex A, RMC No. 80-2023 Annex B-1, RMC No. 80-2023 Annex B-2, RMC No. 80-2023 Annex C, RMC No. 81-2023, RMC No. 83-2023, RMC No. 83-2023 Annex A.