Special InTAX: September 2023 Issue 1 | Volume 2

Bureau of Internal Revenue

The Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular (RMC) No. 91-2023, dated 11 September 2023, to circularize an amendment to Rule 18, Section 5 of the Implementing Rules and Regulations (IRR) of Republic Act No. 11534 or the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE).

The amendment addresses the value-added tax (VAT) related issues and concerns of Registered Business Enterprises (RBEs) particularly those registered prior to the CREATE Act.

The salient provisions of the amended Rule 18, Section 5 of the CREATE IRR are as follows:

— All RBEs that will continue to avail of their existing tax incentives subject to Section 1, 2 and 3 of Rule 18, Section 5 of the CREATE IRR may continue to enjoy the duty exemption, VAT exemption on importation, and VAT zero-rating on local purchases as provided in their respective IPA registrations.

—  Registered Export Enterprises (REEs) whose income tax-based incentives have expired, may continue to enjoy VAT zero-rating on local purchases until the electronic sales reporting system of the BIR is fully operational, or until the expiration of the transitory period, whichever comes earlier.

—  An RBE classified as Domestic Market Enterprise (DME) which is located inside the economic or freeport zone during the transitory period will be allowed to register as a VAT taxpayer.

—  The duty exemption, VAT exemption on importation, and VAT zero-rating on local purchases shall only apply to goods and services directly attributable to and exclusively used in the registered project or activity of said REEs. 

The foregoing rules shall apply prospectively. DMEs inside the economic or freeport zone that will opt to register as VAT taxpayers shall not be allowed to claim VAT refund for transactions prior to the effectivity of these rules.

The amended rules shall take effect immediately following its publication in a newspaper of general circulation.

Here are the links to the full text of the issuances: RMC No. 91-2023, RMC No. 91-2023 Attachment.