Philippines: VAT refund guidelines
Changes in the document requirements and procedures for VAT refund claim applications
Changes in the document requirements and procedures for VAT refund claim applications
The Bureau of Internal Revenue (BIR) issued two guidance documents—Revenue Memorandum Circular (RMC) No. 71-2023 and Revenue Memorandum Order (RMO) No. 23-2023—that introduced significant changes in the document requirements and procedures for value added tax (VAT) refund claim applications.
The refined VAT refund guidelines apply to claims filed starting 1 July 2023.
Reduced document requirements
The new checklist contains a maximum of 22 document requirements compared to 30 from the previous checklist. Some of the requirements in the checklist might not be applicable depending on the nature of the applicant’s business.
Under the new checklist, the BIR has eliminated the requirement to submit returns such as the annual income tax return, VAT returns, and withholding VAT returns. In addition, there is no longer a requirement to submit a USB flash drive or CD containing the scanned copies of the taxpayer-claimant’s sales and purchase documents.
Filing
Claims for a VAT refund of direct exporters, regardless of the percentage of export sales to total sales and with claims under Section 112 (A) of the Tax Code, except for claims with a mix of VAT zero-rated sales originating from sales of power or fuel from renewable energy sources, must still be filed with the VAT Credit Audit Division (VCAD) of the BIR National Office.
However, claims of other taxpayers such as indirect exporters or those engaged in other VAT zero-rated activities, other than direct exports, must now be filed with the Large Taxpayers VAT Audit Unit (LTVAU) of the Large Taxpayers Service (LTS) for large taxpayers or the VAT Audit Section (VATAS) in the Regional Assessment Division or respective Revenue District Office (RDO) where the taxpayer is registered, if without VATAS, for non-large taxpayers.
Other mandated policies
For VAT refund applications filed beyond the two-year prescriptive period, the claim will still be accepted. However, the processing office will recommend outright denial of the claim for the claimant to avail of judicial remedy.
Further, the BIR will now accept VAT refund applications of taxpayer-claimants with existing tax delinquencies reflected in the Delinquency Verification Certificate (DVC). However, the amount of liabilities will be offset against the amount of refund approved, either fully or partially.
Read an August 2023 report prepared by the KPMG member firm in the Philippines
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