February 28, 2024

The Bureau of Internal Revenue will implement newly revised guidelines when it processes value-added tax (VAT) credit and refund claims that were filed beginning this month.

Revenue Memorandum Order (RMO) 23-2023 provides the updated guidelines and prescribes the mandatory documentary requirements and procedures in the processing and grant of VAT credit/refund claims under the National Internal Revenue Code of 1997, as amended (Tax Code, as amended).

This is in line with the provisions of the Tax Reform for Acceleration and Inclusion Law and the Corporate Recovery and Tax Incentives for Enterprises Act.

RMO 23-2023 shall take effect for VAT refund/credit claims that will be filed starting July 1, according to the BIR.

The order declares all offices concerned should prioritize the processing of VAT credit/refund claims filed under Section 112 of the Tax Code, as amended, over other claims not requiring the immediate issuance of tax credit certificates/refund checks.

Section 112(A) of the Tax Code, as amended, provides any VAT-registered person whose sales are zero-rated or effectively zero-rated may, within two years after the close of the taxable quarter when the sales were made, apply for refund of creditable input tax due or paid attributable to such sales.

The requisites for entitlement to VAT refund are: the taxpayer-claimant must be VAT-registered, there must be zero-rated or effectively zero-rated sales; input taxes were incurred or paid; such input taxes were directly attributable to zero-rate sales or effectively zero-rated sales; the input VAT was not applied against any output VAT liability; and the claim for input VAT credit/refund was filed within the two-year prescriptive period.

Only applications with complete documentary requirements will be received and processed by the authorized processing office, says the RMO.

The time frame to grant claims for VAT credit/refund is 90 days from the date of complete submission of the official receipts or invoices and other documents in support of the application.

In case of full or partial denial of the claim, the taxpayer affected may, within 30 days from the receipt of the decision denying the claim, appeal the decision with the Court of Tax Appeals.

Verification of claims starts with the issuance of tax verification notices by the head of the processing office to authorize the verification of VAT credit/refund claims.

The claims will be processed and evaluated by the assigned revenue officer or group supervisor based on submitted documents. This process shall not be construed as an audit/investigation; hence, the claimant may be issued subsequently an electronic letter of authority by an authorized office for that purpose, RMO 23-2023 stated.

Verification of the claim will focus on the validity and existence of the zero-rated sales and related purchases in accordance with the documents submitted by the taxpayer-claimant.

Any findings that may result in a deficiency on internal revenue taxes, other than VAT, or may indicate a possible VAT assessment that needs further documentation and clarification, will be referred to the RDO or large taxpayers audit division having jurisdiction over the taxpayer-claimant for further investigation.

The result of the verification of the claim, whether approval or denial, will be communicated to the taxpayer-claimant. The result will be signed by the authorized revenue official and will be served by the originating processing office. – Press release