Amending RMC No. 89-2017 and Certain Provisions of RMC No. 54-2014 on Processing of Claims for Issuance of Tax Refund/TCC in Relation to Amendments Made in NIRC of 1997, as Amended by RA No. 10963

February 27, 2018 REVENUE MEMORANDUM CIRCULAR NO. 017-18 SUBJECT : Amending Revenue Memorandum Circular (RMC) No. 89-2017 and Certain Provisions of RMC No. 54-2014 Regarding the Processing of Claims for Issuance of Tax Refund/Tax Credit Certificate (TCC) in Relation to Amendments Made in the National Internal Revenue Code of 1997, as Amended by Republic Act No. 10963, Known as the Tax Reform for Acceleration and Inclusion (TRAIN) TO : All Internal Revenue Officials and Employees Concerned For the information and guidance of all concerned, this Circular is issued to amend the provisions in RMC Nos. 89-2017 and 54-2014 on the processing of claims for issuance of tax refund/TCC, except claims processed under the jurisdiction of the Legal Service. I. Claims for value-added tax (VAT) refund A. General Policies 1. Tax Verification Notices (TVNs) shall be issued by the head of the processing office in the verification of claims for VAT refund issued under this Circular. 2. The TVNs shall be manually issued until such time that the Tax Verification Notice Monitoring System (TVNMS) is fully operational. 3. Pursuant to Section 112 (C) of the National Internal Revenue Code of 1997 (Tax Code), as amended by R.A. No. 10963, the time frame to grant claims for VAT refund is ninety (90) days from the date of submission of the official receipts or invoices and other documents in support of the application filed in accordance with Subsections (A) and (B) of the Tax Code, as amended. 4. The claims shall be processed based on submitted documents which shall be verified by the assigned Revenue Officer (RO)/Group Supervisor (GS). This process shall not be construed as an audit/investigation; hence, the taxpayer-claimant may be issued subsequently a Letter of Authority (LA) by the VAT Audit Section (VATAS) in the Regional Assessment Division or the investigating office having jurisdiction over the taxpayer-claimant. 5. Any findings in the course of the verification/review of the VAT claims that may lead to a deficiency in internal revenue taxes, other than VAT, shall be communicated by the processing/reviewing office to the concerned investigating office having jurisdiction over the taxpayer-claimant. However, if the findings involve VAT, these may result to disallowance or denial of the claim, or if the case warrants, for possible assessment of VAT liability. Should the claim be for denial, such fact should be communicated in writing to the taxpayer within the 90-day period. The denial letter shall be signed by the Commissioner (CIR)/Deputy Commissioner-Operations Group (DCIR-OG)/Assistant Commissioner (ACIR)/Regional Director, as the case may be. 6. Cases where the results would be an assessment on VAT instead of a refund/TCC should be referred to the VATAS, for Regional Offices where the VATAS is already in place, Revenue District Office, Large Taxpayers Audit Division or Large Taxpayers VAT Audit Unit (LTVAU), as the case may be. A copy of the Revenue Officer's memorandum report and documents relevant to the findings shall be furnished to the aforesaid offices. The concerned Revenue District Officer/Chief of LT Audit Division/Head of VATAS/Head of LTVAU shall evaluate the report/findings referred to them and shall request for the issuance of an electronic Letter of Authority (eLA), if warranted. However, if there is already an existing eLA covering the same period, the concerned office shall consolidate the findings referred to them with their findings and recommend the issuance of a Notice for Informal Conference/Preliminary Assessment Notice (PAN)/Final Assessment Notice (FAN) for the collection of the deficiency tax. Subsequently, a feedback on the action taken shall be sent to the VAT claim processing office within fifteen (15) days from receipt of the findings. B. Claims for VAT refund by direct exporters 1. All claims by direct exporters shall be filed with and processed by the VAT Credit Audit Division (VCAD), including direct exporters under the jurisdiction of the LTS. 2. The Tax Audit Review Division (TARD) shall review the docket with report on claims processed by the VCAD prior to approval of the claims. 3. The following are the authorized approving revenue officials based on the amount of claims: Amount of Claim Approving Revenue Official Not more than P50,000,000.00 ACIR-Assessment Service (AS) More than P50,000,000.00 up to P150,000,000.00 DCIR-OG More than P150,000,000.00 CIR C. Claims for VAT refund by other zero-rated taxpayers, indirect exporters and claims filed in accordance with Sec. 112 (B) of Tax Code, as amended by R.A. No. 10963 1. All claims for VAT refund by other zero-rated taxpayers, indirect exporters and claims filed in accordance with Sec. 112 (B) of the Tax Code, as amended, shall be filed with and processed by the concerned Revenue District Office and LT Audit Division having jurisdiction over the taxpayer-claimant. 2. The docket with report on said claims shall be reviewed by the Assessment Division/Office of the Head Revenue Executive Assistant (HREA), and shall be subject to approval/disapproval by the Regional Director/ACIR-LTS, as the case may be, irrespective of amount. II. Claims for issuance of tax refund/TCC on income tax, erroneous payment of taxes under Section 204 (C) and recovery of tax erroneously or illegally collected under Section 229 of the Tax Code, as amended, and other taxes, except VAT under Section 112 A. Issuance of eLA 1. An eLA shall be issued to cover the audit/verification of claims for issuance of tax refund/TCC other than VAT through the Electronic Letter of Authority Monitoring System (eLAMS) or Case Management System (CMS) of the electronic Tax Information System (eTIS). 2. The existing procedures in the request, issuance, approval, as well as in the updating of the status of the eLA, through eLAMS/CMS-eTIS, shall be observed by all concerned offices. B. Claims of taxpayers registered with the RDO 1. The RDO shall process all claims for tax refund/TCC filed by their registered taxpayers-claimants which shall be reviewed by the Assessment Division prior to transmittal to the Regional Director. 2. The Regional Director shall be the authorized approving official for claims amounting to Ten Million (10M) Pesos and below. For claims exceeding 10M Pesos, the reports on the said claims shall be signed by the Regional Director, who shall recommend the approval/issuance of the tax refund/TCC. 3. The docket for claims exceeding 10M shall be transmitted to the TARD for further review prior to approval of the revenue officials in accordance with the thresholds set in item no. I.B.3 hereof. 4. All memorandum reports recommending claims within the applicable thresholds in item I.B.3 hereof shall be signed by the ACIR-AS prior to final approval by the DCIR-OG/CIR. C. Claims of taxpayers registered with the LTS All claims filed with and processed by the Divisions under the LTS shall be reviewed by the HREA prior to approval by the ACIR-LTS. III. Time frame to process claims for VAT claims under Sections 112 (A) and (B) of the Tax Code, as amended further by R.A. No. 10963 1. The 90-day period prescribed under Section 112 (C) of the Tax Code, as amended, shall start from the actual date of filing of the application with complete documents duly received by the processing office. 2. The 90-day period shall be applied prospectively, i.e. , for claims filed upon the effectivity of R.A. No. 10963. 3. The following time frame shall be strictly adhered to by the processing, reviewing and approving offices: Time Frame to Verify/Process, Review and Approve/Disapprove the Claim No. of Days from Receipt of Application VCAD Cases For claims not more than P50,000,000.00 For claims more than P50,000,000.00 up to P150,000,000.00 For claims more than P150,000,000.00 Verification/processing 65 60 55 Review (TARD) 20 20 20 Recommending/Final Approval ACIR-AS 5 5 5 DCIR-OG 5 5 CIR 5 Total No. of Days 90 90 90 LTS Cases No. of Days from Receipt of Application Verification/processing 60 Review (Office of the HREA) 20 Approval by ACIR-LTS 10 Total No. of Days 90 Regional Cases No. of Days from Receipt of Application Verification/processing (RDOs) 60 Review (Assessment Division) 20 Approval by Regional Director 10 Total No. of Days 90 4. The concerned revenue officers/officials shall act on the recommended claims in accordance with the abovementioned time frame, including VAT claims on importations. IV. Documents to be submitted by the taxpayer/claimant upon filing of the application for VAT refund: 1. The application must be accompanied by complete supporting documents enumerated in the Revised Checklist of Mandatory Requirements (Annex "A.1") for claims filed pursuant to Sec. 112 (A) of the Tax Code, as amended, or Checklist of Documentary Requirements (Annex "A.2") for claims filed under Sec. 112 (B) of the same Tax Code. 2. The taxpayer-claimant shall also attach a notarized sworn certification (Annex "B") attesting to the completeness and veracity of the documents submitted. Accordingly, the claim shall be processed based on the documents submitted, as well as the books of accounts and accounting records, presented by the taxpayer-claimant. 3. V. Other documents that will form part of a VAT refund/credit case docket The RO assigned to process the claim should prepare, submit and/or attach the reports/schedules and documents prescribed in Annex "C" hereof. VI. Pending VAT refund/credit claims prior to the effectivity of R.A. No. 10963 A. VAT claims filed prior to the effectivity of RMC No. 54-2014 1. All pending claims shall continue to be processed in accordance with RR No. 1-2017. These claims shall be acted upon by the concerned offices not later than June 30, 2018. 2. Claims in the possession of the Revenue District and Regional Offices as of the effectivity of this Circular, including those claims which require further review and approval by the National Office shall no longer be transmitted to the TARD. The concerned Regional Assessment Division shall review these claims prior to transmittal to the Regional Director for approval/disapproval of the claim. 3. Claims in the possession of offices under the AS shall be acted upon based on the thresholds set under item no. I.B.3, while, claims in the possession of offices under the LTS shall be subject to approval/disapproval of the ACIR-LTS after review of the respective HREAs. B. VAT claims filed after the effectivity of RMC No. 54-2014 1. All current pending claims filed prior to the effectivity of R.A. No. 10963, otherwise known as the TRAIN, shall be processed within the 120-day period, as clarified by RMC No. 54-2014. 2. VII. Penalties Any revenue officer or official who fails to act on the application within the 90-day period shall be punishable under Section 269 of the Tax Code, as amended. All other issuances inconsistent herewith are hereby repealed or modified accordingly. The amendments prescribed in this Circular shall take effect immediately. All internal revenue officials and employees concerned are hereby enjoined to give this Circular as wide a publicity as possible. (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue ANNEX A.1 REPUBLIC OF THE PHILIPPINES Bureau of Internal Revenue (Name of Processing/Investigating Office) Revised Checklist of Mandatory Requirements for Claims for VAT Refund ANNEX A.1.1 Sworn Declaration of Taxpayer's Profile ANNEX A.1.12 Name of Taxpayer/Claimant Schedule of Amortization of Input Tax on Imported Capital Goods Exceeding P1 Million from Previous Quarter/Year ANNEX A.2 Checklist of Documentary Requirements for Claims for Tax Refund/Tax Credit Certificate (TCC) Pursuant to Section 112 (B) of the Tax Code, as Amended by R.A. No. 10963 _____ 1. Duly accomplished application for Tax Credit/Refund (BIR Form No. 1914) _____ 2. Tax Clearance issued by the Revenue District Office due to retirement/cessation of business _____ 3. VAT returns for the periods covering the input tax being claimed as certified by the BIR Office where the taxpayer/claimant is registered, except for tax returns filed through eFPS _____ 4. Schedule and copies of Official Receipts (ORs) and Sales Invoices (SIs) supporting the input tax claim, duly certified by authorized official _____ 5. Schedule and copies of ORs and SIs issued by the taxpayer covering the taxable periods of claim, duly certified by the authorized official _____ 6. List of ending inventory of goods, supplies, including capital goods _____ 7. Inventory of unused OR/SI together with the said OR/SI to be destroyed ANNEX B Sworn Certification KNOW ALL MEN BY THESE PRESENTS: I, _______________________________ (Name of Taxpayer/Claimant/Authorized Representative) , in my capacity as ______________________ (Position/Designation) of ____________________________________ (Business Name) with business address at ______________________________________, do hereby certify that the documents submitted are complete for purposes of processing our claim for Value Added Tax (VAT) refund for the period from _____________ to _____________. Accordingly, these are the only documents that will be presented to support our claim. In relation to this claim, our books of accounts and accounting records are available for verification by authorized BIR Revenue Officer(s) upon request. Failure on our part to present said books and records is a ground for denial of our refund. This certification is being issued as a requirement for our application for VAT refund under Section 112 (A) of the Tax Code, as amended. ____________________________ (Signature Over Printed Name) SUBSCRIBED AND SWORN to before me, this _____ day of _____________ at _______________________, affiant with Taxpayer Identification No. ________________. ____________________________ Notary Public Until ____________ PTR No. _________ Issued at _________ On ______________ Doc. No. _______ Page No. _______ Book No. _______ Series of ________ ANNEX C Documents Required to be Prepared/Attached to aVAT Refund/Credit Case Docket A. Documents, Working Papers and Attachments 1. Copy of Tax Verification Notice (TVN) 2. Revenue Officer's Memorandum Report stating among others, the following statements, pursuant to RMC No. 30-2006, to wit: 2.1 That the sources of VAT input tax had been verified against the original VAT invoices or official receipts issued in accordance with Section 113 in relation to Section 110 of the Tax Code; 2.2 That the original copies of purchase invoices or official receipts evidencing sources of input tax credits had been prominently stamped, after the completion of the verification, with the words "VAT REFUND CLAIMED" on the face of the said invoices/official receipts; 2.3 That the proofs of actual exportation and foreign currency remittances for export sales were verified; and 2.4 Computation of VAT Refund (in Philippine Pesos). 3. VAT Refund/Credit Notice (Annex "D" or Annex "E" whichever is applicable) to be prepared by the reviewing office 4. Sworn Declaration of Taxpayers Profile (Annex "A.1.1") 5. Authority to Issue VAT Refund/TCC (Annex "F") to be prepared by the reviewing office 6. Table of Contents 7. Docket Locator Form 8. For "big ticket" purchases pursuant to RMO No. 16-2007, the following are required in addition to the copies of invoices or official receipts submitted: 8.1 Summary Lists of Sales/Purchases/Importations as provided by the AITEID and/or corresponding result of the verification on RELIEF/BOC importations. In the absence of data on sales of "big ticket" suppliers to claimants, proofs of secondary evidence of payments of purchases with input tax ( e.g. , cancelled checks, bank debit advice or any form of settlement in favor of the supplier for the account of taxpayer-claimant) 8.2 Indorsement to the Revenue District Officer having jurisdiction over suppliers of the claimant on the duly ascertained discrepancy, e.g. , under-declaration of sales after matching purchases of the claimant with the sales of his/its suppliers from the pre-processed data provided by the AITEID 9. Working papers showing 9.1 Computation of recommended VAT refund/VAT due, whichever is applicable 9.2 Computation of adjustment to the amount of claim, if applicable 10. Reconciliation of sales and input taxes of Financial Statements' figures with VAT returns' figures and application for VAT refund, if applicable 11. Schedule of zero-rated, exempt and taxable sales (hard and soft copies in prescribed formats Annexes "A.1.2", "A.1.3", "A.1.4", and "A.1.5") with initial of the investigating Revenue Officer 12. Reconciliation of Export Sales and Foreign Currency on Zero-Rated Sale of Goods/Services, duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (Annexes "A.1.9" and "A.1.10", whichever is applicable) 13. Documentary proofs of foreign currency remittances for export sales 14. Reconciliation of total export sales vis--vis total foreign currency remittances 15. Schedule of local purchases with input tax (hard and soft copies in prescribed formats Annex "A.1.6") with initial of the investigating Revenue Officer 16. Alpha List of Local Suppliers with TIN as verified in ITS and total purchases per supplier, identifying the "Big Ticket" suppliers 17. Schedule of Property, Plant and Equipment (PPE) Additions per Financial Statement (hard and soft copies in prescribed format Annex A.1.8) 18. Schedule of importations and corresponding VAT payments (hard and soft copies in prescribed formats Annex "A.1.11") with initial by the investigating Revenue Officer 19. Schedule of amortization of input tax pertaining to locally purchased/imported capital goods over One Million from previous quarter/year amortized during the period of claim (Annexes "A.1.7" and "A.1.12") 20. Allocation of input tax among zero-rated, exempt and taxable sales, if applicable 21. Schedule of off-setting of receivables and payables with supporting documents, if applicable 22. Copy of the duly validated BIR Form 1600 and bank deposit slip, if applicable, covering payment of Final VAT Withholding Tax is required to be attached to the docket, in case of non-resident payees B. VAT Claims on Importation 1. In case of approved claims on importations, a separate folder/docket containing pertinent reports and documents has to be prepared for transmittal to the BOC after approval of the report: 1.1 By the processing office 1.1.a. Schedule of Importations for the Period of Claim; 1.1.b. Invoices relative to importation, import declarations, Single Administrative Document (SAD) import entry documents and official receipts/Statement of Settlement of Duties and Taxes (SSDT) covering payment of VAT; and 1.1.c. Indorsement to BOC signed by the authorized approving official. 1.2 By the reviewing office 1.2.a. Approved Authority to Issue VAT Refund/TCC; 1.2.b. Revenue Officer's Memorandum Report ANNEX D (Name of Office of the Approving Official) VAT Refund/Credit Notice ________________ (Date) ___________________________ Name of Claimant/Taxpayer ___________________________ Address Gentlemen/Sir/Madam: This has reference to your claim for Value Added Tax (VAT) refund/credit covering the period from ___________ to ___________ in the amount of Php ___________ pursuant to Section 112 of the National Internal Revenue Code (NIRC) of 1997, as amended. In connection thereto, please be informed that, upon processing of the aforementioned claim under Tax Verification Notice No. ________________ dated ___________, the amount of input tax allowable on local purchases is Php _____________ as summarized below: Amount VAT Refund Claimed Phpx,xxx,xxx.xx Less: Disallowances (xxx,xxx.xx) Net Allowable VAT Refund/Credit Phpx,xxx,xxx.xx ============= The approved report on the said claim may be subjected to audit/investigation and should there be material findings, the amount allowable may be adjusted and/or an assessment notice may be issued for the collection of any deficiency tax or excess tax credit. Very truly yours, ___________________________ Signature Over Printed Name (Approving Revenue Official) ANNEX E VAT Refund/Credit Notice ________________ (Date) ___________________________ Name of Claimant/Taxpayer ___________________________ Address Gentlemen/Sir/Madam: This has reference to your claim for Value Added Tax (VAT) refund/credit covering the period from ____________ to ____________ in the amount of Php ______________ pursuant to Section 112 of the National Internal Revenue Code (NIRC) of 1997, as amended. In connection thereto, please be informed that, upon processing of the aforementioned claim under Tax Verification Notice No. _______________ dated ____________, the total amount of input tax allowable on local purchases and importation is Php ____________ as summarized below: A. Local Purchases Amount VAT Refund Claimed Phpx,xxx,xxx.xx Less: Disallowances (xxx,xxx.xx) Net Allowable VAT Refund/Credit Phpx,xxx,xxx.xx B. Importations Amount VAT Refund Claimed Phpx,xxx,xxx.xx Less: Disallowances (xxx,xxx.xx) Recommended Net Allowable VAT Refund/Credit Phpx,xxx,xxx.xx Total Amount Allowable for VAT Refund/Credit (sum of A and B) Phpx,xxx,xxx.xx ============= The amount of Php ______________ representing the recommended VAT refund on importations is subject to further verification of actual receipts of VAT payments by the Bureau of Customs (BOC), in compliance with the requirements of the Commission on Audit. The approved report on the said claim may be subjected to audit/investigation and should there be material findings, the amount allowable may be adjusted and/or an assessment notice may be issued for the collection of any deficiency tax or excess tax credit. Very truly yours, ___________________________ Signature Over Printed Name (Approving Revenue Official) ANNEX F Authority to Issue VAT Refund/Tax Credit Certificate