Consolidated and Updated Guidelines and Procedures on Processing of Claims for VAT Credit/Refund Except Those under the Authority and Jurisdiction of the Legal Group

November 24, 2020 REVENUE MEMORANDUM ORDER NO. 047-20 SUBJECT : Consolidated and Updated Guidelines and Procedures on the Processing of Claims for Value-Added Tax Credit/Refund Except Those under the Authority and Jurisdiction of the Legal Group TO : All Internal Revenue Officials, Employees and Others Concerned I. OBJECTIVES 1. To consolidate and amend existing revenue issuances on the processing of VAT credit/refund claims filed under Sections 112 and 229 of the National Internal Revenue Code of 1997 (Tax Code), as amended; 2. To provide uniform standard policies and procedures in the processing of applications for VAT credit/refund from the time of the filing of the application up to payment; 3. To define the duties and responsibilities of different offices, revenue officers and officials, as well as other personnel, in the different stages of processing; 4. To effectively facilitate and expedite the processing of claims, and grant the allowable claims within the prescribed time as required by law and existing regulations; and 5. To streamline prescribed documentary requirements and reports for VAT credit/refund processing. II. POLICIES 1. All offices concerned shall 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 (TCCs)/refund checks. 2. The processing offices authorized to receive "Application for VAT Credit/Refund Claims" (BIR Form No. 1914) are as follows: a. The VAT Credit Audit Division (VCAD) in the National Office shall receive claims of direct exporters regardless of the percentage of export sales to total sales and whose claims are anchored under Section 112 (A) of the Tax Code of 1997, as amended, with the exception of the claims with a mix of VAT zero-rated sales emanating from sales of power or fuel from renewable energy sources pursuant to Section 108 (B) (7) of the Tax Code of 1997, as amended; CAIHTE b. The Revenue District Office (RDO)/Large Taxpayers Audit Division (LTAD) under the Large Taxpayers Service (LTS) where the taxpayer is registered having jurisdiction over the taxpayer-claimant shall receive claims of taxpayers engaged in other VAT zero-rated taxpayers, other than direct exporters, such as renewable energy developers pursuant to Section 108 (B) (7) of the Tax Code, as amended, and those with indirect exports classified as effectively VAT zero-rated sales, pursuant to Section 112 (A) of the Tax Code, as amended, and in Section II (2) (a) of this Order. c. The RDO/LTAD having jurisdiction over the taxpayer-claimant shall receive claims of taxpayers whose VAT registration has been cancelled and those claims for recovery of erroneously or illegally assessed or collected VAT pursuant to Sections 112 (B) and 229, respectively, of the Tax Code, as amended. 3. Only applications with complete documentary requirements, as enumerated in the Checklist of Requirements (Annexes A.1, A.2 or A.3),whichever is applicable, and which are filed within the prescribed period, shall be received by the authorized processing office. 4. One of the documentary requirements is the Delinquency Verification Certificate (DVC) prescribed in Revenue Memorandum Circular No. 64-2019 (Annex "B") showing that the taxpayer has no outstanding (final and executory) tax liabilities as defined under Section II (1) of Revenue Memorandum Order No. 11-2014. Hence, the application shall not be accepted if such tax liabilities appear on the DVC, except for outstanding VAT liability which may be deducted from the approved BIR portion of the claim. Applications where the DVC shows delinquent accounts other than VAT shall not be received. The claimant has to settle first the tax liabilities so that a DVC with no tax liabilities can be issued by the concerned DVC-issuing office. If the delinquent accounts pertain to VAT liability and the amount is lower than the amount of claim on local purchases, the application shall be accepted. For claims where the outstanding VAT liability has been deducted from the claim, the processing office shall prepare a list of taxpayers whose claims for tax refunds were deducted with outstanding delinquent tax liabilities therefrom and furnish the same to the Revenue Accounting Division (RAD) for claims filed in the BIR National Office or Finance Division for claims filed in the Regional Offices together with the copy of the approved report. Even if the outstanding liability is VAT but the claim is purely from importations or the claim includes input VAT on importations, and the BIR portion thereof is not enough to cover payment for the VAT liability, the application shall not be accepted unless there is proof that the liability has been paid in full by the taxpayer. 5. Tax Verification Notices (TVNs) shall be issued by the head of the processing office to authorize the verification of VAT credit refund claims filed under Sections 112 and Section 229 of the Tax Code, as amended. The TVNs shall still be manually issued until such time that the Tax Verification Notice Monitoring System (TVNMS)/Case Management System (CMS) are fully operational. The received application shall be encoded in the Tax Credit Refund module under the Internal Revenue Integrated System (IRIS) once the said system is deployed to concerned BIR offices. 6. Pursuant to Section 112 (C) of the Tax Code, as amended, 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. Thus, the start of the 90-day period is from the actual filing of the application with complete documents duly received by the processing office. 7. The claims shall be processed based on submitted documents for verification by the assigned Revenue Officer (RO)/Group Supervisor (GS).This process shall not be construed as an audit/investigation; hence, the claimant may be issued subsequently an electronic Letter of Authority (LA) by an authorized office for that purpose. However, the books of accounts and accounting records that may have relevance to the claim of the taxpayer may be examined and verified upon request of the assigned RO. 8. The reports of verification from the processing offices shall be forwarded to the following offices for review prior to approval by the approving official: a. Tax Audit Review Division (TARD) for dockets from the VCAD b. Regional Assessment Division for dockets from the RDO c. Office of the concerned Head Revenue Executive Assistant of the LTS for dockets from the LTAD 9. The following are the revenue officials authorized to approve/disapprove the claims: Processing Office Amount of Claim Approving Revenue Official VCAD Not more than P50 million Assistant Commissioner (ACIR) Assessment Service (AS) More than P50 million up to P150 million Deputy Commissioner (DCIR) Operations Group (OG) More than P150 million Commissioner (CIR) LTAD under the LTS Regardless of amount ACIR LTS RDO Regardless of amount Regional Director 10. The result of the verification of the claim, whether approval or denial, shall be communicated to the taxpayer-claimant, which shall be signed by the authorized revenue official and shall be sent by the originating processing office. 11. Manually issued TCCs shall be converted by the concerned office to the Tax Credit Refund System in the ITS until any subsequent development upon the roll-out of the Internal Revenue Integrated System (IRIS). II. PROCEDURES A. Checklisting 1. Before officially receiving the application, the assigned Revenue Officer (RO) in the processing office (VCAD/RDO/LTAD) shall: a. Check the completeness and propriety in the accomplishment of the application form for VAT Credit/Refund (BIR Form No. 1914); b. Review the attached documents based on the applicable Checklist of Requirements to determine if they are complete with the required signatures and sworn statements; c. Ensure that the claim is being filed within the prescribed period. The time of filing the claim shall be verified, to wit: HEITAD i. For claims filed under Section 112 (A) of the Tax Code, as amended, within two years after the close of the taxable quarter when the sales were made; ii. For claims filed under Section 112 (B),within two years from the date of cancellation of VAT registration, which is from the date of the issuance of the BIR tax clearance; and iii. For claims filed under Section 229, within two years from the payment of the tax. d. Verify any outstanding tax liability from the submitted DVC; and e. Determine from the submitted "Taxpayer's Attestations" (Annex A.1.1) or from the Electronic Letter of Authority Monitoring System (eLAMS) if there is an eLA issued to the taxpayer for the audit of VAT liability or all internal revenue tax liabilities covering the same taxable year/period of claim. 2. The RO shall ascertain that the name of the signatory appearing on the application form is that of the duly authorized person/representative on the Special Power of Attorney or Secretary's Certificate, as the case may be. B. Verification of Claims Filed Under Section 112 (A) of the Tax Code, as Amended aDSIHc 1. The head of the processing office (VCAD/RDO/LTAD) shall issue a Tax Verification Notice (TVN) to authorize the verification of the application of VAT credit/refund. 2. The assigned Revenue Officer/s shall: a. Furnish the taxpayer-claimant with the original copy of the TVN and require the acknowledgment receipt on the duplicate copy from his/its responsible officer or staff. b. Familiarize with the business of the taxpayer and determine the economic activity in which he/it is engaged in, whether sale of goods, properties, services and other lines of business aside from the principal undertaking, based on the VAT returns, financial statements and other sources within the Bureau and through on-line facilities. c. Establish the existence and legitimacy of the business of the taxpayer-claimant; i.e. ,he/it is not a mere conduit or agent to claim input taxes for another, by conducting ocular inspection of the taxpayer's premises, such as production plant, sales outlets and/or storage facilities, when necessary. d. Ascertain the legal basis of the claim. e. Verify from the Bureau's information system or offices concerned the following: Number of branches and facilities with corresponding locations Tax types duly registered for the branches and facilities Registered books of accounts for the principal office and branches The issued Authority to Print (ATP) for accountable forms required for principal registration, such as sales invoices and official receipts and for secondary registration, acknowledgment receipts and delivery receipts, etc. Permit to use loose-leaf invoices/receipts/books of accounts Approved Computerized Accounting System (CAS) and Computerized Books of Accounts (CBA) or components thereof VAT returns and Income Tax Returns data from BIR Integrated Tax System (ITS)/Internal Revenue Integrated System (IRIS) or from the Electronic Filing and Payment System (eFPS) for eFPS filers. In case the said returns could not be verified from the system, the processing office should secure a certification from the RDO or LTAD concerned as to the authenticity and accuracy of the data appearing in the copy/ies submitted by the taxpayer-claimant. ETHIDa For indirect export sales or zero-rated sales other than those emanating from direct exports, the indorsement of investment promotion agencies (IPAs) to the Bureau of the exemptions/incentives granted during the period covered by the claim to the registered business enterprise (RBE) claiming such incentive shall be verified from the Audit Information Tax Exemption and Incentives Division (AITEID).In cases where records of the BIR do not show that the respective IPA has not yet endorsed the RBE, the processing office may verify from the IPA whether such RBE is qualified for certain tax incentives particularly VAT zero-rating. All other relevant information available in the BIR records. In cases where the authenticity of the document can be verified electronically or online [ e.g. ,through "quick-response" (QR codes)],the assigned evaluator shall attach to the docket, a printout of the screenshot of the result of the verification from the facility hosting the electronic/online system with the duly-signed notation that the same has been verified through the said system. f. Study the accounting methods and peculiarities in the industry group where the taxpayer belongs. g. Analyze the financial statements and notes to financial statements to determine the accounting method of sales and income recognition, accounting period, input tax existence in the asset account, sources of input taxes, related-party transactions and other relevant information. h. Conduct interview, where necessary, with responsible and authorized finance, accounting, sales and other personnel to further familiarize with business operations related to sales and purchases, as well as other activities that may relate to the claim. i. Request for books of accounts and other relevant accounting records, as necessary, to determine recording of the claim and reconcile findings and discrepancies noted. j. Perform verification procedures for sales of goods in Annex "C.1". k. Perform verification procedures for sales of services in Annex "D". l. Perform verification procedures for purchases and input tax in Annex "E". 3. In the course of the verification of claims, the RO with the approval of the head of office and upon recommendation of the GS, shall: a. Recommend deduction from the claim such amount that may lead to the imposition of output VAT based on the submitted documents; b. Refer, through a memorandum, to the RDO/LTAD having jurisdiction over the taxpayer-claimant for clarification, investigation or appropriate action, any findings that may result in deficiency assessment of internal revenue taxes, if any; and c. If the taxpayer has a VAT liability, prepare a request for the computation of the total tax liability, up to the 90th day of the processing of the claim, from the Accounts Receivable Monitoring Division (ARMD)/Large Taxpayers Collection Enforcement Division (LTCED) of the National Office/Collection Division (CD) of the regional office. 4. The RO shall verify and ascertain that all input taxes claimed are within the period covered by the application for VAT credit/refund and/or are attributable to the period covered by the claim as in the case of amortized input taxes from purchases of capital goods exceeding one million pesos (P1,000,000.00) in a calendar month pursuant to Section 110 (A) of the Tax Code, as amended. 5. The assigned RO/s shall validate the original copies presented by the claimant, which shall be returned after stamping "VAT Refund/Credit Claimed" thereto. 6. The RO shall verify and ascertain that the amount of the claim applied for was shown as a deduction from the available input tax in the VAT return filed and submitted on or before the date of the application for VAT credit/refund. 7. The RO shall prepare a memorandum report recommending the approval/disapproval of the claim for VAT credit/refund for review and preliminary approval of the Group Supervisor and head of the processing office. 8. The head of office shall ensure compliance of the time frame per Annex "F" for the verification, processing and submission of the report and complete docket of the claim to the reviewing office. 9. In addition to the documents submitted by the taxpayer-claimant, the RO shall prepare, attach and submit, together with the abovementioned memorandum, which shall form part of the docket of the claim, the following: AIDSTE a. Documents Required for the VAT Credit/Refund Claim Docket (Annex "G.1") b. Authority to Issue VAT Refund/Tax Credit Certificate (Annex "H") c. VAT Credit/Refund Notice on Local Purchases (Annex "I.1") or VAT Credit/Refund Notice on Local Purchases and Importations (Annex "I.2"),whichever is applicable d. VAT Credit/Refund Covering Sheet (Annex "J.1"/"J.2"/"J.3") C. Verification of Claims Filed Under Section 112 (B) of the Tax Code, as Amended 1. The head of the processing office (RDO/LTAD) shall issue a Tax Verification Notice (TVN) to authorize the verification of the application of VAT credit/refund. 2. The assigned Revenue Officer/s shall: a. Furnish the taxpayer-claimant with the original copy of the TVN and require the acknowledgment receipt on the duplicate copy from his/its responsible officer or staff. b. Familiarize with the business of the taxpayer and determine the economic activity in which he/it is engaged in, whether sale of goods, properties, services and other lines of business aside from the principal undertaking, based on the VAT returns, financial statements and other sources within the Bureau and through on-line facilities. c. Establish the existence and legitimacy of the business of the taxpayer-claimant; i.e. ,he/it is not a mere conduit or agent to claim input taxes for another, by conducting ocular inspection of the taxpayer's premises, such as production plant, sales outlets and/or storage facilities, when necessary. d. Ascertain the legal basis of the claim. e. Verify from the Bureau's information system the following: Number of branches and facilities with corresponding locations Tax types duly registered for the branches and facilities Registered books of accounts for the principal office and branches The issued Authority to Print (ATP) for accountable forms required for principal registration such as sales invoices and official receipts, and for secondary registration, acknowledgment receipts and delivery receipts, etc. Permit to use loose-leaf invoices/receipts/books of accounts Approved Computerized Accounting System (CAS) and Computerized Books of Accounts (CBA) or components thereof f. Study the accounting methods and peculiarities in the industry group where the taxpayer belongs. AaCTcI g. Analyze the financial statements and notes to financial statements to determine the accounting method of sales and income recognition, accounting period, input tax existence in the asset account, sources of input taxes, related-party transactions and other relevant information. h. Conduct interview, where necessary, with responsible and authorized finance, accounting, sales and other personnel to further familiarize with business operations related to sales and purchases, as well as other activities that may relate to the claim. i. Request for books of accounts and other relevant accounting records, as necessary, to determine recording of the claim and reconcile findings and discrepancies noted. j. Perform verification procedures for sales of goods in Annex "C.2". k. Perform applicable verification procedures for sales of services in Annex "D". l. Perform applicable verification procedures for purchases and input tax in Annex "E". 3. If investigation was conducted for the taxable year(s)/period(s) covered by the claim, the RO shall refer to the report(s) corresponding audit to determine if the input taxes being claimed had been applied against the deficiency VAT or the input tax carried over from the previous period had been disallowed. acEHCD 4. In the course of verification of claims, the RO with the approval of the head of office and upon recommendation of the GS, shall: a. Recommend deduction from the claim such amount that may lead to the imposition of output VAT based on the submitted documents. b. Disallow input taxes which had been offset against VAT liability arising from audit findings and input taxes carried over from previous year/period which had been disallowed upon audit, as well as input taxes carried over which cannot be supported by suppliers' invoices and/or official receipts. c. If the taxpayer has a VAT liability, prepare a request for the computation of the total tax liability, up to the 90th day of the processing of the claim, from the Accounts Receivable Monitoring Division (ARMD)/Large Taxpayers Collection Enforcement Division (LTCED) of the National Office/Collection Division (CD) of the regional office. 5. The RO shall prepare a memorandum report recommending the approval/disapproval of the claim for VAT credit/refund for review and preliminary approval of the Group Supervisor and head of the processing office. 6. The head of office shall ensure compliance of the time frame per Annex "F" for the verification, processing and submission of the report and complete docket of the claim to the reviewing office. 7. In addition to the documents submitted by the taxpayer-claimant, the RO shall prepare, attach and submit, together with the abovementioned memorandum, which shall form part of the docket of the claim, the following: a. Documents Required for the VAT Credit/Refund Claim Docket (Annex "G.2") b. Authority to Issue VAT Refund/Tax Credit Certificate (Annex "H") c. VAT Credit/Refund Notice on Local Purchases (Annex "I.1") or VAT Credit/Refund Notice on Local Purchases and Importations (Annex "I.2"),whichever is applicable d. VAT Credit/Refund Covering Sheet (Annex "J.1"/"J.2"/"J.3") D. Verification of Claims Filed Under Section 229 of the Tax Code, as Amended 1. The head of the processing office (RDO/LTAD) shall issue a Tax Verification Notice (TVN) to authorize the verification of the application of VAT credit/refund. 2. The assigned Revenue Officer/s shall: a. Furnish the taxpayer-claimant with the original copy of the TVN and require the acknowledgment receipt on the duplicate copy from his/its responsible officer or staff. b. Verify the letter request of the taxpayer-claimant if it states the factual and/or legal basis of the claim. SDHTEC 3. In the course of the verification of claims, the RO with the approval of the head of office and upon recommendation of the GS, shall: a. Recommend deduction from the claim such amount that may lead to the imposition of output VAT based on the submitted documents; and b. If the taxpayer has a VAT liability, prepare a request for the computation of the total tax liability, up to the 90th day of the processing of the claim, from the Accounts Receivable Monitoring Division (ARMD)/Large Taxpayers Collection Enforcement Division (LTCED) of the National Office/Collection Division (CD) of the regional office. 4. The RO shall validate the bank deposit slip, debit memo or proof of payment of the erroneously or illegally collected tax submitted by the taxpayer-claimant against the Bureau's information system and/or stand-alone system, as well as the manual collection records of the processing office. 5. The RO shall determine the actual date of collection of the tax from the proofs of payment submitted by the taxpayer-claimant and from the aforesaid data within the Bureau to ascertain that the claim was filed within the two-year period from payment of the tax sought to be refunded. 6. The RO shall prepare a memorandum report recommending the approval/disapproval of the claim for VAT credit/refund for review and preliminary approval of the Group Supervisor and head of the processing office. 7. In addition to the documents submitted by the taxpayer-claimant, the RO shall prepare, attach and submit, together with the abovementioned memorandum, which shall form part of the docket of the claim, the following: a. Documents Required for the VAT Credit/Refund Claim Docket (Annex "G.3") b. Authority to Issue VAT Refund/Tax Credit Certificate (Annex "H") c. VAT Credit/Refund Notice on Local Purchases (Annex "I.1") or d. VAT Credit/Refund Notice on Local Purchases and Importations (Annex "I.2"),whichever is applicable e. VAT Credit/Refund Covering Sheet (Annex "J.1"/"J.2"/"J.3") E. Review of Reports and Dockets 1. The RO-reviewer shall conduct a review of the endorsed docket of the claim, which is recommended for approval/disapproval based on the representations of the documents attached to the docket that were verified by the processing office. Checking of the related supporting documents ( e.g. ,sales invoices/official receipts for purchases and sales including export documents and import documents) shall be on sample basis only due to limited time allotted for review depending on the degree of confidence that may be given on the result of evaluation and verification conducted by the processing offices. This process is not an investigation or verification of the documents in support of the schedules attached to the docket. 2. The RO-reviewer, GS and head of the reviewing office shall ensure the correctness of the legal basis of the claim, the propriety of the recommendation, whether approval or denial/disapproval, correctness of the amount recommended for approval, if any, and the completeness of the documents, schedules and working papers endorsed by the processing office. AScHCD 3. The RO-reviewer shall prepare the memorandum report containing the recommendation based on the result of review addressed to the concerned approving officer. 4. Except for claims filed under Section 229 of the Tax Code, as amended, the heads of office shall ensure compliance of the time frame per Annex "F" for the review and submission of the report and complete docket of the claim to the approving office. F. Approval of the Report 1. The approving official identified in Item II.10 of this Order shall prioritize the final review of the docket and memorandum report recommending approval or denial/disapproval of the claim. 2. The approving official shall ascertain the correctness of the legal basis of the claim, the propriety of the recommendation, whether approval or disapproval, and correctness of the amount recommended for approval, if any. 3. Except for claims filed under Section 229 of the Tax Code, as amended, the approving official shall ensure compliance of the time frame per Annex "F" for the final review and approval of the report. 4. Upon approval of the report, the approving official shall transmit the docket of the claim to the concerned office for preparation of the TCC/Disbursement Voucher (DV) or denial letter, whichever is applicable. For TCC to the processing office For VAT refund reviewing/processing office For denial letter processing office 5. The approving official shall sign the TCC/DV and Budget Utilization Request and Status (BURS) for approved claims, or denial letter based on an approved report recommending denial of the claim. G. Processing and Issuance of TCC/Refund Check 1. For claims approved where the application is a TCC, the RO of the processing office shall prepare the TCC. The RO, GS and head of office shall affix their initials on the copies of the TCC other than the original and forward the TCC with the docket to the authorized approving official for signature. If the taxpayer has a VAT liability and the approved claim will suffice to settle the liability, the RO shall prepare two (2) TCCs. One (1) TCC with a notation that the same shall be used to pay the VAT liability as computed by the ARMD/LTCED/Collection Division of the regional office, and another TCC for the balance after deducting the amount of the VAT liability. 2. For approved VAT refund claims from the following processing offices, the DV and BURS shall be prepared, to wit: AcICHD Processing Office Office to Prepare VCAD TARD LTAD LTAD RDO Regional Assessment Division 3. The approving official shall sign the DV and BURS, and transmit the complete docket with the approved report to the Finance Service in the National Office/Finance Division in the regional office. 4. The Accounting Division and Finance Service/Finance Division and Office of the Assistant Regional Director shall process and approve the Disbursement Voucher for payment of the claim based on the approved report and contents of the docket in accordance with existing rules and regulations within the prescribed time frame in Annex "F". 5. The Administrative Service in the National Office/Administrative and Human Resource Division in the regional office shall prepare and issue the refund check based on the approved voucher in accordance with existing rules and regulations. H. Transmittal of Docket of Approved Claim on Importation 1. The processing offices shall send an advance confirmation at [emailprotected] before the transmittal of the approved claims to the Bureau of Customs (BOC),indicating the following details: Name of Taxpayer Tax Type Period Covered Amount Approved Approving Official 2. The endorsement of the docket to the BOC shall be signed by the approving official identified in Item II.9 of this Order, except for the approved claims on importation processed by the LTAD, which shall be endorsed by the Commissioner. 3. Upon receipt of the acknowledgment and authentication from the Tax Credit Committee of the BOC regarding the abovementioned email, the RO who processed the claim or any BIR personnel authorized by the head of the processing office shall hand carry and submit the entire docket of the approved claim to the Receiving Unit of the BOC Commissioner. IV. REPORTING Pursuant to Section 6 of Joint Circular (JC) No. 001-2018 of the Department of Finance (DOF), Department of Budget and Management (DBM), Bureau of Treasury (BTr), Bureau of Customs (BOC) and Commission on Audit (COA), the BIR shall submit to the BTr, DBM and DOF a monthly report of actual VAT claims and disbursements/utilizations on or before the 8th day of the ensuing month. TAIaHE In view thereof, Tax Credit/Refund (TCR) reports shall be submitted to the Assessment Service, Attention: Chief, Assessment Programs Division not later than the 3rd day of each month, to wit: 1. From the processing offices Monthly Report on Claims for Tax Credit/Refund Filed (Annex "K") and Monthly Report on Tax Credit/Refund Processed (Annex "L") 2. From the reviewing offices Monthly Report on Claims for Tax Credit/Refund Reviewed and Acted Upon (Annex "M") 3. From the approving offices Monthly Report on Claims for Tax Credit/Refund Approved and Granted (Annex "N"') To facilitate the preparation and submission of the required report under JC No. 1-2018, the following shall be observed and complied with: 1. The duly signed TCR reports by the authorized officials, together with all copies attached to the report in Microsoft Excel, shall be scanned and emailed to [emailprotected] . 2. In case of issuance of the refund check or TCC beyond the 90-day period mandated under Section 112 (C) of the Tax Code, as amended, and implemented by Revenue Regulations (RR) No. 13-2018, as amended by RR No. 26-2018, the detailed reason for the delay shall be indicated on the Monthly Report on Claims for Tax Credit/Refund Approved and Granted. V. REPEALING CLAUSE All revenue issuances or portions thereof inconsistent herewith are hereby amended, modified or revoked accordingly. VI. EFFECTIVITY This Order takes effect immediately. (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue ANNEX A.1 Revised Checklist of Mandatory Requirements on Claims for VAT Credit/Refund ANNEX A.1.1 Taxpayer's Attestations ANNEX A.1.2 Schedule of Zero-Rated Sale of Goods ANNEX A.1.3 Schedule of Zero-Rated Sale of Services ANNEX A.1.4 Schedule of Exempt Sales (Goods and Services) ANNEX A.1.5 Schedule of Taxable Sales ANNEX A.1.6 Schedule of Local Purchases with Input Tax ANNEX A.1.7 Schedule of Importations ANNEX A.1.8 Monthly Schedule of Property, Plant and Equipment Additions (Local and Importation) Per Financial Statement ANNEX A.2 Checklist of Documentary Requirements for Claims for VAT Credit/Refund Pursuant to Section 112 (B) of the Tax Code, as Amended ___1. Three (3) original copies of the duly accomplished application for Tax Credit/Refund (BIR Form No. 1914) ___2. Tax Clearance issued by the Revenue District Office (RDO)/Large Taxpayers Audit Division (LTAD) due to retirement/cessation of business ___3. For corporate claimants, Certificate of Dissolution from the Securities and Exchange Commission (SEC) ___4. Photocopies of VAT returns for the periods covering the input tax claimed as certified by the BIR Office where the taxpayer-claimant is registered, except for tax returns filed through eFPS ___5. Schedule and photocopies of Sales Invoices (SIs) and/or Official Receipts (ORs) issued by the taxpayer-claimant covering the taxable periods of claim, duly certified by the authorized official of the taxpayer ___6. Schedule and photocopies of SIs and/or ORs supporting the input tax claim duly certified by the authorized official of the taxpayer ___7. List of ending inventory of goods, supplies, including capital goods ___8. Inventory of unused SIs/ORs together with the said SIs/ORs to be destroyed ___9. Original copy of Delinquency Verification Certificate (valid for 6 months from date of issuance) ANNEX A.3 Checklist of Documentary Requirements for Claims for VAT Credit/Refund Pursuant to Section 229 of the Tax Code, as Amended ___1. Three (3) copies of duly accomplished application for Tax Credit/Refund (BIR Form No. 1914) TCAScE ___2. Letter request stating the factual and/or legal basis for the justification of the claim ___3. Photocopies of VAT returns for the periods covering the input tax claimed as certified by the BIR office where the taxpayer-claimant is registered, except for tax returns filed through eFPS ___4. Copy of the proofs of payment of the taxes claimed for tax credit/refund ___5. Original copy of Delinquency Verification Certificate (valid for 6 months from date of issuance) ANNEX B Delinquency Verification Certificate ANNEX C.1 Verification Procedures for Sales of Goods [For Claims Filed Under Section 112 (A) of the Tax Code, as Amended] The assigned Revenue Officer shall: 1. Compare each category and amount of sales in the quarterly VAT returns, audited financial statements and general ledger with the classification and amount declared in the application for VAT credit/refund. Identify and reconcile discrepancies noted to determine taxable and exempt transactions, which will be subject to output tax or allocation of input tax. 2. Determine whether sales declared as zero-rated actually emanate from export sales and other transactions that may qualify as zero-rated or effectively zero-rated sales by verifying sales contracts, marketing agreements and other sales related documents. 3. Verify from the financial statements, VAT returns and books of accounts, as necessary, if there are local sales and exempt transactions which should not be subject to zero rate. 4. Check the correctness of the submitted Schedule of Zero-Rated Sales of Goods (Annex "A.1.2"),Exempt Sales ("A.1.4"),and Taxable Sales ("A.1.5"),and completeness of the supporting documents through the following procedures: a. Examine export sales invoices, airway bills/bills of lading and/or other proofs of exportation of goods for zero-rated sales. b. Check the accuracy of the details in the schedule against the sales invoices issued for all types of sale and for zero-rated sales, to include proofs of inward remittances of foreign currency representing proceeds from zero-rated sales. c. Match the amounts of exempt sales and taxable sales per schedule with those reflected in the VAT returns, and determine if the amount of output tax reflected has been correctly computed. d. Verify totals of zero-rated, exempt and taxable sales as a basis for allocation of input taxes not directly identifiable with each category of sales. e. Ascertain if the proceeds from zero-rated sales were paid for, in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP) by verifying the supporting bank credit memo, bank certifications, taxpayers' passbook or any document issued by the bank to prove the inward remittance of foreign currency from the zero-rated sales. 5. In case of constructive remittance, such as offsetting arrangement, secure a copy of any of the following: Board resolution as to offsetting arrangement Intercompany debit or credit memo on the amount of constructive remittance under the offsetting arrangement cTDaEH Loan documents or proofs of intercompany advances 6. If the amount of the inward remittance, whether actual or constructive, is less than the total declared zero-rated sales, the discrepancy shall be construed as unremitted export sales. Hence, the input tax pertaining to the discrepancy shall be deducted from the allowable input tax using the following formula: a. For companies with purely zero-rated sales: Unremitted Export Sales Total Zero-Rated Sales x Allowable Input Tax = Input Tax Allocable to Unremitted Export Sales b. For companies with zero-rated sales and taxable sales: Unremitted Export Sales Total Sales x Allowable Input Tax Inclusive of Output Tax = Input Tax Allocable to Unremitted Export Sales Computation of Allowable Input Tax: Total input tax claimed P xxx Less: Disallowed input tax per verification xxx Allowable input tax P xxx ==== An illustration is provided in Annex "C.3". 7. For indirect export sales or zero-rated sales other than those emanating from direct exports, verify from Audit Information Tax Exemption and Incentives Division (AITEID) the indorsement of investment promotion agency (IPA) on the exemptions/incentives granted during the period covered by the claim to the registered business enterprise (RBE) claiming such incentive. In cases where the records of AITEID do not show that the respective IPA has endorsed the RBE, verify from the IPA whether such RBE is qualified for certain tax incentives, particularly VAT zero-rating. In cases where the authenticity of the document can be verified electronically/online [ e.g. ,through "quick-response" (QR) codes)],attach to the docket a printout of the screenshot of the result of the verification from the facility hosting the electronic/online system with the duly-signed notation that the same was verified through the said system. 8. Determine compliance with invoicing requirements by: a. Verifying the Authority to Print (ATP) of the receipts/invoices or approved Permit to Use Computerized Accounting System issued by the office where the taxpayer is registered; b. Checking the issuance of sale invoices in accordance with Section 113 (B) of the Tax Code, as amended, and RMO No. 12-2013; and c. Ascertaining the issuance of sales invoices for VATable sales, zero-rated sales and exempt sales by taxpayers with mixed transactions in compliance with the invoicing requirements under Section 113 of the Tax Code of 1997, as amended. 9. Ensure that all issued sales invoices are accounted for, including those issued by branches. Take down any break in the sequence of the serial numbers of issued invoices and ask the taxpayer to account for the missing numbers. In case of cancellation, look for the original copy and note in the working papers the cancelled invoices, as well as those which are unaccounted. Determine if the unaccounted invoices pertain to local sales which should be subject to output tax. 10. Ascertain violation of invoicing requirements that should be imposed the compromise penalty under RMO No. 7-2015 and/or existing issuances. 11. Determine any "deemed sales" as defined in Section 106 (B) of the Tax Code, as amended, and deduct the corresponding output tax from the claim, where applicable. 12. Check if transactions with "Statements of Account," "Delivery Receipts" Collection or Acknowledgment Receipts and Debit Notes have corresponding issued sales invoices and recorded as sales. Any supplementary documents such as these without sales invoices should be verified if they are sales subject to output tax, which has to be deducted from the claim. cSaATC ANNEX C.2 Verification Procedures for Sales of Goods [For Claims Filed Under Section 112 (B) of the Tax Code, as Amended] The assigned Revenue Officer shall: 1. Compare each category and amount of sales in the quarterly VAT returns, audited financial statements and general ledger with the classification and amount declared in the application for VAT credit/refund. Identify and reconcile discrepancies noted to determine taxable and exempt transactions, which will be subject to output tax or allocation of input tax. 2. Check the correctness of the submitted schedules and completeness of the supporting documents through the following procedures: a. Check the accuracy of the details in the schedule against the sales invoices issued for all types of sale and for zero-rated sales, to include proofs of inward remittances of foreign currency representing proceeds from zero-rated sales. b. Match the amounts of exempt sales and taxable sales per schedule with those reflected in the VAT returns, and determine if the amount of output tax reflected has been correctly computed. c. Verify totals of zero-rated, exempt and taxable sales as a basis for allocation of input taxes not directly identifiable with each category of sales. d. Ascertain if the proceeds from zero-rated sales were paid for, in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP) by verifying the supporting bank credit memo, bank certifications, taxpayers' passbook or any document issued by the bank to prove the inward remittance of foreign currency from the zero-rated sales. 3. Determine compliance with invoicing requirements by: CHTAIc a. Verifying the Authority to Print (ATP) of the receipts/invoices or approved Permit to Use Computerized Accounting System issued by the office where the taxpayer is registered; b. Checking the issuance of sale invoices in accordance with Section 113 (B) of the Tax Code, as amended, and RMO No. 12-2013 and/or existing issuances; and c. Ascertaining the issuance of sales invoices for VATable sales, zero-rated sales and exempt sales by taxpayers with mixed transactions in compliance with the invoicing requirements under Section 113 of the Tax Code of 1997, as amended. 4. Ensure that all issued sales invoices are accounted for, including those issued by branches. Take down any break in the sequence of the serial numbers of issued invoices and ask the taxpayer to account for the missing numbers. In case of cancellation, look for the original copy and note in the working papers the cancelled invoices, as well as those which are unaccounted. Determine if the unaccounted invoices pertain to local sales which should be subject to output tax. 5. Ascertain violation of invoicing requirements that should be imposed the compromise penalty under RMO No. 7-2015 and/or existing issuances. 6. Determine any "deemed sales" as defined in Section 106 (B) of the Tax Code, as amended, and deduct the corresponding output tax from the claim, where applicable. 7. Check if transactions with "Statements of Account," "Delivery Receipts" Collection or Acknowledgment Receipts and Debit Notes have corresponding issued sales invoices and recorded as sales. Any supplementary documents such as these without sales invoices should be verified if they are sales subject to output tax, which has to be deducted from the claim. ANNEX C.3 Illustration of Computation of Allowable Input Tax ANNEX D Verification Procedures for Sales of Services The assigned Revenue Officer shall: 1. Compare each category and amount of sales in the quarterly VAT returns, audited financial statements and general ledger with the classification and amount declared in the application for VAT Credit/refund. Identify and reconcile discrepancies noted to determine taxable and exempt transactions, which will be subject to output tax or allocation of input tax. 2. Determine whether sales declared as zero-rated actually emanate from export sales and other transactions that may qualify as zero-rated or effectively zero-rated sales by verifying service contracts and/or other related documents. 3. Verify from the financial statements, VAT returns and books of accounts, where necessary, if there are local sales of services and exempt transactions which should not be subject to zero rate. 4. Check the correctness of the submitted Schedule of Zero-Rated Sales of Services (Annex A.1.3) and completeness of the supporting documents through the following procedures: ISHCcT a. Examine official receipts and/or other proofs of exportation of services. b. Check the accuracy of the details in the schedule against the official receipts, and proofs of inward remittances of foreign currency representing proceeds from zero-rated sales of services. c. Ascertain if the proceeds were paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP) by verifying the supporting bank credit memo, bank certifications, taxpayers' passbook or any document issued by the bank to prove the inward remittance of foreign currency from the zero-rated sales. 5. In case of constructive remittance, such as offsetting arrangement, secure a copy of any of the following: Board resolution as to offsetting arrangement Intercompany debit or credit memo on the amount of constructive remittance under the offsetting arrangement Loan documents or proofs of intercompany advances 6. If the amount of the inward remittance, whether actual or constructive, is less than the total declared zero-rated sales, the discrepancy shall be construed as unremitted export sales. Hence, the input tax pertaining to the discrepancy shall be deducted from the allowable input tax using the following formula: a. For companies with purely zero-rated sales of services: Unremitted Export Sales Total Zero-Rated Sales x Allowable Input Tax = Input Tax Allocable to Unremitted Export Sales b. For companies with zero-rated sales and taxable sales: Unremitted Export Sales Total Sales x Allowable Input Tax = Input Tax Allocable to Unremitted Export Sales Computation of Allowable Input Tax: Total input tax claimed P xxx Less: Disallowed input tax per verification xxx Allowable input tax P xxx ==== An illustration is provided in Annex "C.3". 7. For indirect export sales or zero-rated sales other than those emanating from direct exports, verify from Audit Information Tax Exemption and Incentives Division (AITEID) the indorsement of investment promotion agency (IPA) on the exemptions/incentives granted during the period covered by the claim to the registered business enterprise (RBE) claiming such incentive. In cases where the records of AITEID do not show that the respective IPA has endorsed the RBE, verify from the IPA whether such RBE is qualified for certain tax incentives, particularly VAT zero-rating. In cases where the authenticity of the document can be verified electronically/online [ e.g. ,through "quick-response" (QR) codes)],attach to the docket a printout of the screenshot of the result of the verification from the facility hosting the electronic/online system with the duly-signed notation that the same was verified through the said system. 8. Determine compliance with invoicing requirements by: a. Verifying the Authority to Print (ATP) of the receipts/invoices or approved Permit to Use Computerized Accounting System issued by the office where the taxpayer is registered; b. Checking the issuance of official receipts in accordance with Section 113 (B) of the Tax Code, as amended, and RMO No. 12-2013 and/or existing issuances; and c. Ascertaining the issuance of official receipts for VATable sales, zero-rated sales and exempt sales by taxpayers with mixed transactions in compliance with the invoicing requirements under Section 113 of the Tax Code of 1997, as amended. 9. Ensure that all issued official receipts are accounted for, including those issued by branches. Note any break in the sequence of the serial numbers of official receipts issued and ask the taxpayer to account for the missing numbers. In case of cancellation, look for the original copy and indicate on the working papers the cancelled numbers, as well as those which are unaccounted. CAacTH Determine if the unaccounted receipts pertain to local sales of service which should be subject to output tax. 10. Ascertain any violation of invoicing requirements that should be imposed the compromise penalty under RMO No. 7-2015 and/or existing issuances. 11. Determine any "deemed sales" as defined in Section 106 (B) of the Tax Code, as amended, and deduct the corresponding output tax from the claim, where applicable. 12. Check if transactions with "Statements of Account," Collection or Acknowledgment Receipts and Debit Notes have corresponding issued official receipts and recorded as sales. Any supplementary documents such as these without official receipts should be verified if they are sales subject to output tax, which has to be deducted from the claim. 13. Determine if the taxpayer is also engaged in the sales of goods which should have issued sales invoices and based on the taxable sales of goods, compute the corresponding output tax that should be deducted from the claim. ANNEX E Verification of Purchases and Input Tax The assigned Revenue Official shall: 1. Compare the nature and amount of purchases per VAT returns, financial statements and general ledger with those reflected in the application for VAT refund. Determine any discrepancy and request for reconciliation of the discrepancy. 2. Check the correctness and completeness of the submitted schedule of purchases (Annex "A.1.6") through the following procedures: a. Verify the accuracy of the details in the schedule against the 'suppliers'/'sellers' sales invoices, official receipts, deed of sale and other documents in support of the purchase of goods/properties and services. b. Check the correctness of the input tax shown separately on the invoice/receipt and match with the amount per schedule. 3. Ascertain that input tax credit is not recognized from the following: a. Purchases from non-VAT and/or exempt persons; b. Effectively zero-rated purchases; c. Purchases from VAT persons, which are personal in nature or not made in the course of trade or business; and d. Purchases of tax-exempt goods, properties or services from VAT-registered persons although covered by VAT invoices or receipts. 4. Determine compliance with the substantiation requirements for claims of input tax credit. a. For domestic purchases of goods, properties and services in the course of trade or business, these must be supported by VAT invoices and/or official receipts, showing the information required in Sec. 113 (B) and 237 of the Tax Code, as amended. IAETDc A cash register machine tape shall constitute valid proof of input tax credit only if it shows the information required under the aforementioned issuances, as implemented in Section 4.110.8 (4) of RR No. 16-2005, and Section 2 of RR No. 16-2018. b. Input tax on purchases of real property should be supported by a copy of the public instrument ( i.e. ,deed of absolute sale, deed of conditional sale, contract/agreement to sell) together with the VAT invoice and/or official receipt issued by the seller, as implemented in Sec. 4.110-8 (a) (3) of RR No. 16-2005, as amended. c. Claims for refund of unutilized input tax on importation shall be supported with a VAT Payment Certification from the Bureau of Customs (BOC) Revenue Accounting Division (RAD) including the photocopies of Import Entry and Internal Revenue Declarations (IEIRD) and/or Single Administrative Document (SAD),Statement of Settlement of Duties and Taxes (SSDT). 5. Validate the "VAT Payment Certification" issued by the Revenue Accounting Division of the BOC with the scanned copy of the said certification from the said office sent to the dedicated email address of the processing office of the BIR. 6. Verify actual existence of goods or properties that generate input tax credits whenever practicable and ascertain whether the same are actually used in the course of business. 7. Verify the authenticity and validity of the input taxes claimed by the taxpayer in his/its VAT returns. Per RMO Nos. 16-2007 and 22-2007 and RMC No. 29-2009, it is not only enough that the taxpayer is able to present, upon audit, the corresponding sales invoices/official receipts to evidence these purchases declared, but there is a further need to ascertain the legitimacy and factual existence of "big-ticket" items of purchases and validate whether these have been appropriately recorded in the books of accounts and reflected in the filed tax returns of both the taxpayer-claimant and the seller/supplier of goods/services. For this purpose, "big-ticket" items of purchases shall refer to local purchases made from suppliers whose individual gross cumulative sales to the particular taxpayer-purchaser accounts to more than five percent (5%) of said taxpayer-purchaser's annual or quarterly gross purchases, whichever is applicable, covering the period under audit. 8. Check the authenticity and correctness of substantial claims and "big ticket" items of input tax credits by: a. Requesting for Summary of Purchases from the NO a.1 Ascertain that the purchases made by the taxpayer for which input taxes have been claimed were likewise appropriately reported as sales by his/its respective suppliers in their corresponding VAT Returns/Income Tax Returns and in the summary lists of sales submitted to the BIR following the procedures in RMO No. 16-2007. a.2 In the absence of the Summary of Purchases in the NO, perform the following procedures: DcHSEa a.2.1 Access the BIR's Information System to determine whether the suppliers are duly registered as VAT taxpayers. If it is found out that the suppliers are not registered, or registered as Non-VAT taxpayers only but issuing VAT invoices, then pertinent information relative to the supplier and sales made to the taxpayer-claimant must be endorsed to the concerned investigating office having jurisdiction over the taxpayer-claimant for appropriate action. Disallowance of the input taxes attributable to the sales made by these questionable suppliers shall only be done if, aside from the sales invoice, no other evidence can be presented by the taxpayer-claimant to substantiate the authenticity of other purchases made. a.2.2 Obtain proof/evidence to substantiate the authenticity of the purchases such as copies of delivery receipts of the suppliers/check vouchers/paid checks issued by the taxpayer-claimant with "big ticket" purchases. b. Determining the allowable input tax on purchases of capital goods The aggregate acquisition cost of a depreciable asset in any calendar month refers to the total price, excluding the VAT, agreed upon for one or more assets acquired and not on the payments actually made during the calendar month. Thus, an asset acquired in installment for an acquisition cost of more than P1,000,000.00, excluding the VAT, will be subject to the amortization of input tax despite the fact that the monthly payments/installments may not exceed P1,000,000.00. b.1 Where the aggregate acquisition cost (exclusive of VAT) of the existing or finished depreciable capital goods purchased or imported during any calendar month does not exceed one million pesos (P1,000,000),the total input taxes will be allowable as credit against output tax in the month of acquisition. b.2 Where the aggregate acquisition cost (exclusive of VAT) of the depreciable capital goods in a calendar month exceeds one million pesos (P1,000,000),regardless of the acquisition cost of each capital asset purchased/imported, the input taxes shall be claimed as credit against output tax in the following manner: b.2.1 If the estimated useful life of a capital asset is five (5) years or more, the input tax shall be spread evenly over a period of sixty (60) months and the claim for input tax credit will commence in the calendar month when the capital asset is acquired. b.2.2 If the estimated useful life of a capital asset is less than 5 years, the input tax shall be spread evenly on a monthly basis by dividing the input tax by the actual number of months comprising the estimated useful life of the capital asset. The claim for input tax credit shall commence in the calendar month that the capital assets/goods were acquired. b.2.3 For the amortized portion of the input VAT on aggregate purchases of capital goods exceeding one million pesos (P1,000,000.00) in a month pursuant to Section 110(A)(2)(b) of the Tax Code, as amended, the following rules shall apply: SCaITA b.2.3.1 For current claims, the corresponding sales invoices and/or official receipts, including proofs of payment, if qualified as "big ticket" purchase, shall be required to be submitted and verified. b.2.3.2 For the amortized deferred input VAT which originated from purchases prior to the period of claim, acceptability of supporting documents is clarified as follows: b.2.3.2.1 If the source documents of the capital goods were submitted and verified during the time they were claimed, there is no need to re-submit the same source documents. Instead, the schedule of amortization of deferred input VAT in the approved report will be the basis in determining the amortized portion in the subsequent claims. The copy of the schedule should be authenticated by the head of the processing office by marking "Certified True Copy from the Original" on each and every page thereon to clearly show that the purchases have been duly verified in the previous VAT refund claim/s. In this regard, the processing office shall maintain a file for every claimant with amortized input VAT on purchases of capital goods exceeding P1,000,000.00 in a month. The processing office shall compare/reconcile the current amount claimed vis--vis the amount indicated in the schedule/s. cHECAS b.2.3.2.2 For claims coming from the amortized portion of the deferred input VAT on importation of capital goods with previous certifications from BOC, such certifications should be marked as "Certified True Copy from the Original" by the head of the processing office in addition to the schedules as certified mentioned above. b.3 In case the input VAT of capital goods was disallowed due to non-compliance with the invoicing requirements for local purchases or for some other reasons which may warrant absolute disallowance of the corresponding input VAT, the taxpayer-claimant is already barred from claiming the input VAT from the said purchases for the current claim and thereafter. c. Determining the allowable input tax on Construction in Progress Construction in progress (CIP) is the cost of construction work which is not yet completed. CIP is not depreciated until the asset is placed in service. Normally, upon completion, a CIP item is reclassified and the reclassified asset is capitalized and depreciated. CIP is considered, for purposes of claiming input tax, as a purchase of service, the value of which shall be determined based on the progress billings. Until such time the construction has been completed, it will not qualify as capital goods as herein defined, in which case, input tax credit on such transaction can be recognized in the month the payment was made; Provided, that an official receipt of payment has been issued based on the progress billings. In case of contract for the sale of service where only the labor will be supplied by the contractor and the materials will be purchased by the contractee from other suppliers, input tax credit on the labor contracted shall still be recognized on the month the payment was made based on a progress billing while input tax on the purchase of materials shall be recognized at the time the materials were purchased. Once the input tax has already been claimed while the construction is still in progress, no additional input tax can be claimed upon completion of the asset when it has been reclassified as a depreciable capital asset and depreciated." For purchases of goods, check the subsequent payment of the items purchased and determine if there are discounts granted, returns and allowances. Input tax credit should be reduced by the VAT portion of the said adjustment to the purchase. 9. If a VAT-registered person is also engaged in zero-rated sales, exempt and taxable activities, determine the input taxes directly attributable to each activity. However, if the input taxes paid for purchases of goods, properties or services could not be directly attributable to any activity, the same shall be allocated as shown in the illustration in Annex "C.3". ANNEX F Number of Days Allotted to Grant VAT Refund/Issue Tax Credit Certificate (TCC) Within the Ninety (90)-Day Period ANNEX G.1 Documents Required to be Prepared/Attached to a VAT Credit/Refund Case Docket for Claims Filed Under Section 112 (A) of the Tax Code of 1997, as Amended A. Documents, Working Papers and Attachments 1. Copy of Tax Verification Notice (TVN) 2. Documents and schedules submitted by the taxpayer-claimant per Checklist of Requirements in Annex A.1, excluding items 2.2 and 3.2 where the original copies will be returned to the taxpayer after verification thereof and the soft copies of sales invoices and official receipts for both sales and purchases including supporting documents shall be retained at the processing office. The processing office shall have the option to transmit the said documents to the Records Division/Section for file and future reference. 3. Documentary proofs of foreign currency remittances for export sales AHDacC 4. Working papers, with initials of the assigned RO/s, showing 4.1 Computation of recommended VAT refund/VAT due, whichever is applicable 4.2 Computation of adjustment to the amount of claim, if applicable 4.3 Alphalist of Local Suppliers with TIN as verified in ITS and total purchases per supplier, identifying the "Big Ticket" suppliers 4.4 Reconciliation of sales and input taxes of Financial Statements' figures with VAT returns' figures and application for VAT refund, if applicable 4.5 Allocation of input tax among zero-rated, exempt and taxable sales, if applicable 4.6 5. For "big ticket" purchases pursuant to RMO No. 16-2007: 5.1 Summary Lists of Sales/Purchases/Importations (SLS/SLP/SLI) as provided by the Audit Information, Tax Exemption and Incentives Division (AITEID) and/or corresponding result of the verification on RELIEF/BOC importations with reconciliation of RELIEF data vs. declaration of the claimant on local purchases and importation. 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. ,photocopies of paid checks, bank debit advice or any form of settlement in favor of the supplier for the account of the taxpayer-claimant) 5.2 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 data provided by the AITEID 6. Revenue Officer's Memorandum Report stating among others, the following: 6.1 The legal basis of the claim; 6.2 The business undertaking of the taxpayer; 6.3 The legitimacy and actual existence of the business; 6.4 Relevant verification procedures undertaken, particularly on "big ticket items" of purchases, proof of actual exportation and inward remittances of proceeds from zero-rated sales; 6.5 The reason(s) for denial/disallowances, if any; 6.6 Findings resulting from the verification that impact on the claim; and 6.7 Computation of amount of VAT credit/refund recommended, if any. 7. Authority to Issue VAT Refund/TCC (Annex "H") IDSEAH 8. VAT Credit/Refund Notice (Annex I.1 or Annex I.2, whichever is applicable) 9. Table of Contents 10. VAT Credit/Refund Covering Sheet (Annex "J.1"/"J.2"/"J.3") B. Separate Folder for Approved Claims on Importations In case of approved claims on importations, a separate folder/docket containing the following pertinent reports and documents has to be prepared for transmittal to the BOC after approval of the report: 1. From the processing office (VCAD/RDO): 1.1 Schedule of Importations for the Period of Claim; 1.2 Import entry declarations (IERD),Single Administrative Document (SAD),VAT Payment Certification issued by BOC RAD and import entry documents and official receipts/Statement of Settlement of Duties and Taxes (SSDT) covering payment of VAT; and 1.3 Indorsement to BOC signed by the authorized approving official. 2. From the reviewing office (TARD/Assessment Division of Regional Offices) for attachment to item 1 above: 2.1 Approved Authority to Issue VAT Refund/TCC; and 2.2 Approved Revenue Officer's Memorandum Report 3. From the processing office (LTAD) 3.1 Schedule of Importations for the Period of Claim; 3.2 Import entry declarations (IERD),Single Administrative Document (SAD),VAT Payment Certification and import entry documents and official receipts/Statement of Settlement of Duties and Taxes (SSDT); 3.3 Approved Authority to Issue VAT Refund/TCC; 3.4 Approved Revenue Officer's Memorandum Report; and 3.5 Indorsement to BOC signed by the Commissioner. ANNEX G.2 Documents Required to be Prepared/Attached to a VAT Credit/Refund Case Docket for Claims Filed Under Section 112 (B) of the Tax Code of 1997, as Amended A. Documents, Working Papers and Attachments 1. Copy of Tax Verification Notice (TVN) 2. Documents and schedules submitted by the taxpayer-claimant per Checklist of Requirements in Annex A.2 with the initial of the assigned RO on the schedules after verification and vouching of the supporting documents 3. Alphalist of Local Suppliers with TIN as verified in ITS and total purchases per supplier, identifying the "Big Ticket" suppliers aCIHcD 4. For "big ticket" purchases pursuant to RMO No. 16-2007: 4.1 Summary Lists of Sales/Purchases/Importations as provided by the Audit Information, Tax Exemption and Incentives Division (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. ,photocopies of paid checks, bank debit advice or any form of settlement in favor of the supplier for the account of the taxpayer-claimant) 4.2 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 data provided by the AITEID 5. Working papers showing 5.1 Computation of recommended VAT refund/VAT due, whichever is applicable 5.2 Computation of adjustment to the amount of claim, if applicable 5.3 Reconciliation of sales and input taxes of Financial Statements' figures with VAT returns' figures and application for VAT refund, if applicable 5.4 Alphalist of Local Suppliers with TIN as verified in ITS and total purchases per supplier, identifying the "Big Ticket" suppliers 5.5 Allocation of input tax among zero-rated, exempt and taxable sales, if applicable 5.6 All other schedules, analyses, and working papers as may be prepared by the assigned RO/s. 6. Revenue Officer's Memorandum Report stating among others, the following: 6.1 The legal basis of the claim; 6.2 The business undertaking of the taxpayer; 6.3 The legitimacy and actual existence of the business; 6.4 The reason(s) for denial/disallowances, if any 6.5 Findings resulting from the verification that impact on the claim; and 6.6 Computation of amount of VAT credit/refund recommended, if any. 7. Authority to Issue VAT Refund/TCC (Annex "H") 8. VAT Credit/Refund Notice (Annex I.1 or Annex I.2, whichever is applicable) 9. Table of Contents 10. VAT Credit/Refund Covering Sheet (Annex "J.1"/"J.2"/"J.3") B. Separate Folder for Approved Claims on Importations cHaCAS In case of approved claims on importations, a separate folder/docket containing the following pertinent reports and documents has to be prepared for transmittal to the BOC after approval of the report: 1. From the processing office (RDO): 1.1 Schedule of Importations for the Period of Claim; 1.2 Import entry declarations (IERD),Single Administrative Document (SAD),VAT Payment Certification issued by BOC RAD and import entry documents and official receipts/Statement of Settlement of Duties and Taxes (SSDT) covering payment of VAT; and 1.3 Indorsement to BOC signed by the authorized approving official. 2. From the reviewing office (Assessment Division of Regional Offices) for attachment to item 1 above: 2.1 Approved Authority to Issue VAT Refund/TCC; and 2.2 Approved Revenue Officer's Memorandum Report 3. From the processing office (LTAD) 3.1 Schedule of Importations for the Period of Claim; 3.2 Import entry declarations (IERD),Single Administrative Document (SAD),VAT Payment Certification and import entry documents and official receipts/Statement of Settlement of Duties and Taxes (SSDT); 3.3 Approved Authority to Issue VAT Refund/TCC; 3.4 Approved Revenue Officer's Memorandum Report; and 3.5 Indorsement to BOC signed by the Commissioner. ANNEX G.3 Documents Required to be Prepared/Attached to a VAT Credit/Refund Case Docket for Claims Filed Under Section 229 of the Tax Code of 1997, as Amended A. Documents, Working Papers and Attachments 1. Copy of Tax Verification Notice (TVN) 2. Documents and schedules submitted by the taxpayer-claimant per Checklist of Requirements in Annex A.3 with the initial of the assigned RO on the schedules after verification and vouching of the supporting documents 3. Working papers showing 3.1 Computation of recommended VAT refund/VAT due, whichever is applicable 3.2 Computation of adjustment to the amount of claim, if applicable 4. Revenue Officer's Memorandum Report stating among others, the following: 4.1 The legal basis of the claim; 4.2 The business undertaking of the taxpayer; 4.3 The legitimacy and actual existence of the business; 4.4 The reason(s) for denial/disallowances, if any 4.5 Findings resulting from the verification that impact on the claim; and 4.6 Computation of amount of VAT credit/refund recommended, if any. 5. Authority to Issue VAT Refund/TCC (Annex "H") DACcIH 6. VAT Credit/Refund Notice (Annex I.1 or Annex I.2, whichever is applicable) 7. Table of Contents 8. VAT Credit/Refund Covering Sheet (Annex "J.1"/"J.2"/"J.3") ANNEX H Authority to Issue VAT Refund/Tax Credit Certificate ANNEX I.1 VAT Refund/Credit Notice ANNEX I.2 VAT Refund/Credit Notice ANNEX J.1 VAT Refund/Credit Covering Sheet (For Claims Filed at the VAT Credit Audit Division) ANNEX J.2 VAT Refund/Credit Covering Sheet (For Claims Filed at Large Taxpayers Service) ANNEX J.3 VAT Refund/Credit Covering Sheet ( (For Claims Filed at Revenue District Offices) ANNEX K Monthly Report on Claims for Tax Refund/Issuance for Tax Credit Certificates Filed ANNEX L Monthly Report on Tax Credit/Refund Processed ANNEX M Monthly Report on Claims for Tax Refund/Issuance of Tax Credit Certificate Reviewed/Acted Upon ANNEX N Monthly Report of Tax Credit/Refund Approved and Granted