Mandatory Requirements and Guidelines, Policies and Procedures in the Processing of Claims for Value-Added Tax (VAT) Credit/Refund Except Those under the Authority and Jurisdiction of the Legal Group

June 23, 2023 REVENUE MEMORANDUM ORDER NO. 23-2023 SUBJECT : Mandatory Requirements and Guidelines, Policies and Procedures in the Processing of Claims for Value-Added Tax (VAT) Credit/Refund Except Those under the Authority and Jurisdiction of the Legal Group TO : All Internal Revenue Officials, Employees and Others Concerned This Order is issued to provide the updated guidelines and prescribe the mandatory documentary requirements and procedures in the processing and grant of VAT credit/refund claims under Sections 112, 204 (C) and 229 of the National Internal Revenue Code of 1997, as amended (Tax Code, as amended), in line with the latest developments on VAT introduced by Republic Act (R.A.) No. 10963 or the Tax Reform for Acceleration and Inclusion or TRAIN and R.A. No. 11534, also known as Corporate Recovery and Tax Incentives for Enterprises Act or the CREATE Act. HTcADC I. GENERAL 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 Tax Credits/Refunds" (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, pursuant to Section 106 (A) (2) (a) (1) and 106 (A) (2) (a) (6) for sale of goods and Section 108 (B) (2), 108 (B) (4), and 108 (B) (6) for sale of services, and whose claims are anchored under Section 112 (A) of the Tax Code, as amended, except for 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, as amended, in which case, Item 2 (b) hereof shall apply; b. Claims of taxpayer-claimants (1) engaged in other VAT zero-rated activities, other than direct exports mentioned in Section (I) (2) (a) of this Order, such as but not limited to 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; (2) whose VAT registration has been cancelled or change in the VAT registration status to non-VAT but with accumulated unutilized input taxes pursuant to Section 112 (B) of the Tax Code, as amended; and (3) those with claims for recovery of erroneously or illegally assessed or collected VAT pursuant to Sections 204 (C) and 229 of the Tax Code, as amended, shall be filed at the following offices which have jurisdiction over the taxpayer-claimant: CAIHTE b.1 The VAT Audit Section (VATAS) in the Regional Assessment Division; or b.2 The respective Revenue District Office (RDO) if without VATAS; or b.3 The Large Taxpayers VAT Audit Unit (LTVAU) of the Large Taxpayers Service (LTS). In all cases, the Revenue Officer (Assessment) designated as Revenue Officer of the Day shall receive claims filed at the aforesaid authorized offices and shall be responsible in checking the completeness of the documentary requirements submitted during filing of the application for VAT refund/credit. 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), shall be received and processed by the authorized processing office. 4. In cases where the taxpayers filed VAT refund claim/s beyond the 2-year prescriptive period required to file under Section 112 of the Tax Code, as amended, the processing office shall recommend outright denial of the claim/s. 5. If upon filing or during the processing of the VAT refund claim, the taxpayer-claimant has outstanding tax liabilities (final and executory) as defined under Section II (1) of Revenue Memorandum Order No. 11-2014, as evidenced by Delinquency Verification Certificate (DVC) (Annex "B") prescribed in Revenue Memorandum Circular No. 64-2019 or Annex A of RMO No. 29-2014, the processing/reviewing Office, shall notify the Collection Section of the Revenue District Office and Collection Division of the Revenue Region having jurisdiction over the taxpayer-claimant, of the approved VAT refund which may be used or garnished by the BIR to collect either fully or partially for the outstanding delinquent tax liability of the taxpayer-claimant, subject to existing tax laws and revenue issuances on the enforcement and settlement of delinquent accounts. 6. Where there is a tax delinquency but is pending request for abatement, compromise settlement or other legal remedies under the Tax Code, as amended, and no decision has been rendered by the National Evaluation Board (NEB) or by any authorized approving official of the BIR, the processing of the approved VAT refund/credit may still continue. aScITE 7. 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 supporting documents duly received by the processing office. a. In proper cases, a credit/refund for creditable input taxes shall be granted within ninety (90) days from the date of complete submission of the application, official receipts or invoices and other documents in support of the application filed in accordance with Sections 112 (A) and (B) of the same Tax Code, provided that should the Commissioner find that the grant of refund is not proper, the Commissioner must state in writing the legal and factual basis for the denial. b. In case of full or partial denial of the claim for tax credit/refund, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim, appeal the decision with the Court of Tax Appeals: Provided, however, that failure on the part of any official, agent, or employee of the BIR to act on the application within the ninety (90)-day period shall be punishable under Section 269 of the Tax Code, as amended. 8. 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 Section 112 and Sections 204 (C) and 229 of the Tax Code, as amended. The TVNs shall be manually-issued until such time that the Case Management System (CMS) under the Internal Revenue Integrated System (IRIS) is fully operational. 9. The received application shall likewise be encoded in the CMS and Tax Credit Refund modules under the IRIS. 10. The claims shall be processed and evaluated by the assigned Revenue Officer (RO)/Group Supervisor (GS) based on submitted documents and verification procedures prescribed under Annexes C.1, C.2 or C.3, whichever is applicable. 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. 11. Verification of the claim shall focus on the validity and existence of the zero-rated sales and related purchases in accordance with the documents submitted by the taxpayer-claimant. However, the books of accounts and accounting records shall be verified by the assigned RO to establish that such sales and purchases are indeed reported in the books of accounts of the taxpayer-claimant. Failure to submit and/or present the requested documents within the prescribed time/period therein stated may result in the full or partial denial of the claim. 12. The processing offices shall utilize the sales and purchases data available in the Electronic Invoicing/Receipting and Sales Transmission System (EIS) through the EIS for ROs Portal in line with Section 237 and 237-A of the Tax Code, as amended, and as implemented by Revenue Regulations Nos. 8-2022 and 9-2022. DETACa 13. Any findings that may result in a deficiency on internal revenue taxes, other than VAT, or may indicate a possible VAT assessment that need further documentation and clarification shall be referred to the Revenue District Office or Large Taxpayers Audit Division having jurisdiction over the taxpayer-claimant for further investigation. 14. A copy of the RO/s' memorandum report and documents pertaining to the findings shall be furnished to the concerned investigating office, which shall evaluate the report/findings referred to them and shall request for the issuance of an eLA, if the case warrants. However, if there is already an existing eLA covering the same period, the concerned investigating office shall also evaluate the findings and report of the processing office, and if they are accepted as valid, the concerned investigating office shall consolidate the findings referred to them with their findings and recommend the issuance of a Notice of Discrepancy/Preliminary Assessment Notice (PAN)/Final Assessment Notice (FAN) for the collection of the deficiency tax. Within fifteen (15) days from receipt of the referral, feedback on the action taken shall be properly communicated to the Assessment Service and the referring processing office. 15. 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 VCAD. b. Regional Assessment Division for dockets from VATAS and RDO. c. Office of the concerned Head Revenue Executive Assistant for Programs & Compliance Group of the LTS for dockets from LTVAU. 16. The following are the revenue officials authorized to approve/disapprove the claims for VAT refund/credit pursuant to Section 112 of the Tax Code, as amended: 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) Processing Office Amount of Claim Approving Revenue Official LTVAU Regardless of amount ACIR-LTS VATAS/RDO Regardless of amount Regional Director 17. For VAT refund/credit claims anchored under Sections 204 (C) and 229, the thresholds set under RMC No. 17-2018 shall be followed, to wit: HEITAD Amount of Claim Approving Revenue Official Not more than P10 million Regional Director More than P10 million up to P50 million ACIR-AS More than P50 million up to P150 million DCIR-OG More than P150 million Commissioner (CIR) Claims filed under the LTS ACIR-LTS (regardless of the amount) 18. 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 served by the originating processing office. 19. 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 absolute roll-out of IRIS. 20. Inasmuch as the original copies of supporting sales invoices or receipts for sales and purchases have been submitted as part of the mandatory requirements in the processing of VAT refund claims under Section 112 of the Tax Code, as amended, the entire tax docket of the claim shall be forwarded to the Commission on Audit (COA) if the claim is approved for refund with notice to claimant of such transmittal. Should there be a need to obtain a copy of the same, the requesting party shall submit a written request for a certified copy with COA at no cost, stating therein the reason for the request and the specific document/s that need/s to be certified. 21. For claims that have been denied in full, the processing office shall return the original copies of supporting sales invoices or receipts for sales and purchases to the taxpayer-claimants after stamping "VAT Credit/Refund Processed" to the supporting sales invoices or receipts for purchases. II. PROCEDURES 1. Checklisting and Pre-Verification Procedures a. Before officially receiving the application, the assigned Revenue Officer (RO) in the processing office (VCAD/VATAS/LTVAU/RDO) shall: aDSIHc i. Check the completeness and propriety in the accomplishment of the application form for VAT Credit/Refund (BIR Form No. 1914); and ii. Review the attached documents based on the applicable Checklist of Requirements to determine if these are complete with the required signatures and sworn statements. b. The RO shall ascertain that the name of the signatory appearing on the application form is that of the duly authorized person/representative as shown on the Special Power of Attorney or Secretary's Certificate, as the case may be. c. The head of the processing office (VCAD/LTVAU/VATAS/RDO) shall issue a Tax Verification Notice (TVN) to authorize the verification of the application for VAT credit/refund. d. The assigned RO shall furnish the taxpayer-claimant with the original copy of the TVN and require the acknowledgment receipt on the duplicate copy from his/its authorized representative. e. The assigned ROs shall immediately secure/print copies of the following documents available at the records/database of the BIR: Document to be Verified/Printed Source/s of Data/Information ATP/CAS/CRM/POS and Permit to use loose-leaf invoices/receipts/books of accounts IRIS/RDO/LTS Annual Income Tax Return (AITR) covering the period of claim IRIS-RFP, eFPS, eBIR Forms Audited Financial Statement for the year covered by the period of claim eAFS if claimant submitted thru the facility Latest quarterly VAT returns of the following: 1. Corresponding to the period of claim; and 2. Corresponding to the quarter showing the deduction of TCC/refund claim from the available input tax which must be filed on or before the date of application of the VAT refund IRIS-RFP, eFPS, eBIR Forms Approved application for VAT zero-rating issued by the appropriate BIR office, for effectively zero-rated sales under the CREATE Act that transpired upon the effectivity of RMC No. 24-2022 on March 9, 2022 up to the effectivity of RR No. 3-2023 on April 28, 2023 LTS for large taxpayers (LT), AITEID for non-LT Endorsement from the respective Investment Promotion Agency (IPA) of the claimant's Registered Export Enterprise (RBE) customer that such REE is qualified for the incentives granted under the CREATE Act particularly VAT zero-rating on its local purchases of goods and services that are directly and exclusively used in its registered project or activity corresponding to the year of claim issued by the IPA AITEID (LT and non-LT) BIR Form 1600 in support of the input tax claimed on services rendered by non-residents. IRIS-RFP, eFPS, eBIR Forms Only those tax returns filed on or before filing of the VAT refund claim or the issuance of a Letter of Authority, whichever comes first, shall be considered in the processing of the claim. ATICcS 2. Verification of Claims for VAT Refund Filed Under Section 112 (A) of the Tax Code, as amended a. Section 112 (A) of the Tax Code, as amended, provides that any VAT-registered person, whose sales are zero-rated or effectively zero-rated may, within two years after the close of the taxable quarter when the sales were made, apply for refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax. Accordingly, the assigned RO/s shall ascertain that the claim conforms with the following requisites for entitlement to VAT refund under Section 112 (A) of the Tax Code, as amended: i. The taxpayer-claimant must be VAT-registered. ii. There must be zero-rated or effectively zero-rated sales. iii. Input taxes were incurred or paid. iv. Such input taxes were directly attributable to zero-rated sales or effectively zero-rated sales. v. The input VAT was not applied against any output VAT liability. vi. The claim for input VAT credit/refund was filed within the two-year prescriptive period. b. In order to establish the propriety of the claim, the assigned RO/s shall strictly comply with Annex "C.1" for the verification procedures for claims under Section 112 (A) of the Tax Code, as amended. c. The heads of office shall ensure compliance of the time frame per Annex "G" for the review and submission of the report and complete docket of the claim to the approving office. ETHIDa 3. Verification of Claims for VAT Credit Filed Under Section 112 (B) of the Tax Code, as amended a. A VAT-registered person whose registration has been cancelled due to retirement from or cessation of business, or due to changes in or cessation of status under Section 106 (C) of the Tax Code of 1997, as amended, may, within two (2) years from the date of cancellation, apply for the issuance of tax credit certificate for any unused input tax which may be used in payment of other internal revenue taxes. b. The date of cancellation being referred hereto is the date of issuance of tax clearance by the BIR, after full settlement of all tax liabilities relative to cessation of business or change of status of the concerned taxpayer. c. Filing of the claim shall be made only after completion of the mandatory audit of all internal revenue tax liabilities covering the immediately preceding year and the short period return and the issuance of the applicable tax clearance/s by the appropriate BIR Office that has jurisdiction over the taxpayer. This will be the reckoning date of the two-year period prescribed under Section 112 (B) of the Tax Code, as amended. d. Despite the closure or cessation of the business, the taxpayer-claimant must ensure cooperation with the assigned ROs and availability of all documents that may be requested during verification if there are issues or findings that need further clarification so as not to cause delay on the 90-day processing of the VAT refund/credit. Failure to cooperate or submit the requested documents, other than the mandatory requirements, by the assigned ROs may result in the full or partial denial of the claim. e. In order to establish the propriety of the claim, the assigned RO/s shall strictly comply with Annex "C.2" for the verification procedures for claims under Section 112 (B) of the Tax Code, as amended. f. The heads of office shall ensure compliance of the time frame per Annex "G" for the review and submission of the report and complete docket of the claim to the approving office. 4. Verification of Claims for VAT Credit/Refund Filed under Sections 204 (C) and 229 of the Tax Code, as amended, for the Recovery of Input Tax Erroneously or Illegally Collected a. To differentiate from input tax credit or tax refund claim under Section 112 of the Tax Code, as amended, both the administrative claim and judicial claim for refund under Sections 204 (C) and 229 of the Tax Code must be made within two years from the date of the erroneous payment of VAT. TIADCc b. In any case, no such suit or proceeding shall be filed after the expiration of two (2) years from the date of payment of the tax or penalty regardless of any supervening cause that may arise after payment. c. In order to establish the propriety of the claim, the assigned RO/s shall strictly comply with Annex C.3 for the verification procedures for claims under Section 112 (C) of the Tax Code, as amended. 5. The RO shall prepare a memorandum report recommending the approval or denial of the claim for VAT credit/refund for review and preliminary approval of the Group Supervisor (GS) and head of the processing office. 6. Review of Reports and Dockets a. 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 done 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. b. 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 for 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. c. The RO-reviewer shall prepare the memorandum report containing the recommendation based on the result of review addressed to the concerned approving officer. 7. Approval of the Report a. The approving official identified in Item I.15 of this Order shall prioritize the final review of the docket and memorandum report recommending approval or denial of the claim. cSEDTC b. The approving official shall ascertain the correctness of the legal basis of the claim, the propriety of the recommendation, whether for approval or disapproval, and correctness of the amount recommended for approval, if any. c. 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, if threshold is within the authority of the Regional Director, or to TARD, if the threshold is within the authority of the National Office For VAT refund reviewing/processing office For denial letter processing office d. 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. 8. Processing and Issuance of TCC/Refund Check a. 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 tax 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. b. For approved VAT refund claims from the following processing offices, the DV and BURS shall be prepared as follows: Processing Office Office to Prepare VCAD TARD LTVAU LTVAU VATAS/RDO Regional Assessment Division c. 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. AIDSTE d. 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 "G". e. 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. 9. Transmittal of Docket of Approved Claim on Importation a. 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 b. The endorsement of the docket to the BOC shall be signed by the approving official identified in Item I.15 of this Order, except for the approved claims on importation processed by the LTVAU, which shall be endorsed by the Commissioner. c. 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. 10. Transmittal of dockets for approved claims, including the original copies of sales invoices and receipts for sales and purchases submitted by the taxpayer-claimant together with the paid disbursement vouchers to COA shall be done by the Accounting Division in the National Office/Finance Division in the Regional Office. III. 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. SDAaTC 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 "L") and Monthly Report on Tax Credit/Refund Processed (Annex "M") 2. From the reviewing offices Monthly Report on Claims for Tax Credit/Refund Reviewed and Acted Upon (Annex "N") 3. From the approving offices Monthly Report on Claims for Tax Credit/Refund Approved and Granted (Annex "O"). 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 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. IV. REPEALING CLAUSE This supersedes RMO No. 47-2020 and all other revenue issuances or portions thereof that are inconsistent herewith are hereby amended, modified or revoked accordingly. V. EFFECTIVITY This Order shall take effect for VAT refund/credit claims that will be filed starting July 1, 2023. (SGD.) ROMEO D. LUMAGUI, JR. 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.2 Checklist of Documentary Requirements for Claims for VAT Credit/Refund Pursuant to Section 112 (B) of the Tax Code, as Amended ANNEX A.3 Checklist of Documentary Requirements for Claims for VAT Credit/Refund Pursuant to Section 229 of the Tax Code, as Amended ANNEX "B" Delinquency Verification Certificate ANNEX C.1 Verification of Claims Filed under Section 112 (A) of the Tax Code, as Amended 1. The assigned Revenue Officer (RO) shall conduct the following preliminary procedures: AaCTcI a. 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. b. Establish the existence and legitimacy of the business of the taxpayer-claimant by conducting ocular inspection of the taxpayer's premises, such as principal place of business, production plant, sales outlets and/or storage facilities. c. Ascertain that the taxpayer-claimant is not included in the list of Cannot-Be-Located (CBL) taxpayers. d. Ascertain the legal basis of the claim. e. Verify from the Bureau's information system or offices concerned the following: i. Number of branches and facilities with corresponding locations ii. Tax types duly registered for the branches and facilities iii. Registered books of accounts for the principal office and branches iv. Annual Registration, 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 filed returns. acEHCD v. All other relevant information available in the BIR records. f. In cases where the authenticity of the documents submitted can be verified electronically or online [ e.g. , through "quick-response" (QR) codes)], the assigned evaluator shall attach to the docket, a printout or 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. g. Analyze the Audited Financial Statement 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 interviews, 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. 2. Establish that the VAT refund/tax credit claim conforms with the following requisites under Section 112 (A) of the Tax Code as amended a. The taxpayer-claimant must be VAT-registered. Ascertain that VAT is included in the registered Tax Types of the claimant per IRIS-Taxpayer Registration System. b. There must be zero-rated or effectively zero-rated sales. The assigned ROs must perform verification procedures for sales of goods in Annex "D.1" and/or for sales of services in Annex "E". c. Input taxes were incurred or paid. The assigned ROs must perform verification procedures for purchases of goods and services in Annex "F". d. Such input taxes were directly attributable to zero-rated sales or effectively zero-rated sales. Where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods of properties or services, and the amount of creditable input tax due or paid cannot be directly land entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the amount of sales and only the proportionate share of input taxes allocated to zero-rated or effectively zero-rated sales can be claimed for tax refund. Please refer to Annex "D.3" for the allocation template. EcTCAD e. The input VAT was not applied against any output VAT liability. i. In determining the creditable input tax, Section 110 (C) of the Tax Code of 1997, as amended, mandates that the sum of the excess input tax carried over from the preceding month or quarter and the input tax creditable to a VAT-registered person during the taxable month or quarter shall be reduced by the amount of claim for refund or tax credit for VAT and other adjustments, such as purchase returns or allowances and input tax attributable to exempt sale. ii. Ensure that the amount of 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 refund. The reason for the deduction is to ensure that the claimed input VAT shall not be applied against any future output VAT liability. To grant a claim for a refund, without proof of deduction of the corresponding amount, would be tantamount to granting twice the refund sought to be refunded, to the prejudice of the Government. f. The claim for input VAT refund was filed within the two-year prescriptive period. Tax refunds relating to zero-rated or effectively zero-rated sales must be filed within two (2) years after the close of the taxable quarter when sales were made in accordance with Section 112 (A) of the Tax Code. 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, the reviewing Office, shall notify the Collection Section of the Revenue District Office and/or Collection Division of the Revenue Region having jurisdiction over the taxpayer-claimant, of the approved VAT refund which may be used or garnished by the BIR to collect either fully or partially for the outstanding delinquent tax liability of the taxpayer-claimant, subject to existing tax laws and revenue issuances on the enforcement and settlement of delinquent accounts. 4. The assigned RO/s shall validate the original copies of sales invoices or receipts for sales and purchases presented by the claimant. In case of full denial, the same shall be returned to the claimant after stamping "VAT Credit/Refund Processed" to the original copies of SI/OR for purchases. SDHTEC 5. The RO shall prepare a memorandum report recommending the approval/disapproval of the claim for VAT refund/credit 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 "G" 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 "H.1") b. Authority to Issue VAT Refund/Tax Credit Certificate (Annex "I") c. VAT Credit/Refund Notice on Local Purchases (Annex "J.1") or VAT Credit/Refund Notice on Local Purchases and Importations (Annex "J.2"), whichever is applicable d. VAT Credit/Refund Covering Sheet (Annex "K.1/K.2/K.3/K.4"). ANNEX C.2 Verification of Claims Filed under Section 112 (B) of the Tax Code, as Amended 1. The assigned Revenue Officer/s shall: a. 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. b. Ascertain the legal basis of the claim. c. Request for the Audited Financial Statements covering the period of claim and analyze the same 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. d. Conduct interviews, 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. e. Perform verification procedures for sales of goods in Annex "D.2". f. Perform applicable verification procedures for sales of services in Annex "E". HSAcaE g. Perform applicable verification procedures for purchases and input tax in Annex "F". 2. 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. 3. 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. 4. 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. 5. The head of processing office shall ensure compliance of the time frame per Annex "G" for the verification, processing and submission of the report and complete docket of the claim. 6. 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 "H.2") b. Authority to Issue VAT Refund/Tax Credit Certificate (Annex "I") c. VAT Credit/Refund Notice on Local Purchases (Annex "J.1") or VAT Credit/Refund Notice on Local Purchases and Importations (Annex "J.2"), whichever is applicable d. VAT Credit/Refund Covering Sheet (Annex "K.1/K.2/K.3/K.4"). ANNEX C.3 Verification of Claims Filed under Sections 204 and 229 of the Tax Code, as Amended 1. The head of the processing office (VATAS/LTVAU) shall issue a Tax Verification Notice (TVN) to authorize the verification of the application of VAT credit/refund. AScHCD 2. The assigned Revenue Officer/s shall: a. Furnish the taxpayer-claimant with the original copy of the TVN and require the acknowledgment 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. 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 recommend deduction from the claim such amount that may lead to the imposition of output VAT based on the submitted documents. 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 "H.3") b. Authority to Issue VAT Refund/Tax Credit Certificate (Annex "I") c. VAT Credit/Refund Notice on Local Purchases (Annex "J.1") or VAT Credit/Refund Notice on Local Purchases and Importations (Annex "J.2"), whichever is applicable d. VAT Credit/Refund Covering Sheet (Annex "K.1/K.2/K.3/K.4"). ANNEX D.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. Ascertain and perform the following: a. Ensure that sales declared as zero-rated actually emanate from export sales and other transactions that may qualify as zero-rated or effectively zero-rated sales. Provided, further, that such sales are properly recorded and reported in the VAT returns, Audited Financial Statements and general ledger of the taxpayer-claimant. b. Section 238, in relation to Section 113 (A) of the Tax Code, as amended, mandates that a VAT-registered person shall issue a VAT invoice for every sale, barter or exchange of goods or properties. For zero-rated sales, the term "zero-rated sale" shall be written or printed prominently on the invoice. HESIcT c. In the case of zero-rated sales under Sections 106 (A) (2) (a) (1) and (3) of the Tax Code of 1997, as amended, the payments for the sales must have been made in acceptable foreign currency duly accounted for in accordance with the BSP rules and regulations. d. For zero-rated sale of goods to companies engaged in international shipping or air transport under Sec. 106 (A) (2) (a) (6) photocopy of contracts or other acceptable documents, such as but not limited to certification from Civil Aviation Authority of the Philippines (CAAP) or Philippine Ports Authority (PPA), to prove that the goods sold are delivered to foreign principals and/or clients that are engaged in international shipping or air transport. e. In case of effectively VAT zero-rated sales anchored under the CREATE Act, the assigned ROs shall ensure compliance with the implementing rules and regulations of the said law particularly RR No. 21-2021 and RMC No. 24-2022, including its succeeding amendments, particularly on the following: i. That the goods sold are used directly and exclusively in the registered project or activity of the registered export enterprise buyer; ii. That the respective investment promotion agency (IPA) that has jurisdiction over the REE buyer has endorsed to the Bureau that the said REE is qualified to the incentives granted under the CREATE particularly VAT during the period covered by the claim. This can be verified from the Audit Information Tax Exemption and Incentives Division (AITEID). iii. That the claimant has secured an approved VAT zero-rating from the BIR for claims covered upon the effectivity of RMC No. 24-2022 on March 9, 2022 up to the effectivity or RR No. 3-2023 on April 28, 2023; iv. That the taxpayer has properly observed the transitory provisions under the CREATE Act and RMC No. 24-2022, as amended; and v. That the goods sold are identifiable only to the qualified registered project or activity of the REE. Should the REE buyer has other registered activities or business operations and the particular purchase cannot be attributed to a specific activity, proper allocation of the input VAT claimed must be made. AcICHD f. For zero-rated sales other than those that are direct export or those covered by the incentives provision of Title XIII of the Tax Code of 1997, as amended by the CREATE Act, the documents required under the Special Laws (such as Renewable Energy Act) including its Implementing Rules and Regulations and corresponding BIR issuances shall be submitted. g. 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. 2. Compare each category and amount of sales in the quarterly VAT returns, audited financial statements and general ledger. Identify and reconcile discrepancies noted to determine taxable and exempt transactions, which will be subject to output tax or allocation of input tax. 3. 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. 4. 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. 5. 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 zero-rated sales, to include proofs of inward remittances of foreign currency representing proceeds from zero-rated sales. c. 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. caITAC d. 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. e. 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. 6. In case of constructive remittance, such as offsetting arrangement, verify the agreements or any correspondences submitted therewith. 7. 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 x Allowable Input Tax = Input Tax Allocable to Unremitted Export Sales Total Zero-Rated Sales b. For companies with zero-rated and taxable transactions: Unremitted Export Sales x Allowable Input Tax Inclusive of Output Tax = Input Tax Allocable to Unremitted Export Sales Total Sales Computation of Allowable Input Tax: Total input tax claimed Pxxx Less: Disallowed input tax per verification xxx Allowable input tax Pxxx ==== An illustration is provided for in Annex "D.3" 8. Determine compliance with invoicing requirements by: a. Verify whether the sales invoices issued are covered by the Authority to Print (ATP) or approved Permit to Use Computerized Accounting System submitted by the taxpayer; b. Checking the issuance of sales invoices in accordance with Section 113 (B) of the Tax Code of 1997, 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. TAIaHE 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 for. Determine if the unaccounted invoices pertain to local sales which should be subject to output tax. 10. Ascertain violation of invoicing requirements wherein a compromise penalty under RMO No. 7-2015 and/or existing issuances may be imposed, for indorsement to concerned RDO/LTDO. 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. ANNEX D.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. ICHDca 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: 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 of 1997, 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 for. 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, for endorsement to concerned RDO/LTDO. 6. Determine any "deemed sales" as defined in Section 106 (B) of the Tax Code of 1997, as amended, and deduct the corresponding output tax from the claim, where applicable. ANNEX D.3 Claim for VAT Refund ANNEX E Verification Procedures for Sale of Services The assigned Revenue Officer shall: 1. Ascertain and perform the following: cDHAES a. Ensure that sales declared as zero-rated actually emanate from export sales and other transactions that may qualify as zero-rated or effectively zero-rated sales. Provided, further, that such sales are properly recorded and reported in the VAT returns, Audited Financial Statements and general ledger of the taxpayer-claimant. b. Section 238, in relation to Section 113 (A) of the Tax Code of 1997, as amended, mandates that a VAT-registered person shall issue a VAT official receipt for every lease of goods or properties, and for every sale, barter or exchange of services. For zero-rated sales, the term "zero-rated sale" shall be written or printed prominently on the receipt. c. In the case of zero-rated sales under Sections 108 (B) (1) and (2) of the Tax Code of 1997, as amended, the payments for the sales must have been made in acceptable foreign currency duly accounted for in accordance with the BSP rules and regulations. d. For zero-rated sale of services to companies engaged in international shipping or air transport under Section 108 (B) (4) of the Tax Code of 1997, as amended, respectively, photocopy of contracts or other acceptable documents, such as but not limited to certification from Civil Aviation Authority of the Philippines (CAAP) or Philippine Ports Authority (PPA), to prove that the service is rendered to foreign principals and/or clients that are engaged in international shipping or air transport. e. In case of effectively VAT zero-rated sales anchored under the CREATE Act, the assigned ROs shall ensure compliance with the implementing rules and regulations of the said law particularly RR No. 21-2021 and RMC No. 24-2022, including its succeeding amendments, particularly on the following: i. That the goods sold are used directly and exclusively in the registered project or activity of the registered export enterprise buyer; ii. That the respective investment promotion agency (IPA) that has jurisdiction over the REE buyer has endorsed to the Bureau that the said REE is qualified to the incentives granted under the CREATE particularly VAT during the period covered by the claim. This can be verified from the Audit Information Tax Exemption and Incentives Division (AITEID). iii. That the claimant has secured an approved VAT zero-rating from the BIR for claims covered upon the effectivity of RMC No. 24-2022 on March 9, 2022 up to the effectivity or RR No. 3-2023 on April 28, 2023; iv. That the taxpayer has properly observed the transitory provisions under the CREATE Act and RMC No. 24-2022, as amended; and v. That the goods sold are identifiable only to the qualified registered project or activity of the REE. Should the REE buyer has other registered activities or business operations and the particular purchase cannot be attributed to a specific activity, proper allocation of the input VAT claimed must be made. TCAScE f. For zero-rated sales other than those that are direct export or those covered by the incentives provision of Title XIII of the Tax Code of 1997, as amended by the CREATE Act, the documents required under the Special Laws (such as Renewable Energy Act) including its Implementing Rules and Regulations and corresponding BIR issuances shall be submitted. g. 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. 2. Compare each category and amount of sales in the quarterly VAT returns, audited financial statements and general ledger. Identify and reconcile discrepancies noted to determine taxable and exempt transactions, which will be subject to output tax or allocation of input tax. 3. 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. 4. 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. 5. 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: a. Examine official receipts and 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. ASEcHI 6. In case of constructive remittance, such as offsetting arrangement, verify the agreements or any correspondences submitted therewith. 7. 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 x Allowable Input Tax = Input Tax Allocable to Unremitted Export Sales Total Zero-Rated Sales b. For companies with zero-rated and taxable transactions: Unremitted Export Sales x Allowable Input Tax Inclusive of Output Tax = Input Tax Allocable to Unremitted Export Sales Total Sales Computation of Allowable Input Tax: Total input tax claimed Pxxx Less: Disallowed input tax per verification xxx Allowable input tax Pxxx ==== An illustration is provided for in Annex "D.3" 8. Determine compliance with invoicing requirements by: a. Verifying whether the official receipts issued are covered by the Authority to Print (ATP) or approved Permit to Use Computerized Accounting System submitted by the taxpayer; 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. cTDaEH 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 for. Determine if the unaccounted receipts pertain to local sales of services which should be subject to output tax. 10. Ascertain any violation of invoicing requirements wherein a compromise penalty under RMO No. 7-2015 and/or existing issuances may be imposed, for endorsement to concerned RDO/LTDO. 11. Determine any "deemed sales" as defined in Section 106 (B) of the Tax Code of 1997, as amended, and deduct the corresponding output tax from the claim, where applicable. 12. 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 F Verification of Purchases and Input Tax The assigned Revenue Official shall: 1. Ascertain and perform the following: a. Ensure the legitimacy and factual existence of purchases and whether these have been appropriately recorded in the books of accounts and reflected in the filed tax returns of the taxpayer-claimant. b. The input tax claim must be recorded under the asset account "Input Tax" in the books of the claimant, with full observance of the accounting principle of timeliness, before the same can be claimed as tax credit. Input taxes that have been capitalized or charged to expense or reimbursed cannot be claimed as tax credit or tax refund during any taxable year, notwithstanding any adjustment made during the succeeding taxable year. c. The principal evidence for input VAT on goods and/or properties shall be invoices while official receipt shall be the principal evidence for input VAT on services and/or lease of properties. d. Source documents for input VAT must be ascertained in compliance with the invoicing requirements pursuant to Section 110 (A) in relation to Section 113 of the Tax Code of 1997, as amended. e. Claims for refund of unutilized input VAT on importation shall be supported with a "VAT Payment Certification" issued by the Revenue Accounting Division (RAD) of the Bureau of Customs (BOC), including the supporting Import Entry and Internal Revenue Declarations (IERD)/Informal Import Declaration and Entry or Single Administrative Document (SAD). ITAaHc f. Verify from the list of "Cannot be Located" (CBL) taxpayers if the suppliers of the taxpayer claimant are included therefrom. Pursuant to RMC No. 98-2010 input taxes from such un-located taxpayers shall be disallowed. g. In addition to the regular verification of sales invoices, official receipts, books of accounts and accounting records of the claimant, it must be ensured that the suppliers of "big-ticket items" were duly paid as evidenced by checks or other similar documents as proofs of payment. "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 being claimed. h. For the amortized portion of the deferred 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 of 1997, as amended, the following rules shall apply: i. The amortization of the input VAT on aggregate depreciable 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 of 1997, as amended, shall only be allowed until December 31, 2021 after which taxpayers with unutilized input VAT on capital goods purchased or imported shall be allowed to apply the same as scheduled until fully utilized. ii. For purchase of capital goods made starting January 1, 2022, no amortization shall be made, and the input VAT shall be claimed on the month of purchase. 2. Compare the nature and amounts of purchases per VAT returns, financial statements and general ledger with those related to input VAT reflected in the application for VAT refund. Determine any discrepancy and request for reconciliation of the variance. 3. 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 , and official receipts. b. Check the correctness of the input tax shown separately on the invoice/receipt and match with the amount per schedule. cSaATC 4. 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 VAT-exempt goods, properties or services from VAT-registered persons although covered by VAT invoices or receipts. 5. 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 Sections 113 (B) and 237 of the Tax Code of 1997, as amended. 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 with 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 Section 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 (IERD)/Informal Import Declaration and Entry or Single Administrative Document (SAD). 6. 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. 7. 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 National Office (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. CHTAIc a.2 In the absence of the Summary of Purchases in the NO, perform the following procedures: 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. 8. Determine the allowable input tax on purchases of capital goods. The RO shall verify and ascertain that all input taxes claimed are within the period covered by the application for VAT 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 of 1997, as amended. 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. a. 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. cHDAIS b. 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.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 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.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 of 1997, as amended, the following rules shall apply: b.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.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.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. b.3.2.1 For claims coming from the amortized portion of the deferred input VAT on importation of capital goods with photocopies of previous certifications from BOC-RAD, in addition to the schedules as certified mentioned above. EATCcI b.4 In case the input VAT of capital goods was disallowed due to noncompliance 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. b.5 For purchase of capital goods made starting January 1, 2022, no amortization shall be made and the input VAT shall be claimed on the month of purchase in accordance with Section 110 (B) of the Tax Code, as amended. b.6 For claims covering taxable year 2021, the assigned RO shall check from the books of accounts for any additions to property, plant and equipment with the corresponding input claimed therefrom and this will be included in the working papers to be attached to the docket. c. Determining the allowable input tax on Construction in Progress (applicable for purchases covering taxable year 2021) 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. ISHCcT 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 "D.3". ANNEX G Number of Days Allotted to Grant VAT Refund/Issue Tax Credit Certificate (TCC) within the Ninety (90)-Day Period I. Time frame to Process, Review and Approve Claims for Refund/Issuance of TCC a. VCAD Claims Particulars No. of Days from Receipt of Application For claims not more than P50,000,000 For claims more than P50,000,000 up to P150,000,000 For claims more than P150,000,000 Verification/processing 55 53 53 Review (TARD) 15 15 13 Recommending/Final Approval ACIR-AS 5 4 3 DCIR-OG 3 3 CIR 3 Total No. of Days 75 75 75 b. LTS Claims Particulars No. of Days from Receipt of Application Recommended Amount Pertains to Local Purchases Only Recommended Amount Includes Importation Verification/processing 62 60 Review (Office of the HREA) 8 8 Approval by ACIR-LTS 5 5 Approval by CIR 2 Total No. of Days 75 75 c. Regional Claims Particulars No. of Days from Receipt of Application Verification/processing (VATAS/RDO) 55 Review (Assessment Division) 15 Approval by Regional Director 5 Total No. of Days 75 II. Time frame to Process Payment of the Approved VAT Refund Claims a. VAT Refund Claims Filed and Processed at the BIR National Office Processing Office Days Allotted Finance Service/Accounting Division 10 Administrative Service 5 Total No. of Days 15 b. VAT Refund Claims Filed and Processed at the Regional Offices DHITCc Processing Office Days Allotted Finance Service/Accounting Division 5 Finance Division 4 Administrative and Human Resource Management Division 3 Office of the Regional Director 3 Total No. of Days 15 ANNEX H.1 Documents Required to be Prepared/Attached to a VAT 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) served to the taxpayer-claimant. 2. Documents and schedules submitted by the taxpayer-claimant per Checklist of Requirements in Annex A.1. In case of denied claims, the processing office shall transmit the said documents to the Records Division/Section for file and future reference, except for the Original Copies of Sales Invoices or Official Receipts for sales and purchases. CAacTH 3. Documentary proofs of foreign currency remittances for export sales. 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 Alphalist of Local Suppliers with TIN as verified in ITS and total purchases per supplier, identifying the "Big Ticket" suppliers 4.3 Reconciliation of sales and input taxes of Audited Financial Statements' figures with VAT returns' figures and application for VAT refund, if applicable 4.4 Allocation of input tax among zero-rated, exempt and taxable sales, if applicable 4.5 Gap analysis conducted by the ROs in relation to item 9 of Annex D.1 and Annex E of this Order 5. For the result of verification of the returns in relation to the claim for refund, the assigned ROs shall immediately secure/print copies of the following documents available at the records/database of the BIR: Document to be Verified/Printed Source/s of Data/Information ATP/CAS/CRM/POS and Permit to use loose-leaf invoices/receipts/books of accounts IRIS/RDO/LTS Annual Income Tax Return (AITR) covering the period of claim IRIS-RFP, eFPS, eBIR Forms Audited Financial Statement for the year covered by the period of claim eAFS if claimant submitted thru the facility Latest quarterly VAT returns of the following: 1. Corresponding to the period of claim; and 2. Corresponding to the quarter showing the deduction of TCC/refund claim from the available input tax which must be filed on or before the date of application of the VAT refund IRIS-RFP, eFPS, eBIR Forms Approved application for VAT zero-rating issued by the appropriate BIR office, for effectively zero-rated sales under the CREATE Act that transpired upon the effectivity of RMC No. 24-2022 on March 9, 2022 up to the effectivity or RR No. 3-2023 on April 28, 2023 LTS for large taxpayers (LT), AITEID for non-LT Endorsement from the respective Investment Promotion Agency (IPA) of the claimant's Registered Export Enterprise (RBE) customer that such REE is qualified for the incentives granted under the CREATE Act particularly VAT zero-rating on its local purchases of goods and services that are directly and exclusively used in its registered project or activity corresponding to the year of claim issued by the IPA AITEID (LT and non-LT) BIR Form 1600 in support of the input tax claimed on services rendered by non-residents IRIS-RFP, eFPS, eBIR Forms Only those tax returns filed on or before filing of the VAT refund claim or the issuance of a Letter of Authority, whichever comes first, shall be considered in the processing of the claim. cEaSHC 6. For the result of verification of the schedules of sales and purchases, the assigned ROs shall print only those with findings. However, all the results of verification shall be stored in digital format and stored as additional schedules in the storage device submitted by the taxpayer-claimant. 7. For "big ticket" purchases, 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). 6. n 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 sales and purchases as well as input taxes claimed are properly recorded in the books of the claimant; 6.5 Relevant verification procedures undertaken, particularly on "big ticket items" of purchases, proof of actual exportation and inward remittances of proceeds from zero-rated sales; 6.6 The reason(s) for denial/disallowances, if any; 6.7 Findings resulting from the verification that impact on the claim; and 6.8 Computation of amount of VAT refund recommended, if any. 7. Authority to Issue VAT Refund/TCC (Annex "I") 8. VAT Credit/Refund Notice (Annex J.1 or Annex J.2, whichever is applicable) 9. Table of Contents 10. BIR Form No. 0514 generated from the IRIS-CMS 11. VAT Credit/Refund Covering Sheet (Annex "K.1"/"K.2"/"K.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: IAETDc 1. From the processing office (VCAD/VATAS): 1.1 Schedule of Importations for the Period of Claim; 1.2 Import Entry and Internal Revenue Declarations (IEIRD)/Informal Import Declaration and Entry or Single Administrative Document (SAD); 1.3 Copy of VAT Payment Certification issued by the BOC Revenue Accounting Division (RAD); and 1.4 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 (LTVAU) 3.1 Schedule of Importations for the Period of Claim; 3.2 Import Entry and Internal Revenue Declarations (IEIRD)/Informal Import Declaration and Entry or Single Administrative Document (SAD); 3.3 Copy of VAT Payment Certification issued by the BOC Revenue Accounting Division (RAD); 3.4 Approved Authority to Issue VAT Refund/TCC; 3.5 Approved Revenue Officer's Memorandum Report; and 3.6 Indorsement to BOC signed by the Commissioner. ANNEX H.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) duly served to the taxpayer-claimant. 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. CTIEac 3. Alphalist of Local Suppliers with TIN as verified in ITS and total purchases per supplier, identifying the "Big Ticket" suppliers 4. For "big ticket" purchases, 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. Working papers showing 5.1 Computation of recommended VAT refund/VAT due, whichever is applicable 5.2 Reconciliation of sales and input taxes of Audited Financial Statements' figures with VAT returns' figures and application for VAT refund, if applicable 5.3 Alphalist of Local Suppliers with TIN as verified in ITS and total purchases per supplier, identifying the "Big Ticket" suppliers 5.4 Allocation of input tax among zero-rated, exempt and taxable sales, if applicable 5.5 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 "I") 8. VAT Credit/Refund Notice (Annex J.1 or Annex J.2, whichever is applicable) 9. Table of Contents 10. VAT Credit/Refund Covering Sheet (Annex "K.1"/"K.2"/"K.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: DcHSEa 1. From the processing office (VATAS/RDO): 1.1 Schedule of Importations for the Period of Claim; 1.2 Import Entry and Internal Revenue Declarations (IEIRD)/Informal Import Declaration and Entry or Single Administrative Document (SAD); 1.3 Copy of VAT Payment Certification issued by the BOC Revenue Accounting Division (RAD); and 1.4 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 (LTVAU) 3.1 Schedule of Importations for the Period of Claim; 3.2 Import Entry and Internal Revenue Declarations (IEIRD)/Informal Import Declaration and Entry or Single Administrative Document (SAD); 3.3 Copy of VAT Payment Certification issued by the BOC Revenue Accounting Division (RAD); 3.4 Approved Authority to Issue VAT Refund/TCC; 3.5 Approved Revenue Officer's Memorandum Report; and 3.6 Indorsement to BOC signed by the Commissioner. ANNEX H.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) duly served to the taxpayer-claimant. 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; SaCIDT 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 "I") 6. VAT Credit/Refund Notice (Annex J.1 or Annex J.2, whichever is applicable) 7. Table of Contents 8. VAT Credit/Refund Covering Sheet (Annex "K.1"/"K.2"/"K.3") ANNEX I Authority to Issue VAT Refund/Tax Credit Certificate ANNEX J.1 VAT Refund/Credit Notice ANNEX J.2 VAT Refund/Credit Notice ANNEX K.1 VAT Refund/Credit Covering Sheet ANNEX K.2 VAT Refund/Credit Covering Sheet ANNEX K.3 VAT Refund/Credit Covering Sheet ANNEX K.4 VAT Refund/Credit Covering Sheet ANNEX L Monthly Report on Claims for Tax Refund/Issuance for Tax Credit Certificates Filed For the Month of ___________________ ANNEX M Monthly Report on Tax Credit/Refund Processed For the Month of ___________________ ANNEX N Monthly Report on Claims for Tax Refund/Issuance of Tax Credit Certificate Reviewed/Acted Upon For the Month of ___________________ ANNEX O Monthly Report of Tax Credit/Refund Approved and Granted For the Month of ___________________ ATTACHMENT Major Changes in the Policies and Procedures in RMO 47-2020 1. Change in venue for filing of VAT refund claims to address the clamor from various taxpayer groups for the establishment of a single office to process VAT refund claims due to varying procedures and interpretations to certain issues. HTcADC CLAIMANT WHERE TO FILE PROPOSED Direct Exporters VAT Credit Audit Division VAT Credit Audit Division Indirect exporters/other zero-rated sales registered in RDOs RDO having jurisdiction over taxpayer's registered address VAT Audit Section (VATAS)/RDO if w/o VATAS Indirect exporters/other zero-rated sales registered in LTS Large Taxpayers Audit Division having jurisdiction over taxpayer's registered address LT VAT Audit Unit VAT Claim under Section 112B Large Taxpayers Audit Division/RDO having jurisdiction over taxpayer's registered address Large Taxpayers Audit Division/VATAS if RR has VATAS/RDO having jurisdiction over taxpayer's registered address 2. Significant reduction and easing of compliance in the mandatory requirements for VAT refund claims PARTICULARS Previous REQUIREMENTS (RMC 47-2019) Revised REQUIREMENTS (RMO NO. 47-2020) Proposed Requirements Total number of requirements 39 30 Particulars Exporters Other Claimants Goods Service RE Indirect General-Regular 5 5 5 5 Sale of goods or service 2 3 3 2 Local Purchases 2 2 2 2 Claims specific to RE - - 1 - Basic requirements 9 10 11 9 Additional requirements New claimant 1 1 1 1 With offsetting of receivables 1 1 - - With importation 2 2 2 2 With VAT withheld from services by NRFC 1 1 1 1 With creditable VAT withheld 1 1 1 1 With other income per AFS 1 1 1 1 Total additional 7 7 6 6 Total requirements 16 17 17 15 Documents obtained from local sources that need to be certified by issuing agency or person 16 5 1 (BOC RAD Certification) Documents available at the BIR records or database 6 6 0 if with eFPS submission 1 if NO eAFS submission Notarized Sworn affidavits 5 2 2 but reduced contents Documents obtained abroad that need to be consularized/apostilled 1 None None Requirements that need to be scanned None 2 (SI/OR for sales and purchases) None Submission of photocopies and original copies of sales invoices/official receipts for sales of goods or services including supporting documents Both photocopy and original Original copies only (scanned copies in a memory device). The original copies shall be returned to the claimant after processing thereof) Original copies only but to be retained by COA. No more scanned copies. The original copies shall be returned to the claimant if fully denied. Submission of photocopies and original copies of sales invoices/official receipts for purchases of goods or services Both photocopy and original Original copies only (scanned copies in a memory device). The original copies shall be returned to the claimant after verification and stamping of "VAT Refund Claimed" and processing thereof) Original copies only but to be retained by COA. No more scanned copies. The original copies shall be returned to the claimant after stamping of "VAT Refund Claimed" if fully denied. 3. Lacking documentary requirements and prescribed claims: CAIHTE PARTICULARS RMO NO. 47-2020 Proposed Filed beyond 2-year period Not accepted To be accepted but for denial in order for claimant to avail of judicial remedy With delinquent tax liabilities Not accepted Accepted but to be offset against the approved VAT refund 4. Documentary Requirements: Documentary Requirements (Annex A.1 of RMO 47-2020) PROPOSED REVISION Remarks 1. GENERAL REQUIREMENTS 1.1 Photocopy of SEC Reg./Articles of Incorporation and By-Laws (for corporation/partnership) Photocopy of SEC Reg./Articles of Incorporation and By-Laws for corporation/partnership A separate requirement for first-time claimants or if there is change in corporate/trade name or business purpose 1.2 Photocopy of DTI Registration (for sole proprietorship) Photocopy of DTI Registration for sole proprietorship 1.3 Photocopy of latest General Information Sheet duly received by SEC Deleted 1.4 3 Original Copies of Application for Tax Credit/Refund (BIR Form No. 1914) Retained 1.5 Photocopy of latest quarterly VAT returns of the following: Deleted To be secured/printed thru BIR records/database 1.5.1 corresponding to the period of claim 1.5.2 corresponding to the quarter showing the deduction of TCC/refund claim from the available input tax which must be filed on or before the date of application of the VAT refund 1.6 Photocopy of Annual Income Tax Return (AITR) with Audited Financial Statements (AFS) complete with Notes to AFS, if applicable, covering the period of claim Audited Financial Statements (AFS) complete with Notes to AFS, if AFS was not submitted in the eAFS Facility of BIR AITR and AFS (if submitted thru eAFS) to be secured/printed thru BIR records/database 1.7 Original copy of Delinquency Verification Certificate [valid for six (6) months from date of issuance]: 1.7.1 For non-Large Taxpayers: from the (1) Collection Division of the respective region and (2) Accounts Receivable Monitoring Division (ARMD) Original copy of Delinquency Verification Certificate issued by Accounts Receivable Monitoring Division (ARMD) Retained ARMD DVC only 1.7.2 For Large Taxpayers (LT): from the (1) LT Collection Enforcement Division/LT Division Cebu/Davao and (2) ARMD Deleted 1.8 For claims with input VAT on importation, original copy of certification from DOF-OSS Center that the claimant has not filed a similar claim(s) covering the same period Deleted DOF-OSS Center has been abolished 1.9 Original copy of Notarized Secretary's Certificate (for corporate claimant)/Special Power of Attorney (for individual claimant) stating the authorized representative/s to file, sign documents on behalf of the claimant and/or follow-up VAT refund claims together with the photocopy of at least one (1) valid government-issued ID with three (3) specimen signatures Original copy of Notarized Secretary's Certificate (for corporate claimant)/Special Power of Attorney (for individual & ROHQ claimant) or similar documents stating the authorized representative/s to file, sign documents on behalf of the claimant and/or follow-up VAT refund claims together with the photocopy of at least one (1) valid government-issued ID with three (3) specimen signatures of authorized representative/s This clarifies which document the ROHQ claimants will submit 1.10 Original copy of the duly-notarized Taxpayer's Attestations as to the following (Annex A.1.1) a. Taxpayer's profile, books of accounts and accounting records; b. The amount of sales declared (with breakdown as to amount of zero-rated, taxable and exempt sales); c. Completeness and authenticity of the documents submitted; d. The ending inventory as of close of the period being claimed has been used directly/indirectly in the products exported, if applicable; and e. The company did not file any and/or will not file any similar claim from another BIR office and/or the DOF-OSS (for claims with importation); and f. That the books of accounts and accounting records are available for verification by authorized BIR Revenue Officer(s) upon request and that failure on our part to present said books and records is a ground for denial of the refund. Original copy of the duly-notarized Taxpayer's Attestations, contents of which are as required in Annex A.1.1 Only the following were required: a. BIR permits and accounting of sales invoices/official receipts used b. Completeness and authenticity of the documents submitted; c. The ending inventory as of close of the period being claimed has been used directly/indirectly in the products exported, if applicable; and d. That the books of accounts and accounting records are available for verification by authorized BIR Revenue Officer(s) upon request and that failure on our part to present said books and records is a ground for denial of the refund. 2. SALE OF GOODS OR SERVICES SALE OF GOODS OR SERVICES 2.1 Schedule of Zero-Rated, Exempt and Taxable Sales with details following the prescribed format in Annexes A.1.2, A.1.3, A.1.4 and A.1.5. For direct export sales of goods or services, attach photocopies of proof of remittances arranged in accordance with Annex "A.1.2" or "A.1.3", whichever is applicable. Retained 2.2 Original and soft copies (stored in a separate memory device) of Sales Invoices and AWB/Final BL for sale of goods, or ORs with Billing Statements/OR, with Statements of Account and/or Service Contracts/OR with Job Order or any equivalent document for sale of services (arranged in accordance with the schedule required under 3.1). For sales of goods to special economic zones and freeports, the corresponding photocopies of proof of delivery is required (The original copies shall be returned to the taxpayer-claimant once stamped with "VAT Refund Claimed" after verification while the soft copies shall be retained by the processing office for future reference) . Original of duplicate copies of Sales Invoices (SIs) for zero-rated and exempt sale of goods or Official Receipts (ORs) for zero-rated sales of services, including cancelled SIs or ORs, and copies of airway bill (AWB)/final bill of lading (BL) for sale of goods, or copies of Billing Statements/Statements of Account/Service Contracts (arranged in accordance with the schedule required under 2.1). For taxpayer-claimants that are transmitting their sales data to the EIS, the original copies of SIs or ORs may no longer be submitted in accordance with RR No. 9-2022. (Note: If fully denied, original documents shall be returned to the taxpayer-claimant) With concurrence from Legal Group, both the claimant and BIR will benefit through the following: This eliminates the hassle and saves time and resources for the claimant in scanning all the sales documents. No more stamping of "VAT Refund Claimed" by the assigned ROs which also entails a lot of time and effort to do so With concerns on lack of storage due to the expected volume of documents to be stored, the following are recommended: COA to provide storage BIR to send docket to COA once the claim is approved (with notice to claimant of such transmittal in case claimant asks for certified true copy of documents) TPs/BIR or interested parties to request certified copies from COA who has custody of the docket at no cost. 2.3 For sale of services to a non-resident foreign corporation (NRFC) under Sec. 108 (B) (2), original copy of certification from SEC that the NRFC is not a registered corporation in the Philippines which shall serve as proof that the NRFC-buyer of the services is not doing business in the Philippines For sale of services to a non-resident foreign corporation (NRFC) under Sec. 108 (B) (2), original copy of certification from SEC that the NRFC is not a registered corporation in the Philippines and photocopy of Articles or Certificate of Foreign Incorporation or if not available, printed screenshots from the website of the corporate regulatory body of the NRFC in the country where it is domiciled to prove that the NRFC-buyer of the services is not doing business in the Philippines Photocopy of Articles or Certificate of Foreign Incorporation or if not available, printed screenshots from the website of the corporate regulatory body of the NRFC in the country where it is domiciled was required in line with the recent pronouncements of the SC. 2.4 For sale of services to companies engaged in international shipping or air transport under Sec. 108 (B) (4), photocopy of service contracts or other acceptable documents to prove that the service is rendered to foreign principals and/or clients that are engaged in international shipping or air transport For sale of goods or services to companies engaged in international shipping or air transport under Sections 106 (A) (2) (a) (6) or 108 (B) (4), photocopy of contracts or any acceptable document to prove that the goods or services are delivered or rendered to clients that are engaged in international shipping or air transport 2.5 Schedule of off-setting of receivables and payables if company has offsetting agreement with foreign affiliates/companies Schedule of off-setting of receivables and payables, including agreements or correspondences, if any, if company has offsetting agreement with foreign affiliates/companies 3. LOCAL PURCHASES OF GOODS AND SERVICES LOCAL PURCHASES OF GOODS AND SERVICES 3.1 Schedule of Purchases with input tax for the period of claim with details following the prescribed format in Annex A.1.6 Retained 3.2 Original and soft copies (stored in a separate memory device) of suppliers' Sales Invoices for purchase of goods or ORs, and if applicable, with Statements of Account/Billing Statements or equivalent document for purchase of services (arranged in accordance with the schedule required under 3.1) with proof of payment for "big ticket" purchases (The original copies shall be returned to the taxpayer-claimant once stamped with "VAT Refund Claimed" after verification while the soft copies shall be retained by the processing office for future reference) . Original copies of suppliers' SIs for purchase of goods or ORs, and if applicable, with Statements of Account/Billing Statements or equivalent document (arranged in accordance with the schedule required under 3.1) with proof of payment for "big ticket" purchases (Note: If fully denied, original documents shall be returned to the taxpayer-claimant after stamping "VAT refund claimed") With concurrence from Legal Group, both the claimant and BIR will benefit through the following: This eliminates the hassle and saves time and resources for the claimant in scanning all the sales documents. No more stamping of "VAT Refund Claimed" by the assigned ROs which also entails a lot of time and effort to do so With concerns on lack of storage due to the expected volume of documents to be stored, the following are recommended: COA to provide storage BIR to send docket to COA once the claim is approved (with notice to claimant of such transmittal in case claimant asks for certified true copy of documents). TPs/BIR or interested parties to request certified copies from COA who has custody of the docket at no cost. 4. IMPORTATION [in two (2) sets to include the requirement for BOC] IMPORTATION [in two (2) sets to include the requirement for BOC] 4.1 Schedule of Importations for the period of claim with details following the format prescribed in Annex A.1.7 Retained 4.2 Original copy of VAT Payment Certification issued by the BOC Revenue Accounting Division for importation in the current year Original copy of VAT Payment Certification issued by the BOC Revenue Accounting Division (RAD) for importation in the current year (for quarterly claims where the original copy of certification has been attached to the docket of the previous claim but includes importations for the current claim, the BOC-RAD shall certify the photocopy) 4.3 Photocopies of Import Entry and Internal Revenue Declarations (IEIRD) and/or Single Administrative Document (SAD), Statement of Settlement of Duties and Taxes (SSDT) Photocopies of Import Entry and Internal Revenue Declarations (IEIRD)/Informal Import Declaration and Entry or Single Administrative Document (SAD) SSDT or proof of payment was removed as part of the documentation since the BOC RAD Certification is sufficient as proof of payment. 5. SERVICES RENDERED BY NON-RESIDENTS SERVICES RENDERED BY NON-RESIDENTS 5.1 Schedule of income payments to non-residents as supported with photocopies of BIR Form No. 1600 with proof of payment Schedule of income payments to non-residents showing the date, non-resident corporation or individual who rendered the service, amount paid, amount of VAT withheld, date remitted to the BIR, among others 6. FOR INDIRECT EXPORTERS/TAXPAYERS ENGAGED IN RENEWABLE ENERGY (RE) FOR INDIRECT EXPORTERS/TAXPAYERS ENGAGED IN RENEWABLE ENERGY (RE) 6.1 Photocopies of Registration Certificate with latest Annual Letter of Incentives of customer registered with BOI/PEZA/other Investment Promotion Agencies Deleted 6.2 For RE claimants including manufacturers, fabricators, and suppliers of locally-produced RE equipment, the following photocopies of documents are required on a per transaction or project basis: For RE claimants including manufacturers, fabricators, and suppliers of locally produced RE equipment: For consultation with Legal/DOE/LTS 6.2.1 Certificate of Registration and Accreditation issued by the Department of Energy (DOE); and 6.1.1 Certificate of Registration or Accreditation issued by the Department of Energy (DOE), whichever is applicable; and 6.2.2 Certificate of Endorsement from the DOE, through the RE Management Bureau 6.1.2 Registration with the Board of Investments (BOI) of RE Developer Re developer 6.3 Photocopies of approved application for VAT zero-rating issued by the appropriate BIR office, if applicable Deleted Requirement 6.1 will no longer be required for claimants whose zero-rated sales are anchored under the incentives provision of CREATE Act since they are required to secure an approved application for VAT zero-rating before the transaction. 7. OTHER REQUIREMENTS OTHER REQUIREMENTS 7.1 Schedule of Other Income, if applicable Retained 7.2 Schedule of Property, Plant & Equipment (PPE) Additions per FS, if applicable, following the prescribed format in Annex A.1.8 Deleted Amortization of input taxes from purchases of capital goods exceeding P1 million is no longer applicable starting January 1, 2022 pursuant to Section 110 of the Tax Code, as amended by the TRAIN Law 7.3 Photocopies for support of Creditable VAT Withheld, if applicable Schedule and photocopies for support of Creditable VAT Withheld and other tax credits, if applicable Please Select