Policies and Procedures to Implement the Ninety (90)-Day Period to Process and Grant Claims for Value-Added Tax (VAT) Refund/Credit Pursuant to Section 112 of the National Internal Revenue Code of 1997, as Amended (Tax Code)

May 15, 2019

REVENUE MEMORANDUM ORDER NO. 025-19

 

I. OBJECTIVES

1. To provide uniform policies and guidelines in the processing, verification, approval and payment of claims for VAT refund/credit, except those under the jurisdiction of the Legal Service; HTcADC

2. To prescribe the documents to be attached to a VAT refund/credit docket and the required notice to claimants; and

3. To define and delineate the duties and responsibilities of different offices, including the time frame to process, review, approve and pay the VAT refund/credit claims.

II. POLICIES AND PROCEDURES

A. Receipt of Claims for VAT Refund/Credit

1. The following processing offices shall receive claims for VAT refund/credit:

a. VAT Credit Audit Division (VCAD) — For claims of direct exporters pursuant to Section 112 (A) of the Tax Code, regardless of the percentage of export sales to total sales.

b. Revenue District Offices (RDOs) CAIHTE

i. For claims by other VAT zero-rated taxpayers within their jurisdictions (e.g., renewable energy developers pursuant to Section 108 (B) (7) of the Tax Code of 1997, as amended, and those with indirect exports classified as effectively VAT zero-rated sales) pursuant to Section 112 (A) of the Tax Code; and

ii. For claims of taxpayer-claimants whose VAT registration has been cancelled pursuant to Section 112 (B) of the Tax Code.

c. Large Taxpayers Audit Division (LTAD) aScITE

i. For claims by other VAT zero-rated taxpayers within its jurisdiction (e.g., renewable energy developers pursuant to Section 108 (B) (7) of the Tax Code, and those with indirect exports classified as effectively VAT zero-rated sales) pursuant to Section 112 (A) of the Tax Code; and

ii. For claims of taxpayer-claimants within its jurisdiction whose VAT registration has been cancelled pursuant to Section 112 (B) of the Tax Code.

2. The Revenue Officer/s (RO/s) assigned to receive the documents pertaining to the VAT refund/credit shall pre-check the application form and all the supporting documents based on the Checklist of Requirements per Annex "A.1" of Revenue Memorandum Circular (RMC) No. 47-2019.

3. The RO/s shall not accept applications where the taxpayer-claimant has outstanding delinquent tax liabilities as defined under Section II (1) of Revenue Memorandum Order (RMO) No. 11-2014. However, if the tax liability pertains solely to VAT, 1 the claim may be accepted and the RO/s shall perform the following: DETACa

a. Prepare a request, to be signed by the head of the processing office for the computation of the total tax liability, up to the 90th day of processing of the claim, from the Accounts Receivable Monitoring Division (ARMD)/Large Taxpayers Collection Enforcement Division (LTCED)/Collection Division (CD) of the respective Revenue Region who has jurisdiction over the taxpayer-claimant.

b. Prepare a separate Tax Credit Certificate (TCC) in favor of the taxpayer-claimant with a notation that the same shall be used to pay the VAT liability as computed by the ARMD/LTCED/CD. The memorandum report shall state the amount of TCC to be deducted and the amount to be processed for payment for recommendation to the head of office and the approving BIR official.

4. If there is a VAT liability with the BIR and the claim includes refund of input VAT on importations, or is solely on importations, which necessitates endorsement to BOC for processing of the payment, the RO/s shall inform the claimant that the VAT liability must be settled first before filing the application for VAT refund/credit with the BIR.

B. Processing and Verification of Claims

1. The head of the processing office shall issue Tax Verification Notices (TVNs) in the verification of claims for VAT refund/credit under this Order. The TVNs shall be manually issued until such time that the Tax Verification Notice Monitoring System (TVNMS) and the Case Management System (CMS) are fully operational. HEITAD

2. The assigned RO/s shall verify the documents submitted at the time of filing of application for refund/credit. This process shall not be construed as an audit/investigation; hence, the concerned investigating office having jurisdiction over the taxpayer-claimant in the Regional or National Office may issue subsequently an electronic Letter of Authority (eLA) against the taxpayer-claimant.

3. The RO/s shall prepare a memorandum report recommending the approval/disapproval of the claim for VAT refund/credit, together with the complete case docket, to be reviewed by the head of the processing office and endorsed to the reviewing office for further review, to wit:

a. Tax Audit Review Division (TARD) for claims filed with VCAD;

b. Office of the Head Revenue Executive Assistant for claims filed with the LTS; or

c. Assessment Division of the respective Revenue Region (RR) where the taxpayer is registered for claims filed at the RDOs.

4. In the course of verification for claim/s filed with the VAT Credit Audit Division (VCAD), the RO/s, with the approval of the head of the processing office, shall: aDSIHc

a. Recommend deduction from claim such amount that may lead to the imposition of output VAT that can be determined from the submitted documents; or

b. Refer to the LTAD or RDO having jurisdiction over the taxpayer-claimant for further investigation of 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. 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 for Informal Conference/Preliminary Assessment Notice (PAN)/Final Assessment Notice (FAN) for the collection of the deficiency tax. Within fifteen (15) days from receipt of the referral, a feedback on the action taken shall be properly communicated to the Assessment Service.

5. For claims filed under Section 112 (B) of the Tax Code, the verification of the processing office shall be limited to the supporting documents particularly the proofs of input VAT accumulated as of the change in or cessation of status of VAT registration under Sec. 106 (C) of the Tax Code. Output VAT that may be determined shall be automatically deducted from the claim. ATICcS

6. The assigned RO/s shall validate the photocopies of the invoices/receipts for sales and purchases from the original copies presented by the claimant, which shall be returned after stamping "VAT Refund/Credit Claimed" thereto. Should it not be logistically possible for the claimant to bring the original documents at the processing office, the assigned RO/s may perform the stamping at the registered address of the taxpayer-claimant after securing a permit duly approved by the chief/head of the processing office.

7. The processing office shall validate the "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 (IEIRD) and/or Single Administrative Document (SAD), Statement of Settlement of Duties and Taxes (SSDT) that are submitted by the taxpayer-claimant in support of claims for input VAT on importation. In this regard, the BOC-RAD shall send the scanned copy of the said certification through its dedicated email address to the dedicated email address of the processing office of the Bureau, which shall be indicated in the request of the taxpayer-claimant upon filing with the BOC. Only BOC documents duly authenticated by the BOC shall be accepted for processing and considered in the computation of refundable/creditable amount. ETHIDa

8. The RO/s assigned to process the claim shall prepare, submit and/or attach the reports/schedules and documents, which shall form part of the complete docket of the claim, prescribed in Annexes "A" to "E" hereof.

9. The Disbursement Voucher (DV) and Budget Utilization Request and Status (BURS) shall be prepared in the following manner:

a. For claims filed with VCAD and the RDOs, a final memorandum report together with the DV and BURS shall be prepared by the reviewing office stating therein their concurrence with the recommendation of the processing office or the re-computed amount for refund, should there be other findings during the review, for approval by the designated approving authorities. TIADCc

b. For claims filed with the LTS, the DV and BURS shall be prepared by the processing office, subject to changes, should there be adjustments to the claim by the reviewing office.

c. After approval of the claim, the Assessment Service (for those claims processed at VCAD) or the Office of the ACIR, LTS (for those processed under the LTS) shall endorse the approved VAT refund to the Finance Service, attaching therewith the main docket together with all the supporting documents. Approved claims filed in the RDOs shall be transmitted by the Office of the Regional Director to the Finance Division for processing of the payment thereof.

10. The following time frame shall be strictly adhered to by the processing, reviewing and approving offices: cSEDTC

a. VCAD Claims

 

Particulars	No. of Days from Receipt of Application
For claims not	For claims more than	For claims
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	Recommended
Verification/processing	62	60
Review (Office of the HREA)	8	8
Approval by ACIR-LTS	5	5
Approval by CIR of BOC endorsement	-	2
Total No. of Days	75	75

 

c. Regional Claims AIDSTE

 

Particulars	No. of Days from Receipt of Application
Verification/processing RDOs	55
Review (Assessment Division)	15
Approval by Regional Director	5
Total No. of Days	75

 

11. The following revenue officials shall approve the recommendation for approval/disapproval of VAT claims in accordance with the thresholds below:

a. For claims filed with VCAD under Section 112 (A) of the Tax Code:

 

Amount of Claim	Approving Revenue Official
Not more than P50,000,000	ACIR-AS
More than P50,000,000.00 to P150,000,000	DCIR-OG
More than P150,000,000	CIR

 

b. For claims filed with the LTS under Sections 112 (A) or 112 (B) of the Tax Code, the ACIR-LTS shall approve the memorandum report including DV & BURS and other pertinent documents, except for the endorsement to BOC which shall be signed by the CIR. SDAaTC

c. For claims filed in the RDOs, the Regional Director shall approve claims filed under Sections 112 (A) and 112 (B) of the Tax Code.

12. The result of the evaluation of the VAT refund/credit claim, approved or otherwise, shall be communicated in writing to the taxpayer immediately after approval of the report by the designated approving BIR Official.

C. Processing of Payment for the Approved VAT Refund Claims

1. The following offices shall process and release the payment for the approved VAT refund in accordance with the existing revenue issuances within fifteen (15) days after receipt of the DV and BURS and VAT refund docket and within the ninety (90)-day period required by law: AaCTcI

a. VAT Refund Claims filed and processed at 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

 

Processing Office	Days Allotted
Finance Service/Accounting Division	5
Finance Division	4
Administrative and Human Resource Management Division (AHRMD)	3
Office of the Regional Director	3
Total No. of Days	15

 

2. The Accounting Division and Finance Service in the National Office/Finance Division and Office of the Assistant Regional Director in the Revenue Regions shall process the DV and sign boxes C and D thereof based on the approved memorandum report and Authority to Issue VAT Refund. acEHCD

3. The Administrative Service/AHRMD shall prepare checks on VAT refund payments and their process shall be limited to the determination of the correctness of the amount appearing on the check as against those appearing in the approved audit report and the DV (Box D).

 The General Services Division/AHRMD shall ensure that the check payment will be released to the proper claimant or the duly authorized representative.

III. PENALTY FOR NON-OBSERVANCE OF THE PRESCRIBED TIME FRAME

a. The concerned revenue officers/officials shall act on the recommended claims in accordance with the abovementioned time frame, including VAT claims on importations.

b. Any official, agent or employee of the BIR who fails to act on the application within the prescribed timeframe allotted for his/her office as prescribed in this Order shall be punishable under Section 269 of the Tax Code, as amended. In the event that the processing of the VAT claim exceeded the 90-day processing period without having the payment released to the taxpayer-claimant, the processing office may still continue the administrative processing of the claim. However, the revenue official, agent or employee found to be grossly negligent in the performance of his/her duties or has deliberately caused the delay in the processing shall be penalized according to the said section of the Tax Code. EcTCAD

IV. REPORTING

Pursuant to Section 6 of Joint Circular No. 001-2018, the BIR shall submit to the BTr, DBM and the DOF a monthly report of actual VAT claims and disbursements/utilizations on or before the 8th day of the ensuing month.

V. REPEALING CLAUSE

All revenue issuances or portions thereof inconsistent herewith are hereby amended, modified or revoked accordingly.

VI. EFFECTIVITY

This Order shall take effect immediately. SDHTEC

(SGD.) CAESAR R. DULAYCommissioner of Internal Revenue

ANNEX A

Documents Required to be Prepared/Attached to the VAT

A. Documents, Working Papers and Attachments

1. Copy of Tax Verification Notice (TVN)

2. Revenue Officer's Memorandum Report stating among others, the following statements, pursuant to RMC No. 30-2006, to wit:

2.1 That the sources of VAT input tax had been verified against the original VAT invoices or official receipts issued in accordance with Section 113 in relation to Section 110 of the Tax Code for local purchases and the Certificate of VAT Payment issued by BOC-RAD together with the BOC-authenticated copies of Import Entry and Internal Revenue Declarations (IEIRD) and/or Single Administrative Document (SAD), Statement of Settlement of Duties and Taxes (SSDT) and Commercial Invoices;

2.2 That the original copies of purchase invoices or official receipts evidencing sources of input tax credits had been prominently stamped, after the completion of the verification, with the words "VAT REFUND/CREDIT CLAIMED" on the face of the said invoices/official receipts; HSAcaE

2.3 That the proofs of actual exportation of goods and or services and foreign currency remittances, including documentary proofs for the offsetting of accounts, for export sales were verified; and

2.4 Computation of VAT Refund (in Philippine Pesos).

3. VAT Refund/Credit Notice (Annex "B" or Annex "C", whichever is applicable) — to be prepared by the reviewing office (for claims filed with the VCAD/RDOs) or by the processing office for claims filed with the LTS

4. Authority to Issue VAT Refund/TCC (Annex "D") — to be prepared by the reviewing office (for claims filed with the VCAD/RDOs) or by the processing office for claims filed with the LTS

5. Disbursement Voucher (DV) and Budget Utilization Request and Status (BURS) — to be prepared by the reviewing office (for claims filed with the VCAD/RDOs) or by the processing office for claims filed with the LTS

6. Table of Contents

7. Covering Sheet (Annexes "E.1", "E.2" and "E.3")

8. Documents required under "Annex A.1" of RMC No. 47-2019 or the "Revised Checklist of Mandatory Requirements on Claims for VAT Refund"

9. For "big ticket" purchases pursuant to RMO No. 16-2007, the following are required in addition to the copies of invoices or official receipts submitted:

9.1 Data on purchases declared by the "big ticket" suppliers of the taxpayer-claimant during the period of claim as provided by AITEID;

9.2 Summary Lists of Sales/Purchases/Importations as provided by the AITEID and/or corresponding result of the verification on RELIEF/BOC importations. In the absence of or partial data on sales of "big ticket" suppliers to claimants, proofs of secondary evidence of payments of purchases with input tax (e.g., cancelled checks, bank debit advice or any form of settlement in favor of the supplier for the account of taxpayer-claimant); and AScHCD

9.3 Indorsement to the Revenue District Officer having jurisdiction over suppliers of the claimant on the duly ascertained discrepancy, e.g., under-declaration of sales after matching purchases of the claimant with the sales of his/its suppliers from the pre-processed data provided by the AITEID.

10. Reconciliations and Working papers with initials of the Revenue Officer/s assigned in the verification of the claim —

10.1 Working Paper — Export Sales and Inward Remittances

10.2 Working Paper — Input Tax

10.3 Computation of recommended VAT refund/credit due, whichever is applicable HESIcT

10.4 Computation of adjustment to the amount of claim, if applicable

10.5 Schedule of disallowances on input VAT

10.6 Schedule of unremitted export sales

10.7 Reconciliation of sales and input taxes of Financial Statements' figures with VAT returns' figures and application for VAT refund/credit, if applicable

10.8 Alpha List of Local Suppliers with TIN as verified in ITS and total purchases and input tax per supplier, identifying the "Big Ticket" suppliers

10.9 Allocation of input tax among zero-rated, exempt and taxable sales, if applicable

10.10 All other schedules, analyses, and working papers prepared by the assigned RO/s

11. Copy of the duly validated BIR Form 1600 and bank deposit slip, if applicable, covering remittance of Final VAT Withholding Tax in payment of rentals, royalties and other fees for services rendered within the Philippines by non-resident payees.

B. VAT Claims on Importation

1. In case of approved claims on importations, a separate folder/docket containing pertinent reports and documents has to be prepared for transmittal to the BOC after approval of the report: AcICHD

1.1 By the processing office

1.1.a. Schedule of Importations for the Period of Claim and the amortized portion of the deferred input VAT on importation of capital goods, which shall also indicate the disallowed item/s, if any;

1.1.b. VAT Payment Certification issued by the Revenue Accounting Division (RAD) of the BOC;

1.1.c Invoices relative to importation, import declarations, Single Administrative Document (SAD) import entry documents and official receipts/Statement of Settlement of Duties and Taxes (SSDT) covering payment of VAT; and

1.1.c. Indorsement to BOC signed by the authorized approving official.

1.2 By the reviewing office (for claims filed with the VCAD/RDOs) or by the processing office for claims filed with the LTS)

1.2.a. Approved Authority to Issue VAT Refund/TCC;

1.2.b. Revenue Officer's Memorandum Report. caITAC

ANNEX B

VAT Refund/Credit Notice

________________

____________________ Name of Claimant/Taxpayer

____________________ Address

Gentlemen/Sir/Madame:

This has reference to your claim for Value Added Tax (VAT) refund/credit covering the period from ___________ to ___________ in the amount of Php ___________ pursuant to Section 112 of the National Internal Revenue Code (NIRC) of 1997, as amended. TAIaHE

Please be informed that upon processing of the aforementioned claim under Tax Verification Notice No. ___________ dated ___________, the amount of input tax allowable on local purchases is Php ___________, as summarized below:

 

VAT Refund/Credit Claimed	Phpx,xxx,xxx.xx
Less: Deduction/s from claim	(xxx,xxx.xx)
	––––––––––––––
Net Allowable VAT Refund/Credit	Phpx,xxx,xxx.xx
	=============

 

The approved report on the said claim shall be subject to post-audit by the Commission on Audit as mandated under Section 112 (D) of the NIRC of 1997, as amended, and/or further audit/investigation under the directive of higher authorities. Should there be findings requiring adjustment/deduction on the amount granted, the deficiency tax or excess tax refund/credit shall be collected and/or deducted from future tax refund claim/s, if there is any. ICHDca

Very truly yours,

_________________________

ANNEX C

VAT Refund/Credit Notice

________________

____________________ Name of Claimant/Taxpayer

____________________ Address

Gentlemen/Sir/Madame:

This has reference to your claim for Value Added Tax (VAT) refund/credit covering the period from ___________ to ___________ in the amount of Php ___________ pursuant to Section 112 of the National Internal Revenue Code (NIRC) of 1997, as amended. cDHAES

Please be informed that upon processing of the aforementioned claim under Tax Verification Notice No. ___________ dated ___________, the total amount of input tax allowable on local purchases and importations is Php ___________ as summarized below:

 

A.   Local Purchases
VAT Refund/Credit Claimed	Phpx,xxx,xxx.xx
Less: Deduction/s from claim	(xxx,xxx.xx)
	––––––––––––––
Net Allowable VAT Refund/Credit	Phpx,xxx,xxx.xx
	=============
B.   Importations
VAT Refund/Credit Claimed	Phpx,xxx,xxx.xx
Less: Deduction/s from claim	(xxx,xxx.xx)
	––––––––––––––
Recommended Net Allowable VAT Refund/Credit	Phpx,xxx,xxx.xx
	––––––––––––––
Total Amount Allowable for VAT Refund/Credit (sum of A and B)	Phpx,xxx,xxx.xx
	=============

 

The amount of Php ___________ representing the recommended VAT refund/credit on importations is subject to further verification and processing by the Bureau of Customs (BOC), in compliance with the requirements of the Commission on Audit. TCAScE

The approved report on the said claim shall be subject to post-audit by the Commission on Audit as mandated under Section 112 (D) of the NIRC of 1997, as amended, and/or further audit/investigation under the directive of higher authorities. Should there be findings requiring adjustment/deduction on the amount granted, the deficiency tax or excess tax refund/credit shall be collected and/or deducted from future tax refund claim/s, if there is any.

Very truly yours,

_________________________

ANNEX D

Authority to Issue VAT Refund/Tax Credit Certificate

________________

_________________________________

_________________________________

_____________________________

Period of Claim: _____________________

Legal Basis: ___________________________________

 

	Amount in Figures	Amount in Words
BIR	P __________________	____________________________
BOC	__________________	____________________________
TOTAL	P __________________	____________________________

 

_____________________________

ANNEX E.1

VAT Refund/Credit Covering Sheet

 

Claimant	:	__________________________________________________________________________
Address	:	__________________________________________________________________________
TIN	:	__________________________________________________________________________
Period of Claim	:	__________________________________________________________________________
Amount of Claim	:	__________________________________________________________________________
Date Filed	:	__________________________________________________________________________
TVN No.	:	__________________________________________________________________________
TVN Date	:	__________________________________________________________________________
Revenue Officer/s Assigned		__________________________________________________________________________
Group Supervisor		__________________________________________________________________________
Reviewer/Supervisor		__________________________________________________________________________
BIR Offices	Prescribed No. of Days	Date	Actual No. of	Signature of
<P50M	P50M to	>P150M	Received	Released
VAT Credit Audit Division	55	53	53			days
Tax Audit Review Division	15	15	13			days
Office of the ACIR, Assessment Service	5	4	3			days
Office of DCIR, Operations Group	-	3	3			days
Office of the Commissioner of Internal Revenue	-	-	3			days
Finance Service/Accounting Division	10			days
Administrative Service	5			days
TOTAL NUMBER OF DAYS		90 Days			days
		=======================			============
90th Day				______________________

 

ANNEX E.2

VAT Refund/Credit Covering Sheet

 

Claimant	:	_____________________________________________________________________
Address	:	_____________________________________________________________________
TIN	:	_____________________________________________________________________
Period of Claim	:	_____________________________________________________________________
Amount of Claim	:	_____________________________________________________________________
Date Filed	:	_____________________________________________________________________
TVN No.	:	_____________________________________________________________________
TVN Date	:	_____________________________________________________________________
Revenue Officer/s Assigned		_____________________________________________________________________
Group Supervisor		_____________________________________________________________________
Reviewer/Supervisor		_____________________________________________________________________
BIR Offices	Prescribed No. of Days	Date	Actual No. of	Signature of
Local Purchases Only	With Importation	Received	Released
Processing Office	62	60			days
Office of the Head Revenue Executive Assistant	8	8			days
Office of the ACIR, Large Taxpayers Service	5	5			days
Office of the Commissioner of Internal Revenue	-	2			days
Finance Service/Accounting Division	10			days
Administrative Service	5			days
TOTAL NUMBER OF DAYS	90 Days			days
	====================			===========
90th Day			_____________________

 

ANNEX E.3

VAT Refund/Credit Covering Sheet

 

Claimant	:	________________________________________________________________
Address	:	________________________________________________________________
TIN	:	________________________________________________________________
Period of Claim	:	________________________________________________________________
Amount of Claim	:	________________________________________________________________
Date Filed	:	________________________________________________________________
TVN No.	:	________________________________________________________________
TVN Date	:	________________________________________________________________
Revenue Officer/s Assigned		________________________________________________________________
Group Supervisor		________________________________________________________________
Reviewer/Supervisor		________________________________________________________________
BIR Offices	Prescribed	Date	Actual No. of	Signature of
Received	Released
Verification of RDO	55			days
Review of Assessment Division	15			days
Approval of the Office of the Regional Director	5			days
Finance Service/Accounting Division of National Office	5			days
Finance Division of Revenue Region	4			days
Administrative and Human Resource Management Division	3			days
Office of the Regional Director	3			days
TOTAL NUMBER OF DAYS	90 Days			days
	==========			===========
90th Day			___________________

Footnotes

1.As provided under RMC No. 3-2019, circularizing the full text of Joint Circular No. 001-2018 of the Department of Finance, Department of Budget and Management, Bureau of Treasury, BIR, Bureau of Customs (BOC) and Commission on Audit pertaining to VAT refund claims.