8. Revenue Regulations No.

21-2021;
Amending Certain Provisions of Revenue Regulations (RR) No. 16-2005, as amended
by RR Nos. 4-2007, 13-2018, 26-2018, and 9-2021 to Implement Sections 294 (E) and
295 (D), Title XIII of the NIRC 1997, as amended by R.A. No. 11534 (CREATE Act), and
Section 5, Rule 2 and Section 5, Rule 18 of the CREATE Act Implementing Rules and
Regulations
The Secretary of Finance has issued RR No. 21-2021 to implement Sections 294 (E) and
295 (D), Title XIII of the NIRC 1997, as introduced in R.A No. 11534 (CREATE Act), and
Section 5, Rule 2 of its implementing rules and regulations (IRR).
· Addition of the qualifying phrase “from direct and indirect taxes” in Sec. 4.106-5 (b)
and Sec. 4.108-5 (b)(2):

Sales/Services rendered to persons or entities whose exemption from direct and

indirect taxes under special laws or international agreements to which the Philippines is a
signatory, effectively subjects the sale/supply of services to 0% rate.
· Provision of examples of goods and services that may qualify as directly and
exclusively used in a registered export enterprise’s registered project or activity. As
defined in Section 5, Rule 2 of the CREATE Act IRR, “direct and exclusive use for the
registered project or activity” refers to raw materials, inventories, supplies, equipment,
goods, packaging materials, services, including basic infrastructure, utilities, and
maintenance, repair and overhaul of equipment, and other expenditures directly
attributable to the registered project or activity without which the registered project or
activity cannot be carried out.
· The VAT zero-rating on local purchases shall be granted upon the endorsement of the
concerned IPA, in addition to the documentary requirements of the BIR.
· The VAT zero-rating on local purchases of goods and services can be enjoyed for a
maximum of 17 years from the date of registration, unless otherwise extended under the
Strategic Investment Priority Plan (SIPP).
· Sales to existing registered export enterprises located inside ecozones and freeport
zones are also qualified for VAT zero-rating until the expiration of the transitory period.
These Regulations took effect immediately after its publication on 10 December 2021 and
shall cover transactions entered into the third quarter of taxable year 2021 and onwards.
9. Revenue Regulations No. 3-2023;
Amending Certain Provisions of RR No. 16-2005, as Amended by RR No. 21-2021, to
Implement Sections 294 (E) and 295 (D), Title XIII of the National Internal Revenue
Code of 1997, as Amended by RA No. 11534 (CREATE Act), and Section 5, Rule 2 and
Section 5, Rule 18 of the CREATE Act Implementing Rules and Regulations, as
Amended
RR No. 3-2023 has been issued to amend certain provisions of RR No. 16-2005, as amended

by RR No. 21-2021, with respect to the VAT zero-rating on local purchases by registered

business enterprise as enacted by Sections 294 (E) and 295 (D) of the CREATE Act.
Local purchases of goods and services relating to the following shall not be considered as

“directly and exclusively used” in the registered activity of a registered export enterprise:

1. Janitorial services;

2. Security services;

3. Financial services;

4. Consultancy services;

5. Marketing and promotion; and

6. Services rendered for administrative operations such as Human Resources (HR),

legal, and accounting.

However, the registered export enterprise is not precluded from further proving to the

concerned Investment Promotion Agency (IPA), with sufficient evidence, that any of the

local purchases of goods and services relating to the above-mentioned list are indeed

directly and exclusively used in its registered activity.

In the case of health maintenance organization (HMO) plans acquired by a registered

export enterprise, the same shall be considered as “directly and exclusively used” provided

that these form part of the compensation package of its employees who are directly and

exclusively involved in the operations of their registered project.

If the purchased goods and services are utilized in both registered activity and

administrative operations, a proper method shall be determined by the registered export

enterprise to allocate the same. If proper allocation cannot be determined, the purchases

shall be subject to 12% VAT.

Further, the availment of the VAT zero-rating on local purchases shall be based on the VAT-

zero rating certification issued by the concerned IPA, subject to the post audit verification

of the BIR.

For this purpose, upon effectivity of this RR, the local suppliers of a registered export

enterprise shall no longer be required to apply for approval of VAT-zero rating with the

BIR. All applications with VAT-zero rating certification issued by the concerned IPA which

have been received but not yet acted upon by the BIR shall be granted the VAT zero-rating

treatment from the date of filing of the application, subject to the post audit verification of

the BIR that the goods and services are indeed directly and exclusively used by the

registered export enterprise in its registered activity.

10.Revenue Regulations No. 3-2024;

Implementing the VAT and Percentage Tax Amendments Introduced by the Ease of
Paying Taxes Act
Please be informed that the Secretary of Finance has issued RR No. 3-2024, to implement

the amendments on Title IV - VAT and Title IV - Percentage Tax of the NIRC 1997, as

amended (Tax Code), as introduced in Republic Act No. 11976, otherwise known as the

“Ease of Paying Taxes Act”.

Summary of the salient provisions of the issuance include the following:

1. Amendments on the following words, phrases, or actions used in Revenue

Regulation No.16-2005 and its subsequent amendments:

a. Gross Sales - All references to “gross selling price”, “gross value in money”,

and “gross receipts” shall now be referred to as “Gross Sales” regardless of

whether the sale is for goods or services.

 b. Invoice - All references to Sales/Commercial Invoices or Official Receipts

shall now be referred to as “Invoice”.

c. Billings for sales of service on account - all references to receipts or

payments which was previously the basis for the recognition of sales of

services under VAT and Percentage Tax, shall now be referred to as “Billing”

or “Billed”, whichever is applicable.

d. VAT-exempt threshold -The VAT-exempt threshold of P3,000,000.00 shall be

adjusted every three (3) years using the Consumer Price Index(CPI), as

published by the Philippine Statistics Authority(PSA).

e. Filing and payment - the filing shall be done electronically in any available

electronic platforms, but manual filing shall be allowed in case of

unavailability. Tax payments with corresponding due dates shall be made

electronically in any available electronic platforms or manually to any

authorized agent banks (“AABs”) or revenue collection officers (“RCOs”).

2. Other Specific Amendments on VAT Provisions:

a. Output VAT Credit on Uncollected Receivable:

 A seller of goods or services may deduct the output VAT pertaining to

uncollected receivables from its output VAT on the next quarter, after

the lapse of the agreed upon period to pay. Provided that, (i) the seller

has fully paid the VAT on the transaction (ii) the VAT component of

the uncollected receivables has not been claimed as allowable

deduction;
  Uncollected receivables refer to sales of goods and/or services on

account that occurred upon effectivity of these Regulations which

remain uncollected by the buyer despite the lapse of the agreed

period to pay;

 The Regulation provided the requisites that must be present to be

entitled to VAT credit;

 In case of recovery of uncollected receivables, the output VAT shall be

added to the taxpayer’s output VAT during the period of recovery;

 These rules do not amend the conditions on the deductibility of bad

debts expense in the income tax returns as provided in RR No. 25-02.

b. Procedures for claiming a tax refund or Tax Credit Certificate of Input Tax.

 VAT refund claims shall be classified into low, medium, and high risk

based on the amount of VAT or other factors with medium and high

risk claims to be subject to audit for the relevant year;

 Taxpayers with canceled VAT registration due to cessation of business

may apply for refund or Tax Credit Certificate for any unused input

tax within two (2) years from date of cancellation provided that the

date of cancellation being referred to is the date of the issuance of BIR

Tax Clearance;

 The 90 day period to process and decide the application for refund

shall commence from the date of submission of the invoices and other

documents in support of the application filed provided that the

Commissioner must state the legal and factual basis for denial;
  In case of denial of the claim of refund, the taxpayer may appeal

within 30 days from receipt of the denial or after the 90 days required

to process the claim provided that failure on the part of the BIR

official to act within the period shall be subject to administrative

liability.

3. The Regulations shall apply to sale of services that transpired upon its effectivity.

Hence, the output VAT for outstanding receivables on services prior to effectivity

shall be declared once collected.

The Regulations shall take effect fifteen (15) days following its publication in the Official

Gazette or the BIR official website, whichever comes first. (i.e. 27 April 2024)

11.Revenue Memorandum Circular No. 24-2022;

RMC 24-2022 addressed issues regarding the CREATE Act’s amendments

on the VAT-zero rating provisions of the Tax Code, which were applied
before on RR No. 21-2021.

This Circular is issued to clarify the transitory provisions under RR No. 21-2021 and
certain issues pertaining to the effectivity and VAT treatment of transactions by registered
business enterprises (RBEs) particularly the registered export enterprises.

12.Revenue Memorandum Circular No. 71-2023;

Revenue Memorandum Circular No. 71-2023, provides uniform guidelines and

prescribes the revised mandatory documentary requirements in the processing and
grant of Value-Added-Tax (VAT) credit/refund claims under Section 112 of the Tax
Code of 1997, as amended, in line with the latest developments on VAT introduced
by Republic Act (R.A.) No. 10963 (TRAIN Law) and R.A. No. 11534 (CREATE Act),
except those under the authority and jurisdiction of the Legal Group. The Circular
shall take effect for VAT refund/credit claims that will be filed starting July 1, 2023.
The time frame to process and grant claims for VAT refund is ninety (90) days from the
date of submission of the official receipts or invoices and other documents in support of the
application filed in accordance with Section 112 (A) and (B) of the Tax Code of 1997, as
amended, up to the release of the payment for the approved amount of the refund.
The “Application for VAT Credit/Refund Claims” (BIR Form No. 1914) shall be received by
the processing offices, to wit:

1. The VAT Credit Audit Division (VCAD) in the National Office for 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)(a)(6) for sale of goods and Sections 108(B)(4),
and 108(B)(6) for sale of service, 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)
of the Circular shall apply;
1. Claims of taxpayer-claimants (1) engaged in other VAT zero-rated activities, other
than direct exports mentioned in Section (1)(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 canceled or change in the VAT registration status to non-VAT
but accumulated with 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 and 229 of the Tax Code, as
amended, shall be filed at the following offices which have jurisdiction over the
taxpayer-claimant:
 The VAT Audit Section (VATAS) in the Regional Assessment Division; or
 The Respective Revenue District Office (RDO) of without VATAS; or
 The Large Taxpayers VAT Audit Unit (LTVAU) of the Large Taxpayers Service (LTS).

Subject to the provisions of Sec. 4.112-1 (b) of Revenue Regulations (RR) No. 13-2018,
filing of the claim for VAT refund of a VAT-registered person whose registration has been
canceled due to retirement from or cessation of business, or due to changes on cessation of
status under Section 106(C) of the Tax Code shall b at the BIR office which has jurisdiction
over the taxpayer, within two (2) years from the date of the issuance of the tax clearance by
the BIR.
The taxpayer-claimant shall ensure the completeness and authenticity of the documentary
requirements upon filing of the application for VAT refund. Hence, 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
processing office.
In case where the taxpayer-claimant filed VAT refund claim beyond the 2-year perspective
period required to file under Section 112 of the Tax Code, as amended, the claim shall still
be accepted, however, the processing office shall recommend outright denial of the claim.
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, and evidenced by Delinquency Verification Certificate
(DVC) prescribed in Revenue Memorandum Circular No. 64-2019, the ensuing approved
VAT refund shall be referred for garnishment to the Collection Section of the Revenue
District Office and Collection Division of the Revenue Region having jurisdiction over the
taxpayer-claimant, as may be used or settle to collect either fully or partially of the
outstanding delinquent tax liability subject to existing tax laws and revenue issuances on
the enforcement and settlement of delinquent accounts.
The person who will sign and file the application for VAT refund, execute affidavit/s,
and/or such other document/s supporting the claim shall be duly authorized by the
taxpayer-claimant. The “Secretary’s Certificate” or “Special Power of Attorney”
designating/authorizing said representative of the corporate claimant or sole
proprietorship/partnership, as the case may be, should be notarized and must be
presented to the processing office, together with one (1) valid government-issued
Identification Card (ID) of the said authorized representative.
The application/s must be accompanied with complete supporting documents enumerated
in the Checklist of Requirements under Annexes A.1, A.2 or A.3, whichever is applicable. As
could be gleaned from the said list of mandatory requirements, most documents or data
that can be culled form the records of the BIR are no longer required to be submitted in
compliance with The Ease of Doing Business Law (RA No. 11032). However, the taxpayer-
claimants are not precluded from submitting copies of the same to aid the processing
offices in the timely processing of the claim.
The original copies of invoices/receipts for sales and purchases shall be submitted for
verification by the assigned Revenue Officers (ROs), which shall be forwarded to the
Commission of Audit (COA) if the claim is approved for refund with notice to the 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.
However, 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.
Claims for refund unutilized input VAT in 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
(IEIRD)/Informal Import Declaration and Entry or Single Administrative Document (SAD).
Only the importations appearing on the certification of BOC-RAD shall be considered in the
computation of refundable amount.
For the amortized portion of the input VAT on aggregate purchases of capital goods
exceeding One Million Pesos (P 1,000,000.00) in a month pursuant to Section 110 (A)(2)(b)
of the Tax Code of 1997, as amended, the following rules shall apply:

1. For current claims, the corresponding sales invoices and/or official receipt including
proofs of payment, if payment, if qualified as a “big ticket” purchase, shall be
required to be submitted and verified.
1. For the amortized deferred input VAT which originated from purchases prior to the
period of the claim, the acceptability of supporting documents is clarified as
follows:
 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 scheduled 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 P 1,000,000.00
in a month. The processing office shall compare/reconcile the current amount
claimed vis-a-vis the amount indicated in the schedule/s.
 For claims coming from the amortized portion of the deferred input VAT on
importation of capital goods, photocopies of previous certifications from BOC-RAD,
in addition to the schedules as certified mentioned above.
 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.
 For the purchase/importation 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.

Only tax returns filed by the taxpayer-claimant, particularly the quarterly and/or Annual
Income Tax Returns, the Quarterly VAT Returns and the quarterly VAT return/s showing
the deduction of the amount of the input VAT sought to be refunded, on or before the date
of application of the VAT refund or the issuance of a Letter of Authority, whichever comes
first, shall be considered in the processing of the claim.
The taxpayer-claimant shall attach a notarized sworn certification attesting to the
completeness of the documents submitted. Accordingly, the claim/s shall be processed
based on the documents submitted. The books of accounts and accounting records shall be
presented by the taxpayer-claimant upon written request of the assigned ROS. Failure to
present the books of records relevant to the claim/s may be a ground for denial of the
claim.
For claims filed under Section 112(B) of the Tax Code, as amended, 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 of 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.