Tax Alert No. 5 [Revenue Memorandum Order (RMO) No. 47-2020 dated 24 November 2020]

Consolidated and Updated Guidelines and Procedures on the Processing of Claims for Value-Added Tax (VAT) Credit/ Refund Except Those Under the Authority and Jurisdiction of the Legal Group

The Commissioner of Internal Revenue has issued RMO No. 47-2020 to circularize the guidelines and procedures on the processing of claims for VAT credit/refund.

Processing offices authorized to receive the “Application for VAT Credit/Refund Claims” (BIR Form No. 1914) are the following:

• VAT Credit Audit Division in the National Office for claims of direct exporters except those claims with a mix of VAT zero-rated sales emanating from sales of power or fuel from renewable energy sources;
• Revenue District Office (RDO)/Large Taxpayers Audit Division (LTAD) under the Large Taxpayers Service (LTS) where the taxpayer is registered for claims of taxpayers engaged in other VAT zero-rated transactions, other than direct exporters, and those with indirect exports classified as effectively zero-rated sales; and
• RDO/LTAD having jurisdiction over the taxpayer-claimant for claims of taxpayers whose VAT registration has been cancelled and claims for recovery of erroneously or illegally assessed or collected VAT.

Only applications with complete documentary requirements and filed within the prescribed period shall be received.

Applications with outstanding tax liabilities as shown in the Delinquency Verification Certificate shall not be accepted, except if the outstanding liability is for VAT. If the delinquent accounts pertain to VAT liability, the same should be lower than the amount of claim on local purchases for the application to be accepted. In case the claim is purely from importations or includes input VAT on importations, the BIR portion of the claim should be enough to cover payment for the VAT liability, otherwise, the application shall not be accepted. Nonetheless, the application can be accepted if there is proof that the liability has been paid in full by the taxpayer.

The start of the 90-day period to grant claims for VAT refund is from the actual filing of the application with complete documents duly received by the processing office.

Results of the verification of claim, whether approval or denial, shall be communicated to the taxpayer-claimant and shall be signed by the authorized revenue official.

You may access the full version of the RMO and its annexes through the BIR website.