Tax Alert No. 55 [Revenue Memorandum Circular (RMC) No. 137 dated 14 October 2022]

Clarificatory Guidelines on the Availment of VAT Zero Rate (0%) on Health Maintenance Organization (HMO) Plans Acquired by Registered Export Enterprises (REEs) and Prescribing the Uniform Template of ‘Detailed Information’ Thereof.

The Commissioner of Internal Revenue has issued RMC No. 137-2022 to further clarify the applicability of the 0% VAT treatment on HMO Plans acquired by REEs together and the corresponding documentation thereof.

The RMC clarifies that REEs may avail of the 0% VAT on their acquisition of HMO plans provided that these expenses are acquired for employees directly involved in the operations of registered project or activity of the REEs. However, the VAT zero-rating shall not extend to HMO plans procured for employees’ dependents, as well as for HMO plans for employees not directly involved in the operations of the registered projects or activities of the REEs.

All REEs are required to provide their suppliers detailed information on the HMO plans acquired. Please see Annex A for the Detailed Information format. The same is to be submitted by the suppliers as parts of its documents in filing the application for VAT zero-rate.

You may access the full version of the RMC through the BIR website.