MANDATORY REQUIREMENTS AND GUIDELINES, POLICIES AND PROCEDURES IN THE PROCESSING OF CLAIMS FOR VALUE-ADDED TAX (VAT) CREDIT/REFUND. Revenue Memorandum Order No. 23-2023, June 23, 2023
The BIR prescribes the 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.
|Type of Refund
|Tax Verification Notice (TVN)- Issuing Official
|VAT Credit Audit Division (VCAD) in the National Office
- Outright denial – claims filed beyond the 2-year prescriptive period
- In case of outstanding tax liabilities (as evidenced by Delinquency Verification Certificate)
- Processing Office will notify of the approved VAT refund to be used to collect for the outstanding delinquent tax liability
- In case of tax delinquency with pending request for abatement, compromise settlement or other legal remedies and no decision was arrived by NOD yet
- Processing of the approved VAT refund/credit may still continue
- Revenue Officials to issue the Tax Verification Notices pursuant to RMO 28-2023 (see table)
- 90-day period to grant/deny refund
- From submission of official receipts or invoices and other documents in support of the application.
- Taxpayers have 30 days from receipt of the decision to appeal to the CTA; BIR’s failure to act within the 90-day period is punishable.
- Refund process is not construed as an audit/investigation
- Claimant may be issued subsequently an electronic Letter of Authority (eLA).
- Findings that may result in deficiency internal revenue tax other than VAT or possible VAT assessment
- Findings to be referred to the RDO or LT for further investigation
- Existing eLA covering the same period – investigating office shall evaluate the findings and report of the processing office for issuance of NOD.
- Entire docket to be forwarded to Commission on Audit – if claim is approved for refund
- In case a copy is needed – requesting party to request certified copy with COA at no cost.
- In case of denial in full – original copies will be returned with stamped “VAT Credit/Refund Processed”
- Cancellation of VAT registration (either cessation or change of status)
- 2 years to refund from date of cancellation
- Date of cancellation: Date of issuance of tax clearance by the BIR
- Claim to be made after audit is completed
- Processing and Issuance of TCC/Refund Check
- Approving official shall transmit the docket of the claim for the processing of TCC/Disbursement Voucher (DV)
- For TCC – processing office subject to threshold
- For VAT refund – reviewing/processing office
- For Denial Letter – Processing office
- Approving office to sign the TCC/DV and Budget Utilization Request and Status (BURS)
- TCC where there is tax liability
- 2 TCCs will be prepared – TCC with notation that it will be sued to pay VAT liability and TCC for the balance
- DV and BURS preparer – TARD, LTVAU and Regional Assessment Division, as applicable
- DV and BURS processing and approval for the payment of the claim – Accounting Division and Finance Service/Finance Division or Office of Assistant Regional Director
- Preparation and issuance of refund check – Administrative Service in the National Office/Administrative and Human Resource Division in the Regional Office
THE BIR AND SEC ENTERED INTO A DATA SHARING AGREEMENT (DSA). Revenue Memorandum Order No. 26-2023, July 19, 2023
- The BIR prescribes the policies, guidelines and procedures in the processing of requests for corporate information, including beneficial ownership information, with the Securities and Exchange Commission.
- The BIR and SEC entered into a Data Sharing Agreement (DSA).
- Under the DSA, the BIR may obtain information on corporations and other registered/licensed entities, including beneficial ownership information
- Beneficial owner – a natural person who ultimately owns or controls the corporation or exercise ultimate effective control over the corporation
- Information may be requested from the SEC
- Complete name of the incorporators, stockholders, directors, trustees, member, officers and their residential address, date of birth, nationality, TIN and percentage of ownership
- Beneficial owners
- Partners in the partnership
- Information on other persons licensed by the SEC
REVISED POLICIES AND PROCEDURES RELATIVE TO THE ACCREDITATION OF CASH REGISTER MACHINES (CRMS), POINT-OF-SALE (POS) AND OTHER SIMILAR SALES MACHINES/SOFTWARE GENERATING INVOICES/RECEIPTS INCLUDING ELECTRONIC INVOICING OR ELECTRONIC RECEIPTING SYSTEM/SOFTWARE USED UNDER A SUBSCRIPTION-BASED AGREEMENT. Revenue Memorandum Order No. 24-2023, June 26, 2023
- Collectively covers “Sales Machine/Software”, which includes:
- POS System- Bundled POS (both hardware and software) and POS software
- E-invoicing or e-receipting system/software used under a Subscription-Based Agreement
- All other similar sales machine/software that will generate printed invoices/receipts, such as but not limited to:
- Handheld or mobile devices linked to a server
- Unmanned bill, coin, or token-operated machines issuing invoice upon sale; and
- Other sales machine/software issuing invoices/receipts; except Computerized Accounting system
- Sales Machine/Software must be accredited with the BIR via aAccReg System facility
- Special Purpose Machines (SPM) used solely for internal purposes or generates supplementary invoices/receipts
- NOT subject to accreditation but required to register for the issuance of Permit to Use using eAccReg System
- SPM includes:
- Cash Depository machines/ATMs with cash depository
- Foreign Exchange Machines
- Ordering Machines
- Bills Payment Machines
- Price Checking Machines
- Inventory Checking and Maintenance Machines
- Lottery/Terminal/Ticketing Machine
- Other special Purpose Machines that does not generate sales invoice/OR, but may include machine/software functioning as ordering machine of online platforms
- E-invoicing or e-receipting system/software used under a Subscription-Based Agreement not covered by eAccReg System registration
- All suppliers/vendors/developers/providers/taxpayer-users who intend to distribute/sell/use “Sales Machine/Software” shall enroll by submitting Sworn Declaration where taxpayer is registered
- Upon receipt of email: they will submit online Application for Accreditation; and manually submit documents per checklist
- Required Features of Sales Machine/Software
- Accumulated Grand Total Sales
- Activity Log or Transaction Log
- Non-volatile memory
- E-journal or Audit Journal
- Sales Reading (X and Z)
- Backend Reports
- Sequential series of accountable forms/documents
- Reprint Functionality
- Push Functionality
- Verification or Validation Seal
- Data Retention
- Sales Data Transmission for e-invoice/e-receipt (in JSON File Format)
- There will be a system demonstration
- Functional and Technical Evaluation Checklist will be the Guide
- TWG will prepare the Minutes of the Meeting
- Certificate of Accreditation
- To be issued by the RDO
- Otherwise, Notice/Letter of Denial will be issued
- Timeline: 20 working days from compliance of taxpayer with complete documentary requirements
- Revocation of Accreditation
- Tampering of Certificate of Accreditation
- Any misrepresentation on the Sown Statement submitted by the supplier
- Tampering of sales data to avoid the recording of the sales transactions
- Use of sales suppression software or mechanisms and
- Violation of supplier on the policies and procedures for the accreditation.
- Sale of house and lot under economic and low-cost housing project of a company duly registered with the Board of Investments under Executive Order (EO) No. 226 is exempt from income tax and creditable withholding tax on its income received directly in connection with the mentioned project.
- The exemption is limited in duration and number of units sold.
- Sale of units used for commercial purposes such as leasing, retail stores, offices etc. shall be subject to payment of appropriate taxes.
- Sale of house and lot and other residential dwellings with selling price of not more than P1,919,500 (for residential lot) and not more than Php 3,199,200 (for house and lot and other residential dwellings) is VAT exempted. (BIR Ruling No: Certificate of Tax Exemption No: BOI-LEH-385-2022)
- A sale of parcel of land by private individuals in favor of homeowners association under a Community Mortgage Program (CMP), is not subject to capital gains tax pursuant to Section 32 (b) of Republic Act (RA) No. 7279, as amended by RA No. 10884.
- The transaction is, however, subject to documentary stamp tax under Section 196 of the National Internal Revenue Code (Tax Code) of 1997, as amended.
- Registry of Deeds shall transfer the title only if Certificate Authorizing Registration is used by the BIR.(BIR Ruling No: Certificate of Tax Exemption No: CMP-386-2022, CMP-387-2022, CMP-388-2022)
- Merger between two (2) non-profit civic associations/organizations and consequent transfer of the property is not qualified for tax-free merger. There must be an exchange of property solely for stock in another corporation. It is clear that in order to qualify as an exception to the recognition of the gain or loss upon the sale or exchange of property, a corporation which is a party to a merger exchanges its property solely for stock in another corporation which is also a party to the merger (BIR Ruling No: S40M-389-2022)
- A non-stock and non-profit corporation with primary purpose of being an educational institution is exempted from income tax and VAT only on revenues or receipts generated from:
- Tuition fee and other school fees: and
- Income derived from the operation of cafeterias/canteen, dormitories, and bookstores located within its premises, owned and operated by the corporation to be actually, directly and exclusively used for educational purposes.
- However, the corporation is liable to all other including those below:
- Income derived from any of its properties, real or personal, or any activity conducted for profit, which income should be returned for taxation unless they are actually, directly and exclusively used for educational purposes;
- If engaged in the sale of goods or services in the course of a business pursuit, including transactions incidental thereto, its revenues derived therefrom shall be subject to the 12% VAT, in case the gross receipts from such sales exceed Three Million Pesos (Php3,000.000.00), or the 3% percentage tax, if the gross receipts do not exceed Php3,000.000.00;
- Acts as an employer and its employees receive compensation income subject to the withholding tax; (BIR Ruling No: Certificate of Tax Exemption No: SH30-390-2022)
- Gifts or donations made to or for the use of the National Government or any entity created by any of its agencies which is not conducted for profit, or to any political subdivision of the said Government is exempt from donor’s tax.
- However, if the gifts or donations made to the Government or its agencies is not included in NEDA’s NPP, the deduction shall be limited to ten percent (10%) in case of an individual or five percent (5%) for corporations, of the taxpayer’s taxable income derived from trade, business or profession. BIR Ruling No: OT-391-2022)
- The local purchases of goods and services by Renewable Energy Developers are subject to zero percent (0%) VAT provided that these are needed for the development, construction and installation of their power plant facilities as well as the whole process of exploring and developing renewable energy sources up to its conversion into power, including but not limited to the services performed by the subcontractors and/or contractors. (BIR Ruling No: OT-392-2022)
- The Income generated from the sale of its shares in corporation to domestic corporation is exempt to CGT. However, the domestic corporation shall be subject to Stock Transaction Tax and Documentary Stamp Tax (DST) if the said shares of stock are listed on the local stock storage. (BIR Ruling No: OT-393-2022)