We would like to share a VAT planning opportunity that may be particularly relevant to businesses with 70% export-related sales of goods and services.
Under the CREATE MORE Act (Republic Act No. 12066), VAT-registered exporters that meet the 70% export sales threshold for the preceding taxable year may apply for VAT zero-rating on local purchases through the Export Management Bureau (EMB) of the Department of Trade and Industry (DTI). Once approved, your local suppliers will no longer pass on VAT to you on qualified purchases.
This presents several practical advantages:
- No input VAT accumulation, as VAT is no longer passed on by suppliers
- No need to file VAT refund claims with the BIR or pursue costly and time-consuming cases before the CTA
- Improved cash flow, since VAT is no longer embedded in your purchase costs and tied up pending refund
Recent guidelines from the BIR highlights the importance of timely compliance. Under Revenue Memorandum Circular (RMC) No. 037-2025, for VAT refund claims covering periods beginning April 1, 2025, exporters who meet the 70% export threshold but fail to secure the required EMB VAT zero-rating certification will no longer be allowed to claim VAT refunds for VAT passed on by local suppliers. Instead, any unutilized input VAT may only be carried forward to future period despite the fact that export sales are VAT zero-rated. In short, without EMB certification, VAT may effectively become a stranded cost.
If this is something you would like to explore, we would be glad to walk you through the requirements, qualifying purchases, and implementation process to help you maximize the benefits under CREATE MORE.
Please let us know if you would like to schedule a discussion.