Special InTAX: March 2022 Issue 2 | Volume 2

InTAX is an official publication of R.G. Manabat & Co.'s Tax Group

InTAX is an official publication of R.G. Manabat & Co.'s Tax Group

  • 1000
special intax

 

Bureau of Internal Revenue

 

The Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular (RMC) No. 24-2022, 09 March 2022, to provide clarifications on the transitory provisions under Revenue Regulations (RR) No. 21-2021 and certain issues pertaining to the effectivity and Value-Added Tax (VAT) treatment of transactions by Registered Business Enterprises (RBEs) particularly the registered export enterprises.

Salient items clarified in RMC No. 24-2022 are as follows:

  • The rule governing sale of goods and services by a VAT registered seller from customs territory to enterprises located and registered within the economic zones (Ecozones) or a Freeport Zones: (1) prior to the amendments introduced in the Corporate Recovery and Tax Incentives for Enterprises Act or CREATE Law on VAT; and (2) after the passage of CREATE Law, in relation to RMC No. 74-99 and RMC No. 50-2007 (Q&A item nos. 1 and 2)
  • The rule governing the enjoyment of VAT exemptions and VAT 0% incentives for Registered Business Enterprises (RBEs) with the passage of CREATE Law (Q&A No. 3)
  • The applicability of Sections 106(A)(2)(b) and 108(B)(3) of the 1997 National Internal Revenue Code, as amended (Tax Code) on VAT zero-rating of local purchases of goods and services by enterprises located within the Ecozones and Freeport Zones (Q&A No. 4)
  • VAT treatment for sale of goods and services on the following:

 

Transaction Dates

VAT Treatment

27 to 30 June 2021 (during the effectivity of RR No. 9-2021, Q&A No. 7)

Subject to 12% VAT

1 to 27 July 2021 (sales covered by retroactive application of RR No. 21-2021 where the VAT has already been billed and/or collected, Q&A No. 8):

Options available to seller and buyer:

  1. Retain as subject to 12% VAT
  2. Revert the transaction from VATable to zero-rated (refer also to Q&A No. 9 on what should the seller should do with the sales invoices/official receipts (SIs/ORs) previously issued)

1 July 2021 to 10 December 2021 (sales covered from the issuance of RR No. 15-2021 up to the effectivity of RR No. 21-2021 that have been declared as VAT zero-rated, Q&A No. 10)

  1. Retain as VAT zero-rated if previously declared as such (applying the non-retroactivity rule under Section 246 of the Tax Code)
  2. Follow options in Q&A Nos. 7 and 8 ) if previously declared as VATable

 

  • VAT treatment of sale to registered export enterprises upon the effectivity of CREATE Law (Q&A Nos. 11 to 22)
  • Taxability of existing export enterprises registered prior to CREATE Law (Q&A Nos. 23 to 31)
  • Application for VAT Zero-rating (Q&A Nos. 32 to 37)
  • The required documents to be provided by the registered export enterprise buyers to their local suppliers prior to the sale transaction to avail of VAT zero-rate incentives (Q&A No. 36):
    • Photocopy of the BIR - Certificate of Registration (BIR Form No. 2303)
    • Certificate of Registration and VAT certification issued by the concerned IPA containing the information or specifications required under Q&A No. 34:
      • registered export activity
      • registered export activity
    • A sworn declaration stating that the goods and/or services being purchased shall be used directly and exclusively in the registered project.
  • Refund by local suppliers and recovery of input VAT passed on to registered export enterprises (Q&A Nos. 38 to 40)
  • The recourse of the registered export enterprise if the local supplier inadvertently passed on VAT on its purchase of goods and services directly and exclusively used in the registered project or activity is to contest the same and/or resolve with the former the reimbursement of VAT paid, if any. The previously issued SI/OR to the registered export enterprise having VAT imposed must be surrendered/returned to the local supplier for cancellation and replacement (Q&A No. 39)
  • Recourse on the passed-on VAT, in cases of purchase of goods and services which are not directly and exclusively used in the registered project or activity of the RBE (Q&A No. 40):
    • Claim the passed-on VAT as input tax credit if RBE is VAT-registered and enjoying ITH; or
    • Should there be no sales subject to VAT, accumulate the input tax credits and claim as VAT refund upon expiration of VAT registration; or
    • Charge to cost or expense account if RBE is non-VAT registered

The RMC shall take effect immediately.

 

Attached is the full text of the issuance.

RMC No. 24-2022

© 2022 R.G. Manabat & Co., a Philippine partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

 

For more detail about the structure of the KPMG global organization please visit https://home.kpmg/governance.