Clarifies the issues relative to the application for Value Added Tax (VAT) refund/tax credit attributable to zero-rated

sales. The salient features of the RMC are as follows:

1. Prescriptive Period
Any VAT-registered person whose sales are zero-rated or effectively zero-rated may within two (2) years after the
close of the taxable quarter when sales were made, apply for the issuance of tax credit certificate or refund of
creditable input tax attributable to such sales. The taxpayer can file his administrative claim at anytime within the twoyear prescriptive period.
The Commissioner of Internal Revenue (CIR) has 120 days from the date of submission of complete documents to
decide whether or not to grant the claim. If it is not acted upon within the 120-day period, such inaction shall be
deemed a denial of the application for tax refund or credit.
2. Filing and Processing of Administrative Claims
The application for VAT refund/tax credit must be accompanied by complete supporting documents. A statement
under oath attesting to the completeness of the submitted documents should be attached therein. The affidavit shall
further state that the said documents are the only documents which the taxpayer will present to support the claim. For
juridical persons, there should be a sworn statement that the officer (at least the Chief Financial Officer) signing the
affidavit has been authorized by the Board of Directors of the company. The BIR provides for a checklist of
mandatory requirements and the sample template of the sworn certification.
Upon submission of the claim and its supporting documents, no other documents shall be accepted or required.
Decisions shall be rendered based only on the documents submitted by the taxpayer. Where the taxpayer fails to
submit the complete supporting documents, the application shall be denied by the processing/investigating office, by
issuing a Denial Letter to the taxpayer.
3. Mandatory 120+30 Day Period
In case of denial of the claim for refund or tax credit, or the inaction of the CIR within the prescribed period, the taxpayer is
required to observe the 120+30 day rule before lodging a petitioner for review with the Court of Tax Appeals (CTA).
The taxpayer can appeal by filing a judicial claim within 30 days after the CIR denies the claim within the 120-day period, or
by filing a judicial claim within 30 days after the expiration of the 120-day period if the CIR does not act within the 120-day
period.
4. Exception to the mandatory and jurisdictional nature of the 120+30 day period
As an exception to the 120+30 day rule, taxpayers/claimants need not wait for the lapse of the 120-day period before it
could seek judicial relief with the CTA by way of Petition for Review from 10 December 2003 (time of issuance of BIR Ruling
No. DA-489-03) up to 06 October 2010 (its reversal by the Supreme Court in Aichi case). This applies only to cases of
premature filing (filing prior to the lapse of the 120-day period) and does not extend to late filing of a judicial claim.
5. Pending Administrative Claim
Where a petition for review is filed with the CTA, the CIR loses jurisdiction over the administrative claim, but its Processing
Office shall still review the claim internally in order to intelligently oppose the taxpayers judicial claim.
Failure to file a judicial claim with the CTA within 30 days from the expiration of the 120-day period renders the CIRs
decision, or inaction deemed a denial, final and unappealable. This applies to all currently pending administrative claims for
refund/tax credit.

TAX REFUND claims pending before the Bureau of Internal Revenue (BIR) and the
Court of Tax Appeals (CTA) could total at least P15 billion, business groups said on
Wednesday, as they reiterated their opposition to the complex rules governing the
timing and grant of refund claims.
At least 20 groups opposed to Revenue Memorandum Circular (RMC) 54-2014 said taxpayers refund
claims on value-added taxes (VAT) before the BIR and the CTA run into the billions of pesos.
Asked for an estimate, Rina Lorena R. Manuel, president of the Tax Management Association of the
Philippines (TMAP) said in a news conference: We estimate it to be at least P15 billion because thats
what the government has provided in the national budget as issuance for refund or TCCs (tax credit
certificates).
However, we believe that the figure could be much higher given that it has accumulated all these
years, Ms. Manuel added.
Foreign chambers of commerce, industry groups, exporters and professional organizations yesterday
reiterated their opposition to RMC 54-2014.
Under RMC 54-2014, the Commissioner of Internal Revenue has 120 days from the date of submission
whether to grant or deny a refund claim. If the tax chief fails to act within the given period, the claim
is deemed denied and the taxpayer has 30 days to elevate its refund request before the CTA. The
circular likewise applies retroactively.
I think the issue really is we want fair treatment. We have been banking on government in saying
these are incentives in doing businesses or investing in the Philippines and thats all we want, Henry
J. Schumacher, vice-president for External Affairs of the European Chamber of Commerce of the
Philippines, said in the briefing.
Benedicta Du-Baladad, co-chairperson of the Tax Committee of the Philippine Chamber of Commerce
and Industry, said, for her part that a win-win solution would be the prospective application of the
BIR issuance.
Its okay to apply it forward because that will be better because you have an assurance that your
refund, I hope, will be acted on within a short period, Ms. Baladad said.
Moving forward, the group said it seeks a constructive dialogue with tax authorities but legal
options are also being considered. -- Mikhail Franz E. Flores

MANILA, Philippines - Local and foreign businessmen are weighing their legal options over what they
claim as overly bureaucratic process of securing value-added tax (VAT) refunds or tax credit claims.
Rina Manuel, president of the Tax Management Association of the Philippines (TMAP), said several
foreign chambers and Filipino industry groups are mulling taking their issue to the courts to protect their
fundamental right to an administrative appeals process.
Investors are up in arms over a Bureau of Internal Revenue ruling that makes it difficult for taxpayers to
exercise their right to refund excess input VAT credits.
The retroactive implementation of Revenue Memorandum Circular (RMC) 54-2014 has prejudiced the
rights of taxpayers with pending VAT claims, local and foreign businessmen said.
In case of full or partial denial of the claim for tax refund, the RMC stated that the affected taxpayer could
either file a petition with the Court of Tax Appeals within 30 days from the receipt of BIR decision or file
the claim within 30 days from the expiration of the 120-day period, if no action is taken by the BIR.
Taxpayers who filed an administrative claim but did not file a judicial claim with the Court of Tax Appeals
after the lapse of the 120-day period on the basis that the BIR would continue processing and evaluating
the claim, now face the spectacle of having no further recourse or remedy to pursue the claim, because
RMC 54-2014 says these claims are deemed to have been denied by the BIR.
The RMC also states that the BIR will evaluate the claim for refund based only on the documents
submitted. Thus, failure on the part of the taxpayer to submit all the required documents at the time of
filing the claim may result in the denial of its request.
The VAT refunds are among the key concerns of foreign investors doing business in the country. As an
incentive to investors, firms could claim refunds from the government for the advanced VAT payments
made for imports of items used for goods they export. Foreign and local business groups claimed that the
RMC shows the lack of transparency, predictability and consistency on the part of government, which
greatly affects investor trust and confidence,
They said any unrefunded VAT arising from these very restrictive rules, on top of the existing
bureaucratic inefficiencies, would result in higher costs of doing business in the Philippines.

MANILA, Philippines - The Bureau of Internal Revenue (BIR) defended yesterday the implementation of a
ruling with respect to the processing of value-added-tax refunds, saying such a regulation has been in
effect since 1998.
The BIR cited Sec. 112 of the National Internal Revenue Code which states that the Commissioner shall
grant a refund or issue the tax credit certificate within 120 days from the date of submission of complete
documents.
In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the
Commissioner to act on the application within the period prescribed above, the taxpayer affected may,
within 30 days from the receipt of the decision denying the claim or after the expiration of the 120-period,
appeal the decision or the unacted claim with the Court of Tax Appeals (CTA), Sec. 112 of the NIRC
further said.
Revenue Memorandum Circular 54-2014 merely implements the said provision of law, the BIR said.
Since the implementation of RMC 54-2014 up to the end of Sept. 2014, the BIR received 134 applications
for VAT refund/credit, processed for approval 68 applications for tax credit, 3 applications for refund and 2
applications for BOC (purely importation), and denied 31 applications, the governments main tax
collection agency said.
The BIR maintained that RMC 54-2104 merely seeks to address the various complaints it receives with
respect to the length of time the agency takes to process claims for refund/credit and complaints.
With the said RMC, the BIR commits itself to process all applications in 120 days and provided certainty
to the resolution of the claims of taxpayers, the agency said.
The BIR also pointed out that the circular now enumerates all the documents that must be submitted to
support the application for VAT refund/credit. Upon submission of the claim and its supporting
documents, the claim shall be processed and no other documents shall be accepted/required from the
taxpayer.