Philippines: DoF gives taxpayers 2 yrs to process refunds, VAT credits
TAXPAYERS, particularly foreign investors, seeking value-added tax credits and refunds now have two years to file appropriate documents instead of 120 days under a new set of rules issued by the Bureau of Internal Revenue.
This new revenue regulation addresses the concerns of foreign investors, particularly the issues raised by the Japanese Chamber of Commerce and Industry of the Philippines (JCCIPI), regarding their VAT claims under a previous BIR rule, BIR Commissioner Caesar Dulay said in a statement issued by the Department of Finance.
Finance Secretary Carlos Dominguez 3rd has signed Revenue Regulations (RR) RR1-2017 relieving taxpayer-claimants with denied VAT credit or refund claims because Memorandum Circular (RMC) 54-2014, issued by then BIR Commissioner Kim Henares, took effect retroactively in 2014, according to the DOF.
RMC 54-2014 overturned RMC 49-2003 and barred taxpayers from filing additional documents after filing their claims since the retroactive order invalidated their applications under the provision of 120-rekconing of claims.
Foreign investors seeking VAT refunds raised a howl as RMC 54-2014 required that they submit all supporting documents with their application.
The VAT-related regulations dated January 3, 2017 gave taxpayers two years to apply for a tax credit certificate or refund of creditable input tax from the close of the taxable quarter when the sales were made.
“In all cases, whatever documents a taxpayer intends to file to support his claim must be completed within the two-year period under Section 112 (A) of the Tax Code, as amended, and the Commissioner or his duly authorized representative, should have decided on the claim for tax credit or refund within 120 days from the date of submission of complete documents, or from the date of the filing of the application, if the claimant-taxpayer did not submit additional documents,” the according to the regulations.
Under the new rule, only once all supporting documents have been submitted can an application be considered officially received, Finance Undersecretary for Revenue Operations Group Antonette Tionko noted. Only then will the 120-day period given to BIR to decide on the claim would start to run, she said.
VAT credit and refund applications filed before the old regulation took effect but remain without any resolution, will be decided by the BIR based on available documents submitted by the taxpayer-claimant within the two-year period, Tionko said.
“VAT credit/refund applications must also be accompanied by a complete set of supporting documents before such administrative claim is barred by the two-year prescription,” the undersecretary emphasized.
Not covered by RMC 54-2014 are the claims filed after the two-year period and those that have been denied in writing by the BIR, as well as those approved or settled in full or in partial by the BIR, and those pending before the Court of Tax Appeals, unless case has been withdrawn.