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Revenue Memorandum Circular No. 32-2025

Circularizing Joint Administrative Order No. 002-2025, series of 2025, Entitled “Guidelines to Implement Sections 6,6, and 8 of Republic Act No. 12066, on the Certification of Export-Oriented Enterprise with Export Sales of at least Seventy Percent (70%) of the Total Annual Production of the Preceding Taxable Year”

Joint Administrative Order No. 002-2025

Guidelines to Implement Sections 6,6, and 8 of Republic Act No. 12066, on the Certification of Export-Oriented Enterprise with Export Sales of at least Seventy Percent (70%) of the Total Annual Production of the Preceding Taxable Year

WHEARAS, Republic Act (RA) No. 12066, otherwise known as “An Act Amending Sections 24, 28, 32, 34, 57, 106, 108, 109, 112, 135, 237, 237-A, 269, 293, 294, 295, 296, 297, 300, 301, 308, 309, 310, and 311, and Adding New Sections 135-A, 295-A, 296-A, and 297-A of the National Internal Revenue Code of 1997, as amended (Tax Code), and for Other Purposes”, was enacted on 08 November 2024;

WHEREAS, Sections 6, 7, and 8 of RA No. 12066 amended Section 106(A)(2)(a)(3), 108(B)(5), and 109(dd) of the Tax Code and provides for the Value-added tax (VAT) zero-rating of sales of goods to and sale of services performed for export-oriented enterprises, and VAT exemption of importation of goods to and sale of services performed for export-oriented enterprises, and VAT exemption of importation of goods by export-oriented enterprises: Provided, that the export sales of such export-oriented enterprises are at least seventy percent (70%) of its total annual production for the preceding taxable year: Provided, further, That such goods and services are directly attributable to the export activity of the export-oriented enterprise;

WHEREAS, the same provisions designated the Department of Trade and Industry (DTI)-Export Marketing Bureau (EMB) to determine compliance with the aforementioned thresholds;

WHEREAS, the Department of Finance (DOF) is responsible for the formulation, institutionalization, and administration of fiscal policies, acting in coordination with other concerned political subdivisions, agencies, and instrumentalities of government;

WHEREAS, the DTI served as the primary coordinative, promotive, facilitative, and regulatory arm of government for the country’s trade, industry, and investment activies;

WHEREAS, the Bureau of Internal Revenue (BIR) assesses and collects all national internal revenue taxes, fees, and charges, enforces all forfeitures, penalties, and fines connected therewith, and interprets the provisions of the Tax Code and other tax laws;

WHEREAS, the Bureau of Customs (BOC) supervises and controls the entrance and clearance of vessels and aircraft engaged in foreign commerce, enforces the Customs Modernization and Tariff Act and all other laws, rules, and regulations related to tariff and customs administration, including the enforcement of forfeitures, penalties, and fines connected therewith.

WHEREAS, the DTI, through the DTI-EMB, is mandated to oversee the development, promotion, and monitoring of Philippine exports and provide exporters with the enabling environment to make them globally competitive;

NOW, THEREFORE, pursuant to the above-mentioned, and subject to the limitations of their mandates conferred by law, the DOF, BIR, BOC, and DTI, do hereby promulgate the following guidelines through this Joint Administrative Order (JAO).

Section 1. General Provisions

The DTI-EMB shall determine and certify the compliance of export-oriented enterprises with the seventy percent (70%) threshold under Sections 106 (A)(2)(a)(3), 108(B)(5), and 109(dd) of the Tax Code; and
The Certification to be issued by DTI-EMB (DTI-EMB Certification) shall be a requirement in the availment of the VAT zero-rating on local purchases or VAT exemption on importation. For this purpose, the export-oriented enterprise shall furnish a copy of the DTI-EMB Certification to its local supplier prior to the transaction, and submit the same to the BOC in case of importation.

Section 2. Definition of Terms

As used in the JAO:

Total annual production refers, to for goods, the volume or sales value of production, manufactured, and sold, including mark-up, by the export-oriented enterprise during a taxable year, and for services, the value of services rendered by the export-oriented expertise during a taxable year;
Export-oriented enterprise refers to a person, natural or juridical, engaged in the sale and actual shipment of goods and/or sale of services form the Philippines to a foreign country or economy as contemplated under Section 106(A)(2)(a)(1) and 108(B)(2), respectively, of the Tax Code.

Section 3. Certification Procedure

An export-oriented enterprise availing of the VAT zero-rating under Sections 106(A)(2)(a)(3) and 108(B)(5) of the Tax Code, and VAT exempt importation under Section 109(dd) of the Tax Code, shall apply for a Certification with the DTI-EMB. The DTI-EMB Certification in this provision is to be distinguished from the VAT zero-rating certification to be issued by the Investment Promotion Agencies on the sale to Registered Business Enterprises (RBEs) which is covered under Title XII of the Tax Code;
The following are the documentary requirements:
- Application Form prescribed by DTI-EMB;
- Certified True Copy of the following:
  - BIR Certificate of Registration (BIR Form No. 1556);
  - Proof of 70% export sales by the direct exporter (including but not limited to financial Statements, Export documents, Bank Certification of Inward Remittances, etc.);
- Affidavit executed by the Owner/President or Finance Officer of the export-oriented enterprises, attesting and certifying that the export sales for the taxable year prior to the taxable year applied for is at least 70% of the total annual production;
- Original copy of Notarized Secretary’s Certificate (for corporate claimant)/Special Power of Attorney (for Individual and ROHQ exporters) or similar documents authorizing the representative/s to file, sign documents on behalf of the claimant and/or follow-up the DTI-EMB Certification.;
- Photocopy of at least one (1) government-issued ID with three (3) specimen signatures of authorized representative/s; and
- Other additional documentary requirements to be prescribed by the DTI-EMB.
The DTI-EMB shall process the application within twenty (20) working days form the complete submission of the documentary requirements.
Subsequent applications for the DTI-EMB Certification by export-oriented enterprises shall be filed with the DTI-EMB not earlier than forty-five (45) working days prior to the taxable year of the export-oriented enterprise.

Section 4. Validity of the Certification

The DTI-EMB Certification shall be valid until the end of the applicable taxable year (calendar/fiscal) adopted by the export-oriented enterprise unless earlier revoked.

Section 5. Revocation of Certification

If it is determined that export sales of the export sales of the export-oriented enterprise is less than seventy percent (70%) of the total annual production of the preceding taxable year the Certification shall be revoked by the DTI-EMB.

After revocation of the DTI-EMB Certification, the export-oriented enterprise shall be subject to VAT on their importations for such taxable year covered by the revoked STI-EMB Certification and shall be allowed to refund the excess input tax after verification.

Section 6. Roles and Responsibilities

To fully implement the provisions of these Guidelines, the following agencies shall have the following roles and responsibilities:

DOF
- The DOF shall provide policy direction, after consultation with the BIR, BOC, and DTI-EMB, on the implementation of the provisions of Sections 6,7 and 8 of RA No. 12066 amending Sections 106(A)(2)(a)(3), 108(B)(5), and 109(dd) of the Tax Code and its implementing rules and regulations; and
- The DOF shall include in the database created under RA No. 10708 the reports herein submitted by the DTI-EMB to the DOF.
DTI-EMB
- The DTI-EMB shall determine and certify the compliance of export-oriented enterprises with the seventy percent (70%) threshold under Sections 106(A)(2)(a)(3), 108(B)(5), and 109(dd);
- The DTI-EMB shall submit to the DOF, BIR, and BOC, a Master List of all export-oriented enterprises issued a DTI-EMB Certification, including disapproved applications, beginning on the thirtieth (30th) day after the effectivity of these Guidelines;
- Such Master List shall be updated by the DTI-EMB on or before the fifth (5th) day following the close of each month, which includes the revoked certifications;
- The DTI-EMB, in consultation with DOF, BIR, and BOC, shall establish a mechanism for the transmission of the Master List of export-oriented enterprises to the BIR, BOC, and DOF; and
- The DTI-EMB shall facilitate the publication of such Master List for the information of stakeholders, including the suppliers of export-oriented enterprises. For this purpose, the DTI-EMB may make use of any electronic means of publication.
BIR and BOC
- The BIR and BOC shall maintain a database of export-oriented enterprises based on the DTI-EMB’s Master List of export-oriented enterprises with an issued certificate in accordance with Section 3 of these Guidelines.

Section 7. Violations and Penalties

Any violation of any of the provisions of RA No. 12066, as implemented by these Guidelines, shall be grounds for the initiation of appropriate action against the export-oriented enterprise without prejudice to the filing of appropriate administrative, civil, or criminal charges.

Section 8. Additional Requirements

The DTI-EMB, BIR, and BOC may issue pertinent administrative orders, memorandum circulars, or other similar documents further providing details for enforcement of these Guidelines.

Section 9. Information Dissemination

This JAO shall be disseminated nationwide by the DTI-EMB, BIR and BOC. Information campaigns, and dissemination programs and activities shall be undertaken by the agencies to educate export-oriented enterprises, local suppliers, and other stakeholders.

Section 10. Separability

If any provision of part of this JAO is found invalid, illegal, and unenforceable, the remainder of the rules shall remain valid, legal and subsisting.

Section 11. Repealing Clause

All other others, issuances, rules and regulations which are inconsistent with RA No. 12066 and these rules are hereby repealed and modified.

Section 12. Effectivity

This JAO shall take effect immediately following its publication in a newspaper in general circulation and filing of three (3) copies hereof with the Office of National Administrative Register (ONAR), University of the Philippines (UP) Law Center, Diliman, Quezon City, pursuant to Presidential Memorandum Circular No. 11 dated 09 October 1992.

An act creating a VAT Refund mechanism for non-resident tourists, adding a new section 112-A to the National Internal Revenue Code of 1997, as amended, for the purpose

Section 1 – A new section designated as Section 112-A under Chapter I, Title IV of the National Internal Revenue Code, as amended, is hereby inserted to read as follows:

“Sec 112-A VAT Refund for Tourists –

(a) A Tourist shall be eligible for a VAT refund on locally purchased goods if the following requisites are present

(1) The goods are purchased in person by the tourist in duly accredited stores;

(2) Such goods are taken out of the Philippines by the tourist within sixty (60) days from the date of purchase; and

(3) The value of goods purchased per transaction is equivalent to at least Three thousand pesos (P3,000.00): Provided, That such threshold shall be subject to review and adjustment every three (3) years by the Secretary of Finance, upon recommendation of the Commissioner of Internal Revenue, taking into consideration the Consumer Price Index (CPI) as published by the Philippine Statistics Authority (PSA).

(b) The Department of Finance shall engage the services of one (1) or more reputable, globally recognized and experienced VAT refund operators to provide end-to-end solutions to the government for the establishment and operation of a VAT refund system for tourists.

(c) The refund under this section may be made either electronically or in cash.

(d) The amount necessary for the VAT refund system for tourist under this Code shall be charged against the special account in the General Fund as provided under Section 106 of this Code.

For the purpose of this section the term ‘Tourist’ means a non-resident foreign passport holder.”

Section 2 – Implementing Rules and Regulations – Within ninety (90) calendar days from the effectivity of this Act, the Secretary of Finance shall, after due consultation with the Department of Trade and Industry, Department of Transportation, Department of Tourism, National Economic and Development Authority, Bureau of Internal Revenue, and Bureau of Customs, promulgate the necessary rules and regulations to faithfully implement the intent and provisions of this Act.

Section 3 – Separability Clause – If any provision of this Act is declared unconstitutional, the remaining parts or provisions not affected thereby shall remain in full force and effect.

Section 4 – Repealing Clause – All laws, decrees, executive orders, implementing rules and regulations, issuances, or any part thereof inconsistent with the provisions of this Act are deemed repealed, amended, or modified accordingly.

Section 5 – Effectivity – This Act shall take effect fifteen (15) days following its publication in the Official Gazette or in a newspaper of general circulation.

Further Amending Section 5 of Revenue Regulations (RR) No. 3-69, Relative to the Due Process Requirement in the Service and Execution of Summary Remedies

Section 1 Scope – Pursuant to the provisions of Sections 244 and 245 in relation to Sections 207 and 208 of the National Internal Revenue Code of 1997 (Tax Code), as amended, this Regulation is hereby promulgated to amend the provisions of Revenue Regulations (RR) No. 3-69.

Section 2 Amendment – Section 5 of RR No. 3-69 is hereby amended pertaining to the pertinent provision of Section 5 (a) and shall include additional provision related to the service of warrants and notices to taxpayers who have resurfaced that were previously identified as Cannot be Located (CBL) under the circumstances prescribed in the existing revenue issuances, to wit:

“Section 5. Due Process Requirements in the Enforcement of Summary Remedies

(a) Service and Execution of Warrants and Notices – The Revenue Officer designated to serve the Warrant of Distraint and/or Levy (WDL) shall serve the same personality upon the delinquent taxpayer himself/herself or his/her authorized representative, or to a member of his/her household of legal age with sufficient discretion, and shall require the same to acknowledge the receipt of the warrant, for individual taxpayer. For corporation, the WDL shall be served to the President, Vice President, Manager, Treasurer or Comptroller or to any responsible person of the corporation who customarily receives correspondence for the corporation. In cases, however, where the taxpayer (individual or corporation) refuses to receive the WDL or is absent from his/her given address, the WDL shall be constructively served by requiring two (2) credible witness who are not BIR employee preferably barangay officials, to sign in the acknowledgement receipt portion of the warrant and require a copy of identification card as a proof of witness and leave the duplicate copy of the warrant at the premises of the taxpayer. A copy of the WDL which was previously served constructively shall be sent thru registered mail and/or electronic mail to the delinquent taxpayer.

(c) Service of warrants and notices in case Taxpayers Previously Reported and Published as CBL has Resurfaced. – For purposes of this Section, the term “resurfaced” shall mean that the taxpayers personally appear before any Office of this Bureau of Internal Revenue (BIR), or their whereabouts are known to the BIR through an informant, and other legal means. In such, reappearance, issued WDL together with the copies of the served Warrants of Garnishment, Notice of Levy, Notice of Tax Lien, Notice of Encumbrance and other correspondences shall be simultaneously served to such delinquent taxpayer or his/her authorized representative.

Amending the Pertinent Provisions of Revenue Regulations No. 16-2005 to Implement the Value-Added Tax Provisions under Section 106, 108, 109, and 112 the National Internal Revenue Code of 1997, as Amended by Republic Act No. 12066.

SECTION 1. Scope. – Pursuant to Sections 244 and 245 of the National Internal Revenue Code of 1997, as amended (Tax Code), in relation to Sections 12, 13, and 32 of Republic Act (RA) No. 12066, these Regulations are hereby promulgated to implement Sections 237 and 237-A of the Tax Code, particularly on the issuance of electronic invoices, electronic sales reporting and additional allowable deduction related thereto.

SECTION 2. DEFINITION OF TERMS. – In applying the provisions of these Regulations, the following terms shall be defined as follows:

Electronic Invoice. – It is a written account evidencing the sale, exchange or transfer of goods, properties, services and/or lease/use of properties, issued in the ordinary course of trade or business, using an accounting/invoicing software or system with invoice management tools that is registered/accredited with the Bureau of Internal Revenue (BIR), containing the vital information as prescribed in the existing rules and regulations. It is a system-generated invoice issued to the buyers electronically in a digital/electronic format (e.g. via email as Portable Document Format (PDF) attachments or email content or through electronic viewing in mobile or system application) of subsequently printed: Provided that, it is system-generated in a structured invoice data which can be easily extracted electronically from the invoice and its data can be readily transmitted electronically to the BIR for electronic sales reporting.

A photo or scanned copy (in any file format) of a paper invoice (physical/manual copy) is not an electronic invoice.

Electronic invoicing. – This refers to the automated process of generating and electronic invoice in a structured invoice data which can be easily extracted electronically from the invoice allowing for automated electronic data processing. It involves the electronic exchange of an electronic invoice that records a transaction between a seller and a buyer. This can be a one-way electronic exchange where the seller sends the electronic invoices to the buyer.
Electronic Sales Reporting System. – This refers to electronic reporting or process of sorting, transmitting and/or receiving the electronic invoice data, through direct system-to-system data transfer without manual entry, to the BIR in a structured electronic format [ e.g. JavaScript Object Notation (JSON) file format or Extensible Markup Language (XML) and such other format as may be prescribed by the BIR] and not in PDF or image format, etc. The electronic invoice data contains sales information from sellers to buyers and may also contain payment information made by the buyers.

Electronic Commerce (E-commerce). – This refers to my commercial transaction conducted through electronic. Optical, and similar medium, mode, instrumentality and technology. The transaction includes the sale or offer for sale, purchases of physical or digital goods and services, or lease or offer for lease of the same, between individuals, households, businesses, and government conducted over computer-mediated networks through the Internet, mobile phones, electronic data interchange (EDI), or other electronic channels through open or closed networks. These May be digitally ordered, digitally delivered or platform-enabled transactions.

For purpose of these Regulations, internet transactions shall also refer to e-commerce. Internet transactions. – This refers to the sale or offer of sale, or lease or offer for lease of digital or non-digital goods and services over the internet.

SECTION 3. POLICIES AND GUIDELINES. – All taxpayers mandated to comply with these Regulations shall observe the policies and guidelines set forth herein. A separate revenue issuance shall be provided for the details and specific requirements hereof.

Issuance of Electronic Invoice. The following taxpayers are mandated to issue electronic invoices in a structured invoice data which can be easily extracted electronically from the invoice and can be readily transmitted to the BIR for electronic sales reporting:
- Taxpayers engaged in electronic commerce (e-commerce) or internet transactions.
- Taxpayers under the jurisdiction of the Large Taxpayers Service (LTS);
- Taxpayers classified as Large Taxpayers under RA No. 11976 (Ease of Paying Taxes Act) and RR No. 8-2024;
- Taxpayers using Computerized Accounting System (CAS), and Computerized Books of Accounts (CBA) with Accounting Records (with electronic invoicing) and other invoicing software; and
- Upon the establishment by the BIR of a system capable of storing and processing the required data to be transmitted to it, the following taxpayers are mandated to issue electronic invoices:
  - Taxpayers engaged in the export of goods and services pursuant to Sections 106 and 108 of the Tax Code, except those falling under Section 3(A)(4) hereof;
  - Registered Business Enterprises availing of Tax Incentives under Section 304(D) of the Tax Code, as amended, except those falling under Section 3(A)(4) hereof;
  - Taxpayers using Point-of-Sales (POS) System; and
  - Other taxpayers as may be required by the Commissioner.

In case the above taxpayers or business activities are signed as a branch Office, the taxpayers’ Head Office and all its Branch Offices shall also be mandated to issue electronic invoices.

All CAS, CBA with Accounting Records (with electronic invoicing), or other invoicing software shall be mandated to generate a system-generated invoice in a structured invoice data that can be easily extracted electronically and can be readily transmitted electronically to the BIR for electronic sales reporting.

Invoices generated by a CAS, and CBA with Accounting Records (with electronic invoicing), Cash Register Machines (CRM), POS System, or other invoicing software and subsequently printed on paper for issuance to buyers, without the capability or readiness to electronically report the sales and invoice data, shall not qualify as electronic invoices. Instead, they shall be classified as traditional, manually issued invoices.

B. Electronic Sales Reporting Requirements (as defined in Section 2(3) of these Regulations). Upon establishment by the BIR of a system capable of storing and processing the required data to be transmitted to it, the following taxpayers shall be covered by the Electronic Sales Reporting System requirement under Section 237-A of the Tax Code, as amended:

Taxpayers engaged in electronic commerce (e-commerce) or internet transactions, classified as Small, Medium and Large Taxpayers;
Taxpayers under the jurisdiction of the Large Taxpayers Service (LTS);
Taxpayers classified as Large Taxpayers under RA No. 11976 (Ease of Paying Taxes Act) and RR No. 8-2024;
Taxpayers using CAS, and CBA with electronic invoicing and other invoicing software.
Taxpayers engaged in the export of goods and services pursuant to Sections 106 and 108 of the Tax Code;
Registered Business Enterprises availing of Tax Incentives under Section 304(D) of the Tax Code, as amended;
Taxpayers using POS System; and
Other taxpayers as may be required by the Commissioner.

C. Taxpayers Engaged in E-commerce. For purposes of these Regulations, taxpayers engaged in e-commerce shall cover persons, whether natural or juridical, who are engaged in the following trade or business in the Philippines, including but not limited to:

E-commerce or online businesses, whether formal or informal, including sale, procurement, or availment of physical or digital goods (including virtual items in online games), digital content/products, digital financial services, entertainment services, social commerce, on-demand labor and repair services, and property and space rentals;
Operation of digital platforms, including e-marketplace platforms;
Sale and/or lease of goods and services through digital platforms;
Digital content creation and streaming that are income generating including online advertising, blogging/vlogging, subscription or commission;
E-retailing of goods and services;
Sale of creative or professional services, on-demand or freelance services or digital services supplied over the internet;
On-demand Services over the internet, available whenever a customer request them rather than being provided on a fixed schedule such as, but not limited to, ride-sharing, food delivery, grocery delivery, home services (like cleaning or repairs), and streaming entertainment;
Transport and Delivery Services contracted through an online platform, application, website, webpage or other similar platform operated by the provider, regardless of whether the provider is authorized to engage in e-commerce in the Philippines; and
Other form of businesses other than those mentioned above which are conducted online.

D. Additional Allowable Deductions for Taxpayers using Both Electronic Invoices and Electronic Sales Reporting System. – All taxpayers required under Section 3(A) and 3(B) of these Regulations, including those taxpayers who voluntarily complied both with the issuance of electronic invoice and electronically report their sales data to the BIR, shall be granted the following deduction from their taxable income amounting to certain percentage of the total cost for setting up an electronic sales reporting system, in addition to the allowable deduction under Section 34(A)(1) of the Tax Code, as amended:

Taxpayer Classification	Allowed Additional Deductions from Taxable Income
Micro and Small Taxpayers	100% of the total cost for setting up an electronic sales reporting system
Medium and Large Taxpayers	50% of the total cost for setting up an electronic sales reporting system

The foregoing allowable deduction shall be availed of only once within the taxable year the electronic sales reporting system has been completed or final payment has been made. The importation of such electronic sales reporting system shall also be exempt from taxes.

SECTION 4. EXEMPTION FROM THE MANDATORY REQUIREMENTS TO ISSUE AN ELECTRONIC INVOICE. – In line with the Ease of Doing Business and Ease of Paying Taxes, all taxpayers classified as Micro Taxpayers under Section 3(A)(1), 3(A)(4),3(A)(5)(i), 3(A)(5)(ii), 3(A)(5)(iii) and 3(A)(5)(iv) of these Regulations, shall be exemptedfrom the mandatory requirement to use and issue electronic invoice. However, this exemptiondoes not preclude Micro Taxpayers who are already using electronic invoices, if any, or thosewho choose to voluntarily use them.

In the absence of an electronic invoice, Micro Taxpayers shall issue a registered manual invoice. They may also use CAS, CRM, and POS System, in lieu of electronic invoices.

SECTION 5. PENALTY PROVISIONS. – Any violation of or non-compliance with these Regulations shall be subject to the penalties as defined in Sections 264 and 264-A of the Tax Code.

SECTION 6. TRANSITORY PROVISIONS. – Taxpayers covered under Section 3(A)(1)

to (3) have a period of one (1) year from the effectivity date of these Regulations to comply with the electronic invoicing requirements (issuance of electronic invoice).

Upon the establishment of a system capable of storing and processing the required data by the BIR, all taxpayers covered under Sections 3(A)(5)(i), 3(A)(5)(ii), 3(A)(5)(iii) and 3(A)(5)(iv) and 3(B) of these Regulations shall be mandated to comply with the issuance of electronic invoice and Electronic Sales Reporting System requirements. A separate Revenue Regulations shall be issued for this purpose.

SECTION 7. SEPARABILITY CLAUSE. – If any of the provisions of these Regulations is subsequently declared invalid or unconstitutional, the validity of the remaining provisions hereof shall remain in full force and effect.

SECTION 8. REPEALING CLAUSE. – All other issuances and rules and regulations or parts thereof which are contrary to and inconsistent with the provisions of these Regulations are hereby repealed, amended or modified accordingly.

SECTION 9. EFFECTIVITY. – These Regulations shall take effect fifteen (15) days following its publication in the Official Gazette or the BIR Official Website, whichever comes first.

Amending the Pertinent Provisions of Revenue Regulations NO. 16-2005 to Implement the Value-Added Tax Provisions under Section 106, 108, 109, and 112 the National Internal Revenue Code of 1997, as Amended by Republic Act No. 12066

SECTION 1. Scope. – Pursuant to Sections 244 and 245 of the National Internal Revenue Code of 1997, as amended (Tax Code), in relation to Section 32 of Republic Act (RA) No. 12066, these Regulations are hereby promulgated to implement the Value Added Tax (VAT) provisions under Section 6,7,8, and 9 of the said Act.

Section 2 Coverage. – These regulations shall amend pertinent provisions of Revenue Regulations (RR) No. 16-2005, as amended, to cover the following provisions of the Tax Code:

VAT zero-rating under Section 106(A)(2) for sale of goods
VAT zero-rating under Section 108(B) for sale of services
VAT zero-exempt transactions under Section 109(u) and 109(dd); and
VAT refund/credit under Section 112(C)

SECTION 3. ZERO-RATED SALES OF GOODS OR PROPERTIES. – The entire Section 4.106-5 of RR No. 16-2005, as amended, is hereby further amended to read as follows:

“Sec. 4.106-5. Zero-Rated Sales of Goods and Properties. – A zero-rated sale of goods or properties (by a VAT-registered person) is a taxable transaction for VAT purposes, but shall not results in any output tax. However, the input tax on purchases of goods or properties, related to such zero-rated sale, shall be available as tax credit or refund in accordance with these Regulations.

The following sales by VAT-registered persons shall be subject to zero percent (0%) rate:

Export sales. – “Exports Sales” shall mean:
- The sale and actual shipment of goods from the Philippines to a foreign country, irrespective of any shipping arrangement that may be agreed upon which my influence or determine the transfer of ownership of the goods so exported, paid for in acceptable foreign currency or its equivalent in goods or services, and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP);
- Sale of raw materials or packing materials to a non-resident buyer for delivery to a resident local export-oriented enterprise to be used in manufacturing, processing, packing or repacking in the Philippines of the said buyer’s goods and paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the BSP;
- Sale of goods to an export-oriented enterprise. For purposes of this provisions, Export-Oriented Enterprises” refers to a person, natural or juridical, engaged in the sale and actual shipment of goods from the Philippines to a foreign country or economy as contemplated under Section 4.106-5(2)(1) of these Regulations.
  
  To qualify for VAT zero-rating under this provisions, the following conditions shall be necessary:
  - Export sales of the export-oriented enterprise is at least seventy percent (70%) of the total annual production of the preceding taxable year. For this purpose, “total annual production” for goods, refers to the volume or sales value of production, manufactured and sold, including mark-up, by the export-oriented enterprise during taxable year;
  - Such goods are directly attributed to the export activity of the export-oriented enterprise. For this purpose, ‘directly attributable’ shall refer to goods that are incidental to and reasonably necessary for the export activity of the export-oriented enterprise; and
  - The Export Marketing Bureau (EMB) of the Department of Trade and Industry (DTI) shall determine compliance with the threshold through the issuance of a certification. This certification is to be distinguished from the VAT zero-rating certification issued by the Investment Promotion Agencies (IPAs) on the sale to Registered Business Enterprise (BREs) which is covered under Title XIII of the Tax Code.
  - Any export-oriented enterprise that fails to meet the threshold shall not be qualified from availing of VAT zero-rating on local purchases in the immediately succeeding year. The certification on the threshold and entitlement to VAT zero-rating issued by the EMB shall be effective in the applicable calendar or fiscal year and shall be presented to the local suppliers of the export-oriented enterprises prior to the transaction. This is without prejudice to the conduct of post audit investigation/verification by the Bureau of Internal Revenue (BIR) that the goods are indeed directly attributable to the export activities of the export-oriented enterprise. Local suppliers of goods of the qualified export-oriented enterprise shall no longer be required to apply for approval of VAT zero-rating with the BIR.
    
    The EMB shall furnish the BIR a Master List of all export-oriented enterprises issued with a certification, including those with disapproved applications and revoked certifications, on or before the fifth (5^th) day following the close of each month. In order to obtain relevant information for audit purposes, the Commissioner of Internal Revenue (CIR) may prescribed a report template in a separate revenue issuance.
    In case the local suppliers passed on VAT on the local purchases of goods directly attributable to the export-oriented enterprise’s export activity for the succeeding year despite securing VAT zero-rating certificate from EMB, the qualified exporter may contest the same and/or resolve with the local supplier for the reimbursement of the VAT paid, if any. Should there be a shift of the classification of sales from 12% VAT to VAT at 0%, the previously issued Invoice by the supplier with VAT charged thereon shall be surrendered or returned to the local supplier for cancellation and replacement to VAT zero-rated invoice.
    Provided finally, that input tax otherwise due on VAT zero-rated local purchases attributable to VAT-exempt sales shall be paid and deductible from the gross income of the taxpayer,
- The sale of goods, supplies, equipment, and fuel to persons engaged in international shipping or international air transport operations; Provided, that the goods, supplies, equipment, and fuel shall be exclusively for the international operations, not domestic operations, of persons engaged in international shipping or air transport operations. The sale of goods, supplies, equipment, and fuel to persons engaged in international shipping or international air transport operations is limited to goods, supplies, equipment and fuel that shall be used in the transport of goods and passengers from a port in the Philippines directly to a foreign port, or vice versa, without docking or stopping at any other port in the Philippines unless the docking or stopping at any other Philippine port is for the purpose of unloading passengers and/or cargoes that originated from abroad, or to load passenger and/or cargoes bound for abroad: Provided further, that if any portion of such fuel, goods, supplies or equipment is used for purposes other than those mentioned in this paragraph, such portion of fuel, goods, supplies, and equipment shall be subject to 12% VAT; and
  - (5) Sales to bonded manufacturing warehouses of export-oriented enterprises. For this purpose, “bonded manufacturing warehouse” refers to a warehouse established for the manufacture of products utilizing raw materials or components that are imported duty and tax-free conditioned on the exportation of the finished products within the period prescribed or withdrawal for domestic consumption upon payment of duties and taxes, including VAT, provided that raw materials entered for consumption shall not exceed thirty percent (30%) of the volume of raw materials entered for warehousing.
- Sales to persons or entities whose exemption from direct and indirect taxes under special laws or international agreements to which the Philippines is a signatory effectively subjects such sales to zero-rate.
- Sale of raw materials, inventories, supplies, equipment, packaging materials and goods, to RBEs qualified for VAT zero rating on their local purchases under Title XIII of the Tax Code.
  
  The VAT zero-rating on local purchases of goods shall be availed of on the basis of the VAT zero-rating certification issued by the concerned IPA, without prejudice, however, to the conduct of post audit investigation/verification by the BIR that the goods are indeed directly attributable to the registered project or activity of the qualified RBEs. Local suppliers of goods of the qualified RBEs shall no longer be required to apply for approval of VAT zero-rating with the BIR.
  
  Registered export enterprises (REEs) may still avail of the VAT zero-rating on local purchases of goods under Section 106 of the Tax Code after the expiration of the entitlement to VAT zero-rating on local purchases under Title XIII thereof: Provided, that they comply with the requirements as set forth therein.
  The concerned IPA shall furnish the BIR within twenty (20) days following the close of each taxable quarter a list of RBEs issued with VAT zero-rating certification. In order to obtain relevant information, for audit purposes, the CIR may prescribe a report template in a separate revenue issuance.
  
  In a situation where the local suppliers of RBEs that are qualified for VAT zero-rating under Title XIII of the Tax Code passed on the VAT on the local purchases of goods directly attributable to the latter’s registered activity, the qualified RBEs may contest the same and/or resolve with the local supplier for the reimbursement of VAT paid, if any. Should there be a shift in the classification of sales from 12% VAT to VAT at zero percent (0%), the previously issued Invoice by the supplier with VAT charged thereon shall be surrendered or returned to the local supplier for cancellation and replacement to VAT zero-rated invoice.

SECTION 4. ZERO-RATED SALE OF SERVICES. – The entire Section 4.108-5 of RR No. 16-2005, as amended, is hereby further amended and shall now be read as follows:

“SEC. 4.108-5. Zero-Rated Sale of Services. –

In general. – A zero-rated sale of service (by a VAT-registered person) is a taxable transaction for VAT purposes, but shall not result in any output tax. However, the input tax on purchases of services related to such zero-rated sale shall be available as tax credit or refund in accordance with these Regulations.
Transactions Subject to Zero Percent (0%) VAT Rate. – The following services performed in the Philippines by a VAT-registered person shall be subject to zero percent (0%) VAT rate:
- Processing, manufacturing or repacking goods for other persons doing business outside the Philippines which goods are subsequently exported, where the services are paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the BSP;
- Services other than processing, manufacturing or repacking rendered to a person engaged in business conducted outside the Philippines or to a non-resident person not engaged in business who is outside the Philippines when the services are performed, the consideration for which is paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the BSP;
- Services rendered to persons or entities whose exemption from direct and indirect taxes under special laws or international agreements to which the Philippines is a signatory effectively subjects the supply of such services to zero percent (0%) rate;
- Services rendered to persons engaged in international shipping or air transport operations, including leases of property for use thereof; Provided, that these services shall be exclusively for the international operations, not domestic operations, of persons engaged in international shipping or air transport operations. Thus, the services referred to herein shall not pertain to those made to common carriers by air and sea relative to their transport of passengers, goods or cargoes from one place in the Philippines to another place in the Philippines, the same being subject to 12% VAT under Sec. 108 of the Tax Code;
- Services performed for an export-oriented enterprise. For purposes of this provision, “Export-Oriented Enterprise” refers to a person, natural or juridical, engaged in the sale of services from the Philippines to a foreign country or economy as contemplated under Section 4.108-5(b)(2) of these Regulations. To qualify for VAT zero-rating under this provision, the following conditions shall be necessary:
  - Export sales of the export-oriented enterprise is at least seventy percent (70%) of the total annual production of the preceding taxable year. For this purpose, “total annual production” for services refers to the value of services rendered by the export- oriented enterprise during the taxable year;
  - Such services are directly attributable to the export activity of the export-oriented enterprise. For this purpose, ‘directly attributable’ shall refer to services that are incidental to and reasonably necessary for the export activity of the export-oriented enterprise, including janitorial, security, financial, consultancy, marketing and promotion services, and services rendered for administrative operations such as human resources, legal and accounting; and
  - The EMB of the DTI shall determine compliance with the aforementioned threshold through the issuance of a certification. This certification is to be distinguished from the VAT zero-rating certification issued by the Investment Promotion Agencies (IPAs) on the sale to Registered Business Enterprises (RBEs) which is covered under Title XIII of the Tax Code.
    
    Any export-oriented enterprise that fails to meet the threshold shall not be qualified from availing of VAT zero-rating on local purchases in the immediately succeeding year. The certification on the threshold and entitlement to VAT zero-rating issued by the EMB shall be effective in the applicable calendar or fiscal year and shall be presented to the local suppliers of the export-oriented enterprise prior to the transaction. This is without prejudice to the conduct of post audit investigation/verification by the BIR that the services are indeed directly attributable to the export activities of the export-oriented enterprise. Local suppliers of services of the qualified export-oriented enterprise shall no longer be required to apply for approval of VAT zero-rating with the BIR.
    
    Provided, that the EMB shall furnish the BIR a Master List of all export-oriented enterprises issued with a certification, including those with disapproved applications and revoked certifications, on or before the fifth (5th) day following the close of each month. In order to obtain relevant information, for audit purposes, the CIR may prescribe a report template in a separate revenue issuance. In case the local suppliers passed-on VAT on the local purchases of goods directly attributable to export oriented enterprise’s export activity for the succeeding year despite securing VAT zero-rating certificate from EMB, the qualified exporter may contest the same and/or resolve with the local supplier for the reimbursement of the VAT paid, if any. Should there be a shift of the classification of sales from 12% VAT to VAT at 0%, the previously issued Invoice by the supplier with VAT charged thereon shall be surrendered or returned to the local supplier for cancellation and replacement to VAT zero-rated invoice. Moreover, export-oriented enterprises that have attained the 70% export threshold from the preceding taxable year but failed to secure certification from the EMB shall also not be allowed for VAT refund covering the succeeding year.
    
    Provided finally, that input tax otherwise due on VAT zero-rated local purchases attributable to VAT-exempt sales shall be paid and deductible from the gross income of the taxpayer.
- Transport of passengers and cargo by domestic air or sea vessels from the Philippines to a foreign country. Gross sales of international air or shipping carriers doing business in the Philippines derived from transport of passengers and cargo from the Philippines to another country shall be exempt from VAT; however, they are still liable to a percentage tax of three percent (3%) based on their gross sales derived from transport of cargo from the Philippines to another country as provided for in Sec. 118 of the Tax Code:
- Sale of power or fuel generated through renewable sources of energy such as, but not limited to, biomass, solar, wind hydropower, geothermal and steam, ocean energy, and other emerging sources using technologies such as fuel cells and hydrogen fuels; Provided, however, that VAT zero-rating shall apply strictly to the sale of power or fuel generated through renewable sources of energy, and shall not extend to the sale of services related to the maintenance or operation of plants generating said power.
- Services, including provision of basic infrastructure, utilities, and maintenance, repair and overhaul of equipment, rendered to qualified RBEs as defined under Title XIII of the Tax Code, that are directly attributable to the registered project or activity of the qualified RBE, including incidental expenses thereto.
  
  REEs whose entitlement to VAT zero-rating on local purchases has expired may still avail the VAT zero-rating on local purchases under Section 108 of the Tax Code, Provided, that they comply with the requirements as set forth therein.
  
  Health maintenance organization (HMO) plans acquired by RBE for its employees who are directly involved in the operations of their registered projects or activities and forming part of their compensation package shall be considered as “directly attributable” in the registered project or activity of the qualified RBEs subject to the conditions provided under the existing laws, rules and regulations regarding the availment thereof. This excludes HMO coverage or benefits extended to family member/s or assigned beneficiary/ies of the employees.
  
  The VAT zero-rating on local purchase of services shall be availed of on the basis of the VAT zero-rating certification issued by the concerned IPA, without prejudice, however, to the conduct of post audit investigation/verification by the BIR that the services are directly attributable to the registered project or activity of the qualified RBEs. Local suppliers of services of the qualified RBEs shall no longer be required to apply for approval of VAT zero-rating with the BIR.
  
  The concerned IPA shall furnish the BIR within twenty (20) days following the close of each taxable quarter a list of RBEs issued with VAT zero-rating certification. In order to obtain relevant information, for audit purposes, the CIR may prescribe a report template in a separate revenue issuance. In a situation where the local suppliers of RBEs that are qualified for VAT zero-rating under Title XIII of the Tax Code passed on the VAT on the local purchases of services that are directly attributable to former’s registered activity, the qualified RBEs may contest the same and/or resolve with the local supplier for the reimbursement of VAT paid, if any. Should there be a shift in the classification of sales from 12% VAT to VAT at zero percent (0%), the previously issued Invoice by the supplier with VAT charged thereon shall be surrendered or returned to the local supplier for cancellation and replacement to VAT zero-rated invoice.

SECTION 5. VAT-EXEMPT TRANSACTIONS. – Section 4.109(u) is hereby amended, and Section 4.109(dd) shall be added to RR No. 16-2005, to read as follows.

“SEC. 4.109. VAT-Exempt Transactions. –

xxx xxx xxx

(B) Exempt transactions. – The following transactions shall be exempt from VAT:

xxx xxx xxx

(u) Importation of fuel, goods, and supplies used for international shipping or air transport operations. Said fuel, goods and supplies shall be used exclusively or shall pertain to the transport of goods and/or passenger from a port in the Philippines directly to a foreign port, or vice versa, without docking or stopping at any other port in the Philippines unless the docking or stopping at any other Philippine port is for the purpose of unloading passengers and/or cargoes that originated from abroad, or to load passengers and/or cargoes bound for abroad: Provided, further, that if any portion of such fuel, goods or supplies is used for purposes other than that mentioned in this paragraph, such portion of fuel, goods and supplies shall be subject to twelve percent (12%) VAT;

xxx xxx xxx (dd) Importation of goods by an export-oriented enterprise whose export sales is at least seventy percent (70%) of the total annual production or sales of the preceding taxable year: Provided, That such goods are directly attributable to the export activity of the export-oriented enterprise: Provided, further, That the EMB of the DTI shall determine the compliance with the aforementioned threshold. For this purpose, ‘directly attributable’ shall follow the same definition under Section 4.106(a)(3)(ii) of these Regulations.”

SECTION 6. VAT REFUND/CREDIT. – Section 4.112-1 of RR No. 16-2005 shall now be renumbered as Section 4.112 and shall be further amended to read as follows:

“INPUT VAT REFUND OR TAX CREDIT CERTIFICATE”

SEC. 4.112. Claims for Cash Refund/Tax Credit Certificate of Input Tax. –

Zero-rated and Effectively Zero-rated Sales of Goods, Properties or Services

A VAT-registered person whose sales of goods, properties or services are zero-rated or effectively zero-rated may apply for the issuance of a cash refund of input tax attributable to such sales. The input tax that may be subject of the claim shall exclude the portion of input tax that has been applied against the output tax. The application should be filed within two (2) years after the close of the taxable quarter when such sales were made. In case of zero-rated sales under Secs. 106(A)(2)(a)(1) and (3), Secs. 108(B)(1) and (2) of the Tax Code, the payments for the sales must have been made in acceptable foreign currency duly accounted for in accordance with the BSP rules and regulations.

Where the taxpayer is engaged in both zero-rated or effectively zero- rated sales and in taxable or exempt sales of goods, properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, only the proportionate share of input taxes allocated to zero-rated or effectively zero-rated sales can be claimed for refund or issuance of a tax credit certificate.

In the case of a person engaged in the transport of passenger and cargo by air or sea vessels from the Philippines to a foreign country, the input taxes shall be allocated ratably between his zero-rated sales and non- zero-rated sales (sales subject to regular rate and VAT-exempt sales).

Cancellation of VAT registration

A VAT-registered person whose registration has been cancelled due to retirement from or cessation of business, or due to changes in or cessation of status under Sec. 106(C) of the Tax Code may, within two (2) years from the date of cancellation, apply for the issuance of tax credit certificate or cash refund for any unused input tax which he may use in payment of his other internal revenue taxes or apply for refund for any unused input tax: Provided, however, that the taxpayer- claimant shall be entitled to a refund if it has no internal revenue tax liabilities against which the tax credit certificate may be utilized: Provided further, that for purposes of dissolution or cessation of business, the date of cancellation being referred hereto is the date of the issuance of BIR Tax Clearance.

Where to file the claim for refund/credit

Claims for tax credits/refunds shall be filed with the appropriate BIR Office in accordance with the existing rules and regulations.

Period within which refund/credit of input taxes shall be made

(1) In proper cases, the CIR shall grant refund for creditable input taxes within ninety (90) days from the date of submission of certified true copies of invoices and other documents specifically limited to those prescribed in the revenue issuances and in support of the application filed in accordance with Subsections (a) and (b) hereof: Provided that, should the CIR find that the grant of refund is not proper, the CIR must state in writing the legal and factual basis for the denial. The 90-day period to process and decide shall start from the filing of the claim up to the release of the payment of the approved VAT refund: Provided that, the claim/application is considered to have been filed only upon submission of the duly certified copies of invoices and other documents in support of the application as prescribed under pertinent revenue issuances.

(2) The taxpayer shall have fifteen (15) days from receipt of the full or partial denial to file a request for reconsideration. The request for reconsideration shall be limited only to questions of law on the full or partial denial of the claim for refund. Additional documentary requirements particularly those unsubmitted/unsupported mandatory requirements during the filing of the claim shall not be accepted. The CIR or his duly authorized representative shall decide on the request for reconsideration within fifteen (15) days from receipt thereof. Failure to file a request for reconsideration within the fifteen (15)-day period shall render the decision final.

(3) In case of full or partial denial of the request for reconsideration, or failure on the part of the CIR to act on the application for refund or request for reconsideration within the periods prescribed above, the taxpayer affected may appeal with the CTA within thirty (30) days:

i. after the expiration of the ninety (90)- day period to decide on the application for refund, in case where no action is made by the CIR on the application for refund; or

ii. from the receipt of the decision denying the request for reconsideration; or

iii. after the lapse of the fifteen (15)-day period decide on the request for reconsideration in cases where no actions is made by the CIR on the request for reconsideration

When no decision is rendered within the 90-day period or the 15-day period, as the case may be, and the taxpayer-claimant opted to seek for a juridical remedy within thirty (30) days from such period, the administrative claim for refund or the request for reconsideration shall be considered moot and shall no longer be processed.

Failure on the part of any official, agent, or employee of the BIR to act on the application for VAT refund within the ninety (90)-day period and on the application shall be punishable under Section 296(J) of the Tax Code. Provided further that, in the event that the 90-day period to decide on the application for refund, or after the lapse of the fifteen (15)-day period to decide in the request for reconsideration has lapsed without having the refund released to the taxpayer-claimant, the VAT refund claim may still continue to be processed administratively. However, the BIR official, agent or employee who has found to have deliberately caused the delay in the processing of the VAT refund claim may be subject to penalties imposed under the said section.

Risk-based approach in the verification and processing of VAT refund claims

VAT refund claims shall be classified into low-, medium-, and high-risk, with the risk classification based on the amount of VAT refund claim, tax compliance history, frequency of filing vat refund claims, among others: Provided, that medium- and high-risk claims shall be subject to audit or other verification process in accordance with the BIR’ national audit program for the relevant year.

Manner of giving refund

Refund shall be moved upon warrants drawn by the CIR or by his duly authorized representative without the necessary pf being countersigned by the Chairman, Commission on Audit (COA), the provisions of the Revised Corporation Code of 1987 to the contrary notwithstanding: Provided further, That the BIR shall publish statistics on the aggregated volume, processing time, approval rate of refund claims, and other relevant statistics in their website: Provided further, that in case of disallowed by the COA, only the taxpayer shall be liable for the disallowed amount without prejudice to any administrative liability on the part of any employee of the BIR who may be found to be grossly negligent in the grant of refund.

Vat Refund Center

The Department of Finance shall establish a VAT refund center in the BIR and in the Bureau of Customs (BOC) that will handle the electronic processing and granting of cash refunds of creditable input tax. In the absence of automated processing, the existing procedures shall apply.

Automatic Appropriation

An amount equivalent to five percent (5%) of the total VAT collection of the BIR and the BOC from the immediately preceding year shall be automatically appropriated annually and shall be treated as a special account in the General Fund or as trust receipts for the purpose of funding claims for VAT refund: Provided that, any unused fund, at the end of the year shall revert to the General Fund.

(i) Quarterly Report

The BIR and the BOC shall be required to submit to the Congressional Oversight Committee on the Comprehensive Tax Reform Program (COCCTRP) a quarterly report of all pending claims for refund and any unused fund.”

SECTION 7. TRANSITORY PROVISIONS. – For VAT credit/refund claims pursuant to Section 112(A) and 112(B) of the Tax Code, these Regulations shall apply to VAT credit/refund claims that are filed starting April 1, 2025, onwards to provide ample time for taxpayers and the BIR to adjust with the new requirements and procedures that will be imposed for this purpose.

SECTION 8. SEPARABILITY CLAUSE. – If any of the provisions of these Regulations is subsequently declared invalid or unconstitutional, the validity of the remaining provisions hereof shall remain in full force and effect.

SECTION 9. REPEALING CLAUSE. – All other issuances and rules and regulations or parts thereof which are contrary to and inconsistent with the provisions of these Regulations are hereby repealed, amended or modified accordingly.

SECTION 10. EFFECTIVITY. – These Regulations shall take effect fifteen (15) days following its publication in the Official Gazette or the BIR Official Website, whichever comes first.

Implementing Section 112(C) and 125-A of the National Internal Revenue Code of 1997, as Amended by Section 9 and 11 of Republic Act No. 12066 on the Procedures in the Resolution of Request for Reconsideration on the Denial of Claims for Refund

SECTION 1. Scope. – Pursuant to Sections 244 and 245 of the National Internal Revenue Code of 1997, as amended (Tax Code), in relation to Section 9, 11, and 32 of Republic Act (RA) No. 12066, these Regulations are hereby promulgated to implement Sections 112(C) and 135-A of the Tax Code by providing the governing rules on the resolution of requests for reconsideration against the full or partial denial of taxpayer-claimant’s claim for refund of:

(1) Creditable input taxes under Section 112(A) and (B) of the Tax Code; and

(2) Excise tax paid on petroleum products under Section 132-A of the Tax Code.

SECTION 2. COVERAGE – These Regulations shall cover request for reconsideration of the full or partial denial of taxpayer-claimant’s claim for refund under Section 112(A) and (B), and 135-A of the Tax Code involving application for refund files on or after April 1, 2025.

SECTION 3. DEFINITION OF TERMS. –

Request for reconsideration – a request for reconsideration is a plea for re-evaluation of a pure question of law on a given set of facts or circumstances based on previously submitted documents and arguments without need for the introduction of new or additional documents.
Question of law – A question of law arises when there is doubt as to what the law is on a certain state of facts. For question to be one of law, the same must not involve an examination of the probative value of the evidence presented by the applicant. The resolution of the issue must rest solely on what the law provides on the given set of circumstances.
Question of fact – Involves factual determination and application of facts based on documentary evidence; it exists when the doubt of difference arises as to the truth or falsehood of alleged facts.

SECTION 4. GENERAL POLICIES. –

The notice of full or partial denial of the claim for refund shall cite the factual and legal bases stating the law, and regulations, and jurisprudence, if any, on which such denial is based as required under the Tax Code.
All request for reconsideration on full or partial denial of a claim for refund should be limited to questions of law. Any issue/s relating to factual determination or appreciation should have been threshed out during the initial process of the claim for refund and contained in the notice of full or partial denial. Consequently, any factual issue raised in the request for reconsideration shall no longer be entertained.
Only the documents previously attached to the taxpayer-claimant’s application for tax refund relevant to the issues raised may be submitted with the request for reconsideration. Introduction of new evidence/document, as well as questions of law already addressed in the Notice of Full or Partial Denial, shall not be allowed during the request for reconsideration.
The processing time to act on the taxpayer-claimant’s request for reconsideration shall be within fifteen (15) days from the date of actual receipt for reconsideration by the concerned Processing Office, as provided for under Section 5 hereof. Consequently, failure to file with the Processing Office shall rendered the request for reconsideration invalid and shall not toll the running of the fifteen (15)-day period to file the request for reconsideration. Hence, the partial or full denial of the refund shall become final and executory after the lapse of such period.

No supplemental or amended appeal, or any other pleading of similar import, shall be allowed notwithstanding that the same is filed within the fifteen (15)-day prescribed period to file a request for reconsideration. Further, no second request for reconsideration shall not toll the running of the prescriptive period to file an appeal before the Court of Tax Appeals (CTA).

SECTION 5. MANNER AND PERIOD OF FILING. – Request for reconsideration shall be filed with the following Offices:

	Processing Office	Approving Office
1. For denial of claims within the National Office, including those signed by Assistant Commissioner (ACIR) – Large Taxpayers Service (LTS)	Appellate Division	Office of the Commissioner of Internal Revenue (OCIR)
2. For denial of claims signed by the regional Director	Legal Division of Revenue Region concerned	Regional Director concerned

The Processing Office shall not receive any request for reconsideration filed beyond the fifteen (15)-day period to file the request for reconsideration.

The running of the fifteen (15)-day period to resolve the request for reconsideration shall commence upon its actual receipt of the Processing Office.

SECTION 6. FORM AND CONTENTS OF THE REQUEST FOR RECONSIDERATION. – The request for reconsideration shall contain the following:

Title of the request for reconsideration must be in all capital letters, bold-faced, thus:

“REQUEST FOR RECONSIDERATION OF THE PARTIAL/FULL OF CLAIMS FOR VAT REFUND”

“REQUEST FOR RECONSIDERATION OF THE PARTIAL/FULL DENIAL OF CLAIMS FOR REFUND ON EXCISE TAX PAID ON PETROLUM PRODUCTS”

Description of the claim subject of the request for reconsideration indicating the name of taxpayer-claimant. Tax Verification Notice (TVN) number, amount of the original claim and the amount which was denied, and the taxable period/s covered;
Date of receipt of the notice of full or partial denial of the claim for refund;
Clear and concise statements of facts, the assignment of errors of law and citation of the rules and regulations, law, and jurisprudence, if any, in support of the taxpayer-claimant’s arguments;
The taxpayer-claimants shall attach one (1) set of the following documents as annexes to the request for reconsideration:
- Original copy of the authority to file the request for reconsideration embodied in a Secretary’s Certificate, if the taxpayer-claimant is a corporation, or Special Power Attorney, if the taxpayer-claimant in as individual;
- Certified true copy of the original application for refund with the receiving stamp from the VAT Credit Audit Division/Large Taxpayers’ VAT Audit Unit or concerned LTS Office/VAT Audit Section or Revenue District Office, whichever is applicable;
- Certified true copy of the notice of full or partial denial of the claim for refund subject of the request for reconsideration, and its attachments, if any, with proof of date of receipt of the same;
- Certified true copy of the checklist of mandatory requirements prepared by the original Processing Office and acknowledged by the taxpayer-claimant or its authorized representative; and
- Other pertinent documents relevant to the legal issue/s raised which were previously submitted in the original claim for refund with proof thereof.

SECTION 7. EFFECT OF FAILURE TO COMPLY WITH REQUIREMENTS AS TO FORM AND CONTENTS. – The failure of the taxpayer-claimant to comply with any

of the foregoing requirements as to the period, form and manner of filing of the request for reconsideration shall constitute sufficient grounds for the outright denial of the same.

SECTION 8. ACTION ON THE REQUEST FOR RECONSIDERATION. – The decision on the request for reconsideration shall be issued within the fifteen (15)-day processing period from actual receipt of the request by the Processing Office.

Service thereof shall be effected through registered mail or any other modes of service as defined under existing rules and regulations.

The Processing Office shall furnish the Office which rendered the full or partial denial of the claim, a copy of the decision on the request for reconsideration to aid the latter in establishing statistics on the aggregated volume, processing time, approval rate of refund claims and other relevant statistics and its publication on the BIR website.

SECTION 9. EFFECT OF GRANTING THE REQUEST FOR RECONSIDERATION. – Upon timely filing of the request for reconsideration, the processing of the refund claim subject of the request for reconsideration, if granted, shall be made within twenty (20) days from the date the decision is issued.

SECTION 10. WITHDRAWAL OF THE REQUEST FOR RECONSIDERATION. – Notwithstanding the filing of the request for reconsideration, the taxpayer-claimant may withdraw the same at any time before it is finally resolved, in which case, the full or partial denial shall stand as though no such request of reconsideration has been filed. The full or partial denial shall then be deemed final upon the lapse of the fifteen (15)-day period from the date of receipt by the taxpayer-claimant of the notice of full or partial denial of the claim for refund.

SECTION 11. APPEAL TO THE COURT OF TAX APPEALS. – In case of full or partial denial of the request for reconsideration, or in case of inaction thereon by the CIR or his duly authorized representative, the taxpayer-claimant may appeal the full or partial denial of the request for reconsideration of the full or partial denial of the claim for refund in case of inaction on the request for reconsideration to the CTA within thirty (30) days from receipt of the decision or from the lapse of the fifteen (15)-day period to decide thereon.

SECTION 12. SEPARABILITY CLAUSE. – If any of the provisions of these Regulations is subsequently declared invalid or unconstitutional, the validity of the remaining provisions hereof shall remain in full force and effect.

SECTION 13. REPEALING CLAUSE. – All other issuance and rules and regulations or parts thereof which are contrary to and inconsistent with the provisions of these Regulations are hereby repealed, amended or modified accordingly.

SECTION 14. EFFECTIVITY– These regulations shall take effect fifteen (15) days following its publication in the official gazette or the BIR Official Website, whichever comes first.

Implementing the Amendments to Section 27, 28, and 34 of the National Internal Revenue Code of 1997, as Amended by Republic Act No. 12066

SECTION 1. SCOPE. – Pursuant to Sections 244 and 245 of the National Internal Revenue Code of 1997, as amended (Tax Code), in relation to Sections 1, 2, 4, and 32 of the Republic Act (RA) No. 12066, these Regulations are hereby promulgated to implement Sections 27, 28, and 34 of the Tax Code, specifically on:

(1) reduced income tax rates for domestic and resident Foreign corporations classified as Registered Business Enterprises (RBEs) under the Enhanced Deductions Regime (EDR) as provided in Section 294(C) of the Tax Code; and
(2) additional allowable deductions from gross income under Section 34(C)(8) of the same Code.

Section 2 Corporate Income Tax Rates. – The income tax rates for domestic and resident foreign corporations pursuant to Section 27 and 28 of the Tax Code, as amended by RA No. 12066 are as follows:

DOMESTIC CORPORATIONS:

PARTICULARS	INCOME TAX RATE	EFFECTIVITY
Domestic corporation, in general	25%	July 1, 2020
Domestic corporations with net taxable income not exceeding Five Million Pesos (P5,000,000.00) and with total asset not exceeding One Hundred Million Pesos (P100,000,000.00), excluding land on which the particular business entity’s office, plant and equipment are situated, during the taxable year for which tax is imposed	20%	July 1, 2020

PARTICULARS	INCOME TAX RATE	EFFECTIVITY
Domestic corporations classified as RBEs under the EDR as provided in Sec.294(C) of the Tax Code	20%	November 28, 2024

RESIDENT FOREIGN CORPORATIONS:

PARTICULARS	INCOME TAX RATE	EFFECTIVITY
Resident Foreign Corporations, in general	25%	July 1, 2020
Resident Foreign Corporations classified as RBEs under the EDR as provided in Sec. 294(C) of the Tax Code	20%	November 28,2024

SECTION 3. APPLICABILITY OF THE REDUCED INCOME TAX RATE, – For RBEs under the EDR, the corporate income tax rate of twenty percent (20%) shall apply starting November 28, 2024 and shall only cover the taxable income derived from registered projects or activities during each taxable year. Income from non-registered projects or activities shall be subject to the applicable income tax rates.

SECTION 4. DEDUCTIBILITY OF INPUT TAX ATTRIBUTABLE TO VAT EXCEMPT SALES. – Input tax paid on local purchases attributable to VAT-exempt sales shall be deductible from the gross income of the taxpayer in accordance with Section 34(C)(8) of the Tax Code.

SECTION 5. TRANSITORY PTOVISIONS. – For RBEs who availed of the EDR and have already filed their Annual Income Tax Return covering calendar year 2024 or fiscal year ending on or before the effectivity of these Regulations, the excess income tax payments as a result of the reduction of tax rate from twenty-five percent (25%) to twenty percent (20%) upon the effectivity of RA No. 12066 may be carried forward to the succeeding taxable quarter/year.

SECTION 6. SEPARABILITY CLAUSE. – If any of the provision of these Regulations is subsequently declared invalid or unconstitutional, the validity of the remaining provisions hereof shall remain in full force and effect.

SECTION 7. REPEALING CLAUSE. – All other issuance and rules and regulations or parts thereof which are contrary to the inconsistent with the provisions of there Regulations are hereby repealed, amended or modified accordingly.

SECTION 8. EFFECTIVITY. – These Regulations shall take effect fifteen (15) days following its publication in the Official Gazette or the BIR Official Website, whichever come first.

Amending Revenue Regulations No. 2-98 Relative to the Withholding Tax Rates on Certain Income Payments Subject to Creditable Withholding Tax Pursuant to Section 57 of the National Internal Revenue Code of 1997, as Amended by Republic Act No. 12066

SECTION 1. SCOPE., – Pursuant to Sections 244 and 245 of the National Internal Revenue Code of 1997, as amended (Tax Code), in relation to Sections 5 and 32 of Republic Act (RA) No. 12066, these Regulations are hereby promulgated to further amend Section 2.57.2 of Revenue Regulations (RR) NO.2-98, as amended, by revising the withholding tax rates and adjusting the basis of certain income payments.

SECTION 2. AMENDATORY PROVISIONS. – Section 2.57.2 (H) and (X) of RR No. 2-98, as renumbered and amended to read as follows:
“Sec. 2.57.2. Income payments subject to credible withholding tax rates prescribed thereon. –

(H) Certain income payments made by credit card companies – On the gross amounts paid by any credit card company in the Philippines to any business entity whether a natural or juridical person, representing the sales of goods/services made by the aforesaid business entity to cardholders – One-half percent (1/2%).

(X) Remittance of Electronic Marketplace Operators and Digital Financial Services Providers to Merchants – On the gross remittances by emarketplace operators and digital financial services providers to the seller/merchants for the goods and services sold/paid through their platform/facility – One-half percent (1/2%).

SECTION 3. SEPARABILITY CLAUSE. – If any of the provisions of these Regulations is subsequently declared invalid or unconstitutional, the validity of the remaining provisions hereof shall remain in full force and effect.

SECTION 4. REPEALING CLAUSE. – All other issuances and rules and regulations or parts thereof which are contrary to and inconsistent with the provisions of the Regulations are hereby repealed, amended or modified accordingly.

SECTION 5. EFFECTIVITY. – Thes Regulations shall take effect fifteen (15) days following its publication in the Official Gazette or the BIR Official Website, whichever comes first.

Availability of the Alphalist Data Entry and Validation Module Version 7.4

This Circular is hereby issued to inform all concerned taxpayers that the Alphalist Data Entry and Validation Module Version 7.4 is now available for use and can be downloaded from the website of the Bureau of Internal Revenue.

The 7.4 version comprises the newly-created alphanumeric tax codes and updates rates for transactions under the creditable and final withholding taxes.

In this connection, the deadline of submission of the alphalist for taxable year 2024 under BIR Form Nos. 1604C, 1604F, 1601EQ and 1601FQ shall be thirty (30) days immediately after the date of posting in the BIR website of this Circular.

In cases of alphalists previously submitted using the old version of 7.3 data entry module but with error reply messages from eSubmission facility of Bureau of Internal Revenue, the concerned taxpayers shall re-submit the said alphalists within the same deadline using the upgraded version of the module upon its availability thereof.

Moreover, those taxpayers with their own extract program shall strictly observe the attached revise file structures and standard naming conventions for the said modules.

This Circular is issued to provide clarifications and realign inconsistencies on certain provisions of Revenue Memorandum Circular (RMC) No. 75-2024 relative to the mandatory requirements for Tax Credit Certifies or cash refund of excess/unutilized CWT on income under Section 76(C), in relation to Sections 204(C) and 229 of the Tax Code.

I. Clarification to certain provisions and requirements

Q1: In the list of mandatory requirements under Annexes “A.1” for those taxpayers of going-concern status and “A.2” for taxpayers undergoing cessation or dissolution of business of RMC No. 75-2024, Annex “A.1” required original copies of duly accomplished Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) whereas Annex “A.2) is silent whether the said documents should be original or copies only. Will this result in the disallowance of the CWT if the taxpayer submitted scanned, facsimile, photocopy or a notarized or certified copy of the original or electronic document in considered duplicate only?
- A1: No. In the digital era, transmission of documents such as the BIR Form No. 2307 is not limited only to the physical delivery of documents from the sender to the receiver, which could also be through digital means such as but not limited to electronic mails, facsimile, cellphones, or other emerging technologies. Hence, the copies produced and submitted by the receipient of BIR Form No. 2307 may not necessarily be the original copy.
  
  Included in the verification procedures of the processing office is the validation of the authenticity and veracity of the claimed BIR Form No. 2307 by comparing the CWT claimed per Summary Alphalist of Withholding Tax at Source (SAWT) submitted by the taxpayer claimant with the annual or quarterly Alphalist of payees as attached in the BIR Form No. 1604E or 1601E submitted by the withholding agents of the taxpayer-claimant. If the data matched, the BIR can already be assured that the BIR Form 2307 claimed by the taxpayer-claimant is valid and authentic which makes the question as to whether or not the submitted document is an original copy already moot and academic.
  
  In this regard and consistency of application, the third item in Annex A.1 shall now read as: “Copies of duly accomplished Certificate of Creditable Tax withheld at Source (BIR Form No. 2307) or Withholding Tax Remittance Return for Onerous Transfer of Real Property Other Than Capital Asset (BIR Form No. 1606), whichever is applicable, issued by the payor (withholding agent) to the payee”.
Q2: If the taxpayer claimant is engaged in real estate business, should the Withholding Tax Remittance Return for Onerous Transfer of Real Property Other Than Capital Asset (BIR Form No. 1606) be original as required in Annex “A.1”)
- A2: No. The processing office is mandated to verify form the BIR database if the said return was indeed filed by the taxpayer claimant to establish the authenticity and veracity of the said document. A reproduction of the original copy of the said form would suffice.
Q3: Section 76(c) of the Tax Code pertains to corporate claimants only. In case an individual taxpayer incurred unutilized CWT and intends to refund or credit the said excess income taxes, what will be the basis of the claim?
- A3: It is confirmed that Section 76 of the Tax Code covers tax credit or refund claims of CORPORATIONS as defined under Section 22(B) of the Tax Code. For individual taxpayers, the claim may be anchored under Section 58(E), in relation to Section 204 of the Tax Code, to quote:
  
  Sec. 58. Returns and Payment of Taxes withheld at Source.-
  
  E. Income of Recipient – Income upon which any creditable tax is required to be withheld at source under Section 57 shall be included in the return of its recipient but the excess of the amount of tax so withheld over the tax due on his return shall be refunded to him subject to the provisions of Section 204.”
Q4: RMC No. 75-2024, in relation to Revenue Memorandum Order (RMO) No. 25-2024, pertain to claims of income tax credit or refund filed under Section 76(C) of the Tax Code, which, consequently is for corporate individual taxpayer-claimants?
- A4: Yes. A new set of mandatory requirements will be prescribed for individual taxpayers who intend to claim for tax credit or refund unutilized CWT pursuant to Section 58(E), in relation to Section 204 of the Tax Code. However, the general policies and guidelines in the mandatory documentary requirements in RMC No. 75-2024 and the procedures in the processing hereof pursuant to RMO No. 25-2024 remain the same for both corporate and individual taxpayer-claimants.
Q5: What is the implication to claim of tax returns filed after filing of the income tax credit/refund claim or the issuance of the Electronic Letter of Authority (eLA), whichever comes first?
- A5: Once the claim for income tax credit has been filed or an eLA has been issued covering the same period of the claim, the taxpayer-claimant is already precluded form amending the tax returns. In the existing procedures for processing of income tax credit/refund certain BIR Forms are no longer required to be submitted by the taxpayer claimants but the processing offices are mandated to verify and produce copies of the said tax returns filed by the taxpayer to be mandated to verify and produce copies of the said tax returns filed by the taxpayer to be attached to the corresponding tax docket of the claim. Once the application for income tax credit or refund has been officially received by the processing office of the BIR and the verification process commences, only the tax returns filed on or before the receipt of the application shall be considered in the evaluation of the claim. Should there be discrepancies, this may result in the disallowance of the portion of the claim or full denial thereto.

II. Changes in Documentary Requirements

To effect the changes above, Annex “A.1” is hereby renumbered as Annex “A.1.1” and Annex “A.1.2” is added as the mandatory requirements for individual taxpayer-claimant. Copies of the said Annexes are hereto attached for reference. This correspondingly amends Annexes “A.1”, “A.2” and “A.4” of RMC No. 75-2024.

Seminar Schedules

Revenue Memorandum Circular No. 34-2025

Revenue Memorandum Circular No. 32-2025

Republic Act No. 12079

2025 Filing of Annual Financial Statements and General Information Sheet

Revenue Regulations No. 012-2025

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