By: Atty. Rey Christian M. Guintibano on June 26, 2025

IN our article published on June 19, 2025, we discussed the requirement under Republic Act 12066, or the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (Create More), for export-oriented enterprises (EOEs) to obtain a certification from the Department of Trade and Industry’s Export Marketing Bureau (DTI-EMB) to avail of VAT zero-rating on their purchases of goods and services, as well as VAT exemption on importation of goods. In fact, the DTI began issuing EOE certifications earlier this month, and as of today, a total of eight companies have already been certified.

EOE certification is one of several procedural innovations under Create More, which is aimed at making the Philippines more attractive to investors by strengthening the country’s incentive regime and streamlining VAT refund mechanisms.

Following the enactment of the law, the Bureau of Internal Revenue (BIR) issued several regulations and circulars to implement the amended VAT provisions of the National Internal Revenue Code. These issuances prescribe updated guidelines, revised documentary requirements and clearer processing timelines for VAT refund claims

One of the key reforms under Create More, as implemented by Revenue Regulations (RR) 10-2025 and Revenue Memorandum Circular 37-2025, is the shift from requiring original documents to allowing the submission of certified true copies of invoices, receipts and supporting records, reducing the burden on taxpayers during the filing of their VAT refund applications. However, the original copies of invoices and receipts must still be presented to the BIR for stamping with the notation “VAT refund claimed,” either at the processing office or, in the case of voluminous documents, at the taxpayer’s registered office address.

The BIR also emphasized that documents already in its records, such as previously filed returns, are no longer required to be resubmitted. Nevertheless, taxpayers are not precluded from attaching these documents to help expedite validation.

Another significant development is the introduction of a request for reconsideration for denied VAT refund claims. Previously, taxpayers could only elevate the denial of their VAT refund application to the Court of Tax Appeals. Under Create More, taxpayers now have 15 days from receipt of a full or partial denial to file for a request for a reconsideration before the commissioner of internal revenue (CIR). Failure to file the request within the 15-day period renders the CIR’s decision final.

The BIR subsequently issued RR 8-2025, clarifying that requests for reconsiderations are limited to questions of law, and that any factual issue raised shall not be entertained by the CIR. The RR further provides that only documents originally submitted with the application shall be considered. Notably, RR 8-2025 is silent on instances where the denial involves only questions of fact. Is the taxpayer still required to file a request for reconsideration despite the absence of any question of law, or can the taxpayer proceed directly to the CTA?

The DTI-EMB may certify EOEs that meet the 70-percent export sales threshold in the preceding year to qualify for VAT zero-rating on their local purchases and VAT exemption on their importations. Failure to obtain a certification, despite meeting the threshold, bars the EOE from applying for a VAT refund covering the immediately succeeding year. However, any unutilized input VAT can be carried forward to subsequent taxable quarters and can be utilized against its future VAT liabilities.

On the other hand, if an EOE fails to meet the export threshold in the previous year, it may still file a claim for refund of input VAT on its local purchases attributable to zero-rated sales in the immediately succeeding year. To do so, the EOE must submit a notification from the DTI-EMB confirming that the enterprise was not eligible for VAT zero-rating and is therefore subject to 12-percent VAT, along with certified evaluation sheets from the EMB to substantiate its export activities and bank certifications to prove inward remittances.

While the BIR has already taken steps toward digitalization, such as through the e-filing and payment system, VAT refund applications are still required to be filed physically at designated processing offices, to allow for the validation of documentary requirements.

Expanding these digital initiatives to cover VAT refund applications and supporting documents submission may be worth considering. Doing so would not only ease compliance and reduce costs for taxpayers but also support the government’s broader push toward digital transformation.

Rey Christian M. Guintibano is an associate of Mata-Perez, Tamayo & Francisco (MTF Counsel). This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. If you have any question or comment, you may email the author at info@mtfcounsel.com or visit MTF website at www.mtfcounsel.com.

https://www.manilatimes.net/2025/06/26/business/top-business/vat-refund-under-create-more/2138583