‘Create-ing More’ efficiency in the VAT refund process
By: Atty. Lew Earvin Manarin on July 24,2025
THE Create More Act (Republic Act 12066) and its implementing regulations introduced key amendments to the VAT refund and tax credit system in the National Internal Revenue Code (the “Tax Code”). These reforms, aimed at simplifying and expediting the refund process, represent an important step in the country’s efforts to create a more competitive tax environment and boost investor confidence.
One of the most significant amendments introduced relates to Section 112(C) of the Tax Code, which governs the period within which VAT refund claims must be processed. Under the provision, the Commissioner of Internal Revenue (CIR) is mandated to act on VAT refund claims within 90 days from the submission of complete documents. The new provisions clarify that the 90-day period starts only after the taxpayer submits certified true copies of invoices and other supporting documents strictly limited to those identified in BIR issuances. This eliminates ambiguity and allows both the taxpayer and the BIR to proceed based on a defined checklist.
In case of a full or partial denial of a refund claim, the CIR is mandated to issue a written explanation within the same 90-day period, stating the legal and factual basis of the denial and identifying any deficiencies in the claim.
The Create More Act also introduced the remedy of a request for reconsideration under Section 112(C). The provision now provides that taxpayers whose refund claims are partially or fully denied must file the request for reconsideration within 15 days from receipt of the denial notice. Failure to do so will render the decision final. The CIR is then required to act on the request within 15 days from receipt.
It is important to note that Revenue Regulation 8-2025, which was issued to implement Create More, limits the request for reconsideration to questions of law and must be based only on documents already submitted during the original claim. New evidence or factual issues are no longer allowed at this stage. The amendments to the Tax Code introduced by Create More do not provide for such limitations.
The Tax Code has also been amended to expressly provide that if the CIR fails to act within the 90-day period for the refund claim or the 15-day period for the request for reconsideration, or if the request for reconsideration is denied, the taxpayer may elevate the matter to the Court of Tax Appeals within 30 days from receipt of the denial or after the expiration of the relevant period of inaction.
Previously, following the amendments from the Train Act (Republic Act 10963), the option to appeal due to the “inaction” of the CIR was removed in Section 112(C) of the Tax Code. Consequently, it became unclear if the taxpayer had the option to appeal to the CTA if the claim for refund was not acted upon within the 90-day period. However, in the case of CIR v. Maersk Global Service Centres (Philippines) Ltd. (CTA EB Nos. 2534 and 2554, June 7, 2023), the CTA en banc held that it was mandatory for the taxpayer to file a judicial claim within 30 days from either receipt of the CIR’s decision or ruling or the expiration of the 120-day [now 90-day] period — whichever comes first — since the CIR’s inaction is deemed a final denial of the refund claim. However, the dissenting opinions posit that the filing of an appeal upon inaction after the lapse of the 90-day period is permissive, not mandatory.
The Create More Act clarifies that the remedy for the CIR’s inaction on a claim for refund is indeed permissive, and that the taxpayer has the option to either file a petition for review with the CTA within 30 days after the expiration of the 90-day period or wait for the CIR’s decision before appealing to the CTA.
It should be noted that beyond procedural reforms, Create More introduced institutional changes aimed to modernize and bring greater transparency to the VAT refund process:
– Risk-based verification. Claims are now categorized as low-, medium-, or high-risk based on the taxpayer’s profile and historical compliance. Medium- and high-risk claims are subject to additional audit procedures, while low-risk claims may be prioritized for faster processing.
– Dedicated VAT refund centers. The BIR and Bureau of Customs (BOC) are mandated to establish specialized units dedicated solely to processing VAT refund claims.
– Automatic appropriation of funds. Five percent of the previous year’s VAT collections by both the BIR and BOC will be automatically appropriated each year to fund VAT refunds. Any unutilized portion will revert to the General Fund.
– Simplified issuance of refunds. VAT refunds may now be released without the need for a Commission on Audit countersignature.
– Transparency and oversight requirements. The BIR is now required to publish on its official website key statistics such as the volume of refund claims, average processing times, and approval rates.
Through these changes, the Create More Act aims to shift toward a more efficient, rules-based, and transparent tax regime. It seeks to offer a framework with a stronger basis of trust, compliance, and faster resolution of refund claims. Whether these reforms yield meaningful improvements will depend on consistent implementation and monitoring of the reforms introduced by the law.
Lew Earvin H. Manarin is a CPA-Lawyer and 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 questions or comments regarding this article, you may email the author at info@mtfcounsel.com or visit MTF website at www.mtfcounsel.com.
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