VAT refunds through the pandemic
The COVID-19 pandemic has compelled companies to discover new methods to enhance their money stream. A technique is to ask the federal government for the VAT refund. This treatment is open to taxpayers whose unused enter VAT is attributable to zero-rated transactions and is ruled by a course of that was not too long ago streamlined by the Bureau of Inner Income (BIR).
Up to now, now we have heard from taxpayers who’ve expressed reluctance to file VAT refund claims as a result of many documentary necessities and prices related to submitting. Those that really filed had problem retrieving paperwork, both internally or from exterior sources, such because the required certifications from varied authorities companies and overseas jurisdictions.
To be able to cut back the burden of the VAT refund course of, the BIR issued Income Memorandum Order (RMO) No.47-2020, which took impact on January 19, 2021, in response to the attraction of taxpayers-applicants who, as a result of COVID -19 pandemic, have encountered difficulties in complying with the documentary necessities below the outdated guidelines and in compliance with the Legislation of the Republic (RA) No 11032, also referred to as Ease of Doing Enterprise and Environment friendly Authorities Service Supply Act, 2018.
The adjustments launched by the RMO, coupled with the authorized mandate to undertake simplified necessities, goal to encourage reluctant taxpayers to file VAT refund claims and get better the tax they’re legitimately owed. In the event that they obtain a refund, taxpayers can faucet into new money stream that will assist them assist their day-to-day operations.
NON-SUBMISSION OF PHOTOCOPIES OF SALES INVOICES / RECEIPTS
Among the many notable adjustments below this RMO is the elimination of the requirement to submit photocopies of gross sales invoices or receipts for purchases and gross sales of products or companies, which as soon as constituted the majority of paperwork required when submitting. As an alternative, the submission of photocopies has been changed by the submission of the originals for verification, together with the corresponding scanned copies saved in a reminiscence gadget. This variation is seen by some to be price and environmentally pleasant, and it eliminates the necessity for BIR officers to conduct fieldwork on the taxpayer’s head workplace, merely to stamp every authentic doc with the phrase ” Refund of VAT claimed ”. Making an allowance for all of the geographic issues and localized lockdowns, the rule change successfully takes under consideration the well being and security of BIR officers and requesters in cost.
NON-SUBMISSION OF CONSULARIZED DOCUMENTS
The duty to current consular or apostilled certificates of registration, incorporation or affiliation of non-resident overseas corporations (NRFCs) overseas has additionally been abolished. This modification seeks to resolve the dilemma of taxpayer-claimants whose VAT refund claims are hampered as a result of delay in processing and delivering overseas paperwork to the Philippines. The revised guidelines solely requires the submission of an authentic copy of a certification from the Securities and Alternate Fee (SEC) indicating that the NRFC is just not registered to do enterprise within the Philippines.
In any case, it could all the time be fascinating for taxpayers to acquire a consularized or apostilled doc in anticipation of a potential attraction to the courtroom. So long as case legislation doesn’t remove these necessities, taxpayer-applicants usually are not but fully free to acquire consular or apostilled paperwork overseas.
OTHER RELAXED REQUIREMENTS
The RMO additionally eliminated different paperwork from the revised guidelines, specifically these that are already accessible to the BIR from its personal registers (i.e. annual registration charges, authorization of ‘print, the authorization to make use of the computerized accounting system and the schedule of main purchases categorised by provider). Nevertheless, for costly gadgets, BIR brokers are nonetheless required to confirm authenticity and accuracy by accessing the BIR info system.
The OGR additionally compressed 4 separate affidavits / affidavits (i.e. the quantity of gross sales reported; the out-of-forum purchasing affidavit; the completeness and authenticity of the submitted paperwork; and the profile of the taxpayer) in a single taxpayer certificates.
The RMO additionally eliminated paperwork that beforehand needed to be licensed as compliant by issuing authorities companies. The RMO acknowledged that some government-issued paperwork comprise built-in “Fast Response” (QR) codes that may be verified electronically or on-line.
90-DAY FIXED TREATMENT PERIOD
Whereas earlier BIR points offered for the 90-day interval to start from the date of submission of official receipts or invoices and different paperwork in assist of the declare, RMO 47-2020 famous that the beginning of the 90-day interval of submitting the applying with the whole paperwork duly obtained by the processing workplace.
The RMO intends to remove the opportunity of the calculation date being moved or adjusted by a BIR processing officer by merely requesting extra paperwork exterior of the guidelines.
CLARIFYING THE EXCLUSIVE LOCATION FOR DIRECT EXPORTERS
Concerning location, RMO No.47-2020 expressly states that solely the VAT Credit Audit Division (VCAD) can obtain complaints from direct exporters, excluding the Income District Workplace (RDO) or the Giant Taxpayers Audit Division (DLTA). . This clarifies the earlier BIR points (RMC n ° 17-2018 and RMO 47-2019), which may be interpreted by some direct exporters to imply that they’ve the likelihood to file the request for VAT refund with the RDO or LTAD.
Whereas the pandemic has in some way disrupted the ‘ought to be’ order of VAT refund returns, it has additionally given tax authorities a chance to rethink and streamline the VAT refund course of. The OGR seeks to deal with the challenges confronted by BIR officers and taxpayers who discover themselves enjoying a job in a pandemic the place claims have but to be filed and processed accordingly.
This IR is a welcome growth, and its implementation will in the end profit all events concerned. As we proceed to fulfill the challenges of this new world of uncertainty, taxpayers should proceed to be looking out for additional enhancements in authorities processes – together with VAT refunds – and reap the advantages of those adjustments.
This text is for basic info solely and isn’t an alternative choice to skilled recommendation when the details and circumstances warrant. The opinions and opinions expressed above are these of the writer and don’t essentially characterize the views of SGV & Co.
Joanne P. Lansangan is Affiliate Tax Director of SGV & Co.