PROCESSING OF VAT REFUND UNDER THE EASE OF PAYING TAXES ACT

• July 1, 2024

BIR Revenue Regulations 5-2024 has been issued to implement the pertinent provisions of Ease of Paying Tax, specifically Sections 112(C), 112(D), 76(C), 204(C), and 229 of the Tax Code. These changes shall be effective beginning 01 July 2024. The salient part of this revenue issuance pertaining to VAT Refund is discussed below:

VAT REFUNDS (SECTION 112, TAX CODE)

risk-based” approach. Taxpayers may be classified as low, medium, and high based on several factors. Below table summarizes it:

Risk level	Basis for classification	Scope of Sales Verification	Scope of Purchases Verification
Low	Classification risk factors: Amount of vat refund  Frequency of filing Tax compliance history Other factors	No verification	No verification
Medium		At least 50% of sales amount and total invoices/receipts	At least 50% of purchases with input amount and 50% of suppliers
High	First-time claimants up to the 3 succeeding claims filed Succeeding claim when the prior claim filed is denied Fourth (4th) vat refund claim when the first 3 claims were considered as low-risk Other basis	100% verification	100% verification

In all cases, the taxpayer-claimant shall submit the documentary requirements under Section 112 of the Tax Code regardless of risk type and shall be subject to post audit by the Commission on Audit pursuant to Section 112(D) of the Tax Code.

Liability of Taxpayer-Claimant in case of disallowance by the Commission on Audit

The Refund shall be subject to post audit of the Commission on Audit. In the event of disallowance in whole or in part, the taxpayer claimant shall be solely responsible for the disallowed amount.

Judicial Remedies

The processing of VAT Refund shall be made within a period of ninety (90) days from the date of submission of invoices and other documents in support of the application for refund. The following shall be the options of the taxpayer:

1. In case of denial in whole or in part, file an appeal with the Court of Tax Appeals within thirty (30) days from the receipt of the decision denying the claim;
2. In case of nonaction:
1. Appeal to the Court of Tax Appeals within thirty (30) days from the expiration of the ninety (90) day period;
2. Forego the judicial remedy and await the decision of the Commissioner of Internal Revenue on the VAT Refund Application.

This article is for general information only and does not constitute professional advice. Therefore, the reader holds Morfe, Ceneta & Co., CPAs, including its partners, officers and employees free and harmless from any liability arising from one’s reliance on this article.