RR No. 1-2017 — Prescribes the regulations governing applications for Value-Added Tax (VAT) credit/refund filed under Section 112 of the Tax Code, as amended, prior to the effectivity of RMC No. 54-2014 (Published in Manila Bulletin on January 20, 2017) Digest | Full Text

tt h. il.lEAAU 0f lfEcoll]}s REPUBL]C OI T].{E P]-NLIPPII.\ES IhITEitNAL R't"r,Tt,ttrB Df PARTI!4|NT Ol IiTNANCF McT. DI\'IeIalr{ BUREAU OF INTERNAL RWENI]E tr: P. Quezon City JAN 1 B 2017 r+ RECE IVLEll"$n REVENUE REGULATIONS NO. Januaty 3 , 2017 I.3Dfi SUBJECT Prescribing the Regulations Governing Applications for Value- TO Added Tax (VAT) CrediuRetund Filed under Section 112 of the Tax Code, as Amended, Prior to Revenue Memorandum Circular No. 54-20'14 dated June 11, 20'14 All lnternal Revenue Officials, Officers and Others Conce.ned - SECTION '1. BACKGROUND- On August 27, 2003, Revenue Memorandum Circular (RMC) No. 49-2003 dated August 15,2003, was issued to allow taxpayers to file the complete documents to enable the Commissroner of lniernal Revenue to properly process the administrative claims for tax credit or tax refund. lt provided that upon f ling of his application for tax credivrefund, the taxpayer-claimant is given thldy (30) days within which to complete ihe required documents unless given furiher extension by the head of the processing unit but such extension shall not exceed thirty (30) days. The claim shall be officlally received only upon submission of compLete documents. lt is only upon such submission that the 120-day period would begin to run. ln this sense, ii is the taxpayer "who ultimately determines when complete documents have been submiited for ihe purpose of commencing and coniinuing the running ofthe 120-day period.' R[/C No 54-2014 dated June 11.2014, was issued which provides that the Commissionel shall have one hundred twenty (120) days from date of subrnission of complete documents io decide whether or not to grant the claim fortax credivrefund. lfthe claim is not acted upon by the Commissioner within the statutory 120-day period, such 'inaction sha I be deemed a denial" of the application for tax credit or refund. Fudher it requires that the application or claim must already be accompanied by complete supporting documents and the taxpayer is barred from submitting additional documents after he has filed his administrative claim. This takes away from the taxpayer-claimant the reckoning of the 120-day period It appears that RMC No. 54-2014 was being given retroactive effect because pending clalrns were deemed denied upon expiration of the 120-day period from the date the claims were filed even though the taxpayer clairirants are still in the process of submitting ihe comp ete documents which was allowed under RMC No. 49-2003. lt presurned that the pending claims had been filed with con]plete documents and the sa.ne have remained unacted upon beyond ihe 120-day period. On December 8, 2016 the Suprerne Court, in the case P/rpmas Total Gas, lnc. vs. The Cammissianer af lnternai RevenLte (G.R. No. 207112) decreed that taxpayers "have every right to pursue their ciaims in the rnanner provided by ex siing regulations at the tlme itwas lile.rl "and thereiore, RIVIC No.54-2014 cannot be applied retroactive y as this would prejudice taxpayers.whose VAT claims for tax credit or tax refund were filed and pendlng before June 11.2014 the date RMC No. 54-2014 look effect- Thls judicial declaratiorl ur,

compels the need to clarify the tax treatment and process;ng of applicaiions for VAT iax credit/refund filed and pending prior to RMC 54-2014. SEc.2.geqeE.-PursuanttotheprovisionsofSeciion244,inrelationtoSection 246 and Section 112 of the Tax Code, as amended, these Regulalons are issued to give efiect to the doctrina rule laid down in the aforecited Plilplras lofal Gas case and to afford fair and adequate relief to iaxpayer-claimants whose claims were "deemed denied" as a result of the retroactive application of RMC No. &-2014. Forthis purpose, and consistent with the judicial "summaton of rules" decreed to be'made applicable to claims of tax crediurefund filed before June 11, 20'14," such claims filed prior io RMC No. 54-2014 shall continue to be processed administratively. 3 SEC. PRoCESSING OF ADMINISTRATIVE CLAIMS. - VAT claims filed and pending prior io the effectivity of RIMC 54-2014, the claims solely covered by these Regulations, shall be processed and approved in accordance with the following rules: L The claimant-taxpayer, under Section 112(A) of the Tax Code, as amended, has hwo (2) years after the close ofthe iaxable quarter when the sales were made, to apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales. Thus, before the administrative claim is barred by prescription, the taxpayer rnust have submitted his complele documents in suppori of the application filed. This is because, it is upon the complete submission of his documents in support of his application that it can be said that the application was, "officially received" as clarified under RMC No. 49- 2003. 2. ln all cases, whatever documents a taxpayer intends to file to support his claim must be completed within the two-year period under Section f 12 (A) of the Tax authorized Code, as amended, and the Commissioner, or hs duly representative, should have decided on the claim for tax credit or refund within 120 days irom the date of submission of complete documents, or from the date filing of the application, if the claimant-taxpayer did not submii additional documents. Hence, pending adminisiraiive claims prior to the effectivity of RMc No. 54-2014 shall be processed by the concerned offices based on available documents submitted by the clalmant-taxpayer within the aforesaid statulory two year period. For this purpose, the result shall be communicated in writing by the concerned revenue official. SEc.4. CLAIMS NOI coVERED. - The following clairns filed and pending before the effecilvity of RIIIC 54-2014 are not covered by these Regulations: 1. Those clairns filed beyond the two-year siatutory prescriptive period under Seciion 112 (A) ofthe Tax Code, as explained in Sec. 3 hereof; 2. Those denied in writing by the approving authority; 3. Those approved or granied fu ly or partially by tne approving authority; and 4. Those already appealed to and pendlng with the CTA unless ihere is proof of r,v.1 /& withdra!,/al ofthe case filed with the CTA BiJnU U 0[ Ifl][i]NAL Bf'r],iltif, nI1'Onlre i{Gl" l)tv i.ct. ii{ ).' P. M' wLl. iAi.l 181017,+ Tr Il {,rEli'u,/Fl"a}

SEc. 5. BEeEAUN-9_qLAUSE. - All revenue issuances inconsisient herewith are hereby repealed or modified accordingly. SEc. 6. EEEEglly[Y_etAUEE - These regulations shall take effect fiiteen (15) days after publication in a newspaper of general circulation. RECOMN/lENDING APPROVAL: Secretary of Finance )^o'r1^^4"-X [rf !', . CAESAR R. DULAY h ',' Commissloner of lnternal Revenue .j 002836 ;006574 t-1 BIJP$AiJ 0F [qIo8NAf RnEi{tlE MGT. DIVISION J:t6 R'IINORAS P t4' WT JAN1B20lir+ RE C}1}VES