BIR Ruling No. 698-2018

BUREAU OF INTERNAL REVENUE REPUBLICOF THE PHILIPPINES DEPARTMENT OF FINANCE

Quezon City

Revenue Regulations No. 16-2005 Section 112(A,1997 Code, as amended 698-2018 APR 1 3 2013

Salcedo Village, Makati City Sedeno cor Valero Streets Unit 1005, 88 Corporate Center ATTY. MARK FRANCIS P.ABAYA

Sir:

interpretation of Section 112 (A) of the 1997 Tax Code, as amended, with respect to VAT refund of input tax on zero-rated sales. This refers to your letter dated February 9, 2018 requesting for confirmation on the

to such zero-rated sale regardless of when such input tax was incurred. Hence. the request for amended, as well as jurisprudence and decided cases', the word "sales" should pertain to zero- rated sales. Accordingly, a taxpayer has 2 years from the close of the taxable quarter in which its zero-rated sale was made to apply for refund or credit of its creditable input tax attributable confirmation. It is your claim that given a plain reading of Section 112 (A) of the 1997 Tax Code, as

or refund of creditable input tax due or paid attributable to VAT zero-rated sales, viz: provides for the period within which to apply for the issuance of a tax credit certificate (TCC) In reply, please be informed that Section 112(A) of the 1997 Tax Code, as amended.

tax has not heen applied against the output tax. xxx refund of creditable input tax due or paid attributable to such sales_except transitional input tax, to the extent that such input (Underscoring supplied) whose sales are zero-rated or effectively zero-rated may,_within two (2) vears after the close of the taxable quarter when the sales were made. apply for the issuance of a iax credit certificate or or Effectively Zero-rated Sales. -Any VAT-registered person. "SEC. 112. Refunds of Tax Credits of Input Tax.-(A) Zero-rated

1 CIR v.Mirant Pagilao Corporation, G.R. No.17129, September 12, 2008; CIR v.MindanaoII Geothermal Partnership, GR 8,2007; CBK Power Co.Ltd.v. CIR,G.R.No.19872930,January 15,2014; ATT Communications Services v. CIRG.R.No (Philippines) Realty Corp., C.T.A.EB Case No.1504 (C.T.A.CaseNo.8983), August 18, 2017; Hedcor Sibulan, Inc.v.CIR, C.T.A No. 191498, January 15, 2014; Atlas Consolidated Mining and Development Corporation, G.R. No. 141104 and 148763, June 185969, November 19, 2014; CIR v. Aichi Forging Company of Asia, Inc., G.R. No.183241, October 22,2014: CIR v. KEP Case No.8166,December 21,2016

Page 2 of 3 ATTY.MARK FRANCIS P.ABAYA 698-2018 APR1

provides: Relative to the above provision, Revenue Regulations (RR) No. 16-2005, as amended.

Certificate of Input Tax. - SECTION 4.112-1.CluimsforRefund/Tax Credit

(a) Zero-rated and Effectively Zero-rated Sales of Goods. Properties or Services.

Ssubject of the claim shall exclude the portion of input tax that has been applied against the output tax. The application should be filed within two (2) years after the close of the taxable quarter when such sales were made. " (Underscoring supplied) properties or services are zero-rated or effectively zero-rated may apply for the issuance of a tax credit certificate/refund of input tax attributable to such sales. The input tax thut muy be A VAT-registered_person whose sales of goods.

zero-rated sales is reckoned from the close of the taxable quarter when such sales were made. (BIR Ruling No. 123-2013 dated March 25, 2013). within which to file a claim for refund or issuance of TCC of input tax attributable to VAT Based on the above-cited provisions, it is clear that the two (2) year prescriptive period

172129, dated September 12, 2008. had occasion to clarify the above provision, to wit: The Supreme Court, in the case of CIR v. Mirant Paghilao Corporation, G.R. No.

"xxx. Sec. 112(A) of the NIRC pertinently reads.

such input tax has not been applied against output tax: x refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that x x. (Emphasis ours.) or effectively zero-rated may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or Any VAT-registered person, whose sales are zero-rated (A) Zero-rated or Effectively Zero-rated Sales.

transaction, said taxpayer only has a year to file a claim for refund it erroneously applied the aforequoted Sec. 112(A), [P]rescriptive rated VAT taxpayer pays its input VAT a year afier the pertinent of whether said tax was paid or not. As the CA aptly puts it, albeit period commences from the close of the taxable quarter when the from the time the official receipt was issued. Thus, when a zero- that_ unutilized input VAT payments not otherwise used for any years reckoned from the close of the taxable quarter when the sales were made and not from the time the input VAT was paid nor internal revenue tax due the taxpayer must be claimed within twe relevant sales were made pertaining to the input VAT regardless The above proviso clearly provides in no uncertain terms.

ATTY.MARK FRANCIS P. ABAYA Page 3 of 3 APR 1 3 2018

Frame would always be the end of the quarter when the pertinent or tax credit of the unutilized creditable input VAT. The reckoning Sales or transaction was made, regardless when the input VAT was paid. xxr " (Underscoring supplied)

refund of excess/unutilized input VAT attributable to zero-rated sales is from the end of the paid, input VAT to be refunded need not be incurred in the same period or year when the zero- such sales were made. Considering that the reckoning period for the filing of the claim for quarter when the pertinent sale or transaction was made, regardless when the input VAT was year prescriptive period within which to file a claim for refund or issuance of TCC of input tax attributable to VAT zero-rated sales is reckoned from the close of the taxable quarter when rated sales transpired. The aforesaid Decision of the Supreme Court has reiterated the rule that the two (2)

rated sale was made can be the subject of a claim for refund/application for TCC provided that the input VAT is unutilized and directly attributable to zero rated sales. Thus, the input VAT accumulated, incurred or paid prior to the year when the zero-

if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. This ruling is being issued on the basis of the foregoing facts as represented. However.

Very truly yours.

1aou1re

Commissioner of Internal Revenue CAESAR R.DULAY

015755

K-1-RSV K1-FR-18-0310