RMC No. 21-2024 — Clarification on the answer to Question No. 31 of Revenue Memorandum Circular No. 49-2022 in relation to Revenue Regulations No. 4-2022, implementing Section 295(F) of the National Internal Revenue Code (Tax Code) of 1997, as amended by Republic Act No. 11534, otherwise known as the Corporate Recovery and Tax Incentives for Enterprises Act or CREATE Act

REPUBLIC OF THE PHILIPPINES E e

DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE

National Office Building

Quezon City

REVENUE MEMORANDUM CIRCULAR N. 2.- 2024

SUBJECT: Clarification on the Answer to Question No. 31 of Revenue Memorandum Circular (RMC) No. 49-2022 in Relation to Revenue Reguiations (RR) No. 4-

Known as the Corporate Recovery and Tax Incentives for Enterprises Act or 2022, Implementing Section 295(F) of the National Internat Revenue Code (Tax Code) of 1997, as Amended by Republic Act (RA) No. 11534, Otherwise CREATE Act

TO: All Internal Revenue Officers and Others Concerned

answer in Q & A No. 31 of RMC No. 24-2022, as revised by RMC No. 49-2022, in relation to RR No. 4-2022, implementing Section 295(F) of the Tax Code of 1997, as amended by Republic Act No. 11534 or the CREATE Act. This circular is hereby issued to address the concern pertaining to the application of the

value-added tax (VAT)-registered entity to non-VAT: following types of Registered Export Enterprises (REE) to change their registration status from The revised answer in Q & A No. 31 pursuant to RMC No. 49-2022 required the

a Within two (2) months from the expiration of their Income Tax Holiday

(ITH): Those whose sales are generated only from the registered activity Corporate Income Tax (SCIT) regime; and and have shifted from ITH to 5% Gross Income Tax (GIT) or Special

b. Within two (2) months from the effectivity of RMC No. 49-2022: Those enjoying 5% GIT regime but are still VAT-registered at the time the CREATE Act took effect.

registered with the Investment Promotion Agency (IPA) that are subject to VAT (i.e., VAT at as VATable, zero-rated and/or VAT-exempt, as the case may be. 12% and 0%), it shall remain as a VAT taxpayer and shall report the sales in the VAT returns The said RMC likewise provides that if the taxpayer has other activities other than those

VAT in order to avail of either the 5% GIT or SCIT regime. freeport zones or special economic zones which do not have other activities other than those registered with the IPA changed their registration status from VAT-registered entity to non- On the basis of the said guidelines, some importers of petroleum products located in

territory in the application of the guidelines in Q & A No. 31 of RMC No. 49-2022 in located inside the freeport zone or special economic zone and those located within the customs However, a disparity of treatment inadvertently arose between petroleum importers

states: conjunction with the intention of Section 295 (F) of the Tax Code of 1997, as amended, which

No. 8479, otherwise known as the 'Downstream Oil Industry Deregulation Act of under Republic Act No. 10863, otherwise known as the Customs Modernization and 1998', for resale in the Philippine customs territory and/or in free zones as defined "(F) Persons who directly import petroleum products defined under Republic Act

Tariff Act, shall not be entitled to the foregoing tax and duty incentives, and shall be subject to appropriate taxes imposed under this Code.

Any law to the contrary notwithstanding, the importation of petroleum products by any person, including registered business enterprises shall be subject to the payment of applicable duties and taxes as provided under Republic Act No. 10863, otherwise known as the Customs Modernization and Tariff Act, and this Code, respectively, upon importation into the Philippine customs territory and/or into free zones as defined under Republic Act No. 10863, otherwise known as the Customs Modernization and Tariff Act:

Provided, That the importer can file for claims for the refund of duties and taxes applicable under Republic Act No. 10863, otherwise known as the Customs Modernization and Tariff Act, and this Code, respectively, for direct or indirect

Modernization and Tariff Act and other special laws within the period provided export of petroleum products, and/or tax-exempt sales under the Customs therein.

Provided, further, That the importers who subsequently export fuel, subject to the

and taxes, as applicable under Republic Act No. 10863, otherwise known as the Customs Modernization and Tariff Act, and this Code. " appropriate rules of the fuel marking program, may apply for a refund of duties

pursuant to RR No. 4-2022. freeport zones or special economic zones, were required to pay the applicable duties and taxes on their import transactions including VAT. Correspondingly, they may be refunded of the duties and taxes for the direct or indirect export of petroleum products, and/or tax-exempt sales Based on the foregoing, REE petroleum importers, including those located inside the

In relation thereto, under Section 112(A) of the Tax Code of 1997, as amended. provides that only VAT-registered persons or entity may file for VAT refund. Hence, this clarification.

attributable to zero-rated sales pursuant to RR No. 4-2022. do not have other activities subject to VAT, shall be permitted to register as a VAT taxpayer to allow them to file for refund of input VAT incurred from importation of petroleum within freeport zones or special economic zones, which directly import petroleum products and Therefore, the Bureau hereby clarifies that REEs enjoying the 5% GIT or SCIT located

products importers located in freeport zones or special economic zones, which changed their status from VAT to non-VAT pursuant to RMC No. 49-2022, are not covered by this Circular. This Circular shalil be applied prospectively. Previous transactions of petroleum

accordingly. All other issuances inconsistent herewith are hereby repealed and modified

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wide publicity, as possible. All internal revenue officers and employees are hereby enjoined to give this Circuiar a

This Circular shall take effect immediately.

. ROMEO LUMAGUI, JR.

Commhissioner of Internal Revenue

K1/RVU& EACRI1

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