carried over to the succeeding
months/quarter
Tax Refund and Credit
Tax refund
It is the return by the government of
excess taxes paid by a taxpayer. The refund is
also made in money.
Tax Credit
The VAT-registered taxpayer is allowed
to credit his excess input taxes against his direct
internal revenue tax liability. The VAT-
registered taxpayer is issued a tax credit
certificate to be used for such purpose.
A person is entitled to a VAT refund or credit
when
(a) claimed input tax payments are duly
supported by VAT invoices and or
receipts
(b) claimed input taxes are directly
attributable to zero-rated sales
Sitel Phils vs. CIR G.R no. 201326,
february 8, 2017
In a claim for tax refund or tax credit,
the applicant must prove not only
entitlement to the grant of the claim
under substantive law,
He must also show satisfaction of all the
documentary and evidentiary
requirements for an administrative
claim for a refund or tax credit and
compliance with the invoicing and
accounting requirements mandated by
NIRC.
(c) claimed input taxes payments were
not applied against any output tax nor
(d) both the administrative and judicial
claims for refund or credit were filed
within the two year prescriptive period.
Who may claim for refund or tax credit?
A VAT registered person whose sales of
goods, properties or services are zero-rated or
effectively zero-rated may apply for the
issuance of a TCC or refund of input tax
attributable to such sales.
GENERAL RULE:
 The VAT registered taxpayer may
only apply for TAX CREDIT
 UNLESS
 Exception: He shall be entitled for a
refund if he has no internal revenue
tax liabilities against which the tax
credit certificate may be utilized
Period to file/manner of giving refund
A VAT registered taxpayer must file the
claim within 2 years from
Attributable to Reckoning Date
Zero-rated or Close of taxable
effectively zero rated quarter when the
sales sales were made
Cancellation of VAT Cancellation of VAT
registration Registration
Refund or tax credit of Excess Input Tax
In proper cases, the Commissioner shall
grant a refund for creditable input taxes within
90 days from the date of submission of the
official receipts or invoices and other
documents in support of the application filed
with subsections (A) AND (B) of Section 12 of
NIRC.
 Upon the submission of the claim within
2 years prescriptive period, the CIR has 90 days
from the date of submission of complete
documents to decide.
The decision of the CIR may either be a:
GRANT-CIR decided favorably
DIRECT DENIAL-CIR expressly denies the
claim,
INDIRECT DENIAL-inaction of the CIR
within the 90 day period.
In case of full or partial denial of the claim
for tax refund
The taxpayer affected may, within 30
days from the receipt of the decision denying
the claim, appeal the decision with the Court of
Tax Appeals (CTA)
Failure on the part of any official, agent,
or employee of the BIR to act on the application
within the 90-day period shall be punishable
under 269 of the NIRC.
Enhanced Vat Refund System under R.A
10963 (train)
Is intended to grant refunds of
creditable input tax within 90 days from the
filing of the VAT refund application with the BIR
All applications filed from January 1,
2018 shall be processed and must be decided
within 90 days from the filing of the VAT refund
application. All pending VAT refund claims as of
December 31, 2017 shall be fully paid in cash by
December 31, 2019
Mandatory Registration
Any person who, in the course of trade
or business or profession, sells, barters, or
exchanges goods or properties, or engages in
the sale or exchange of services shall be liable
to register if,
1. His gross sales or receipts from on-
going business for the past 12
months, have exceeded 3 million
2. There is reasonable ground to
believe that his gross sales or
receipts in a new business from the
next 12 months, will exceed 3
million.
When to register as NON –VAT TAXPAYER
Every person other than those required
to be registered as VAT persons, engage
in any business, shall, on or before the
commencement of his business or
whenever he transfers to another
revenue district should register as a
non-VAT taxpayer.
Purely self employed individual who are
VAT-registered taxpayers and whose
gross sales/receipts and non-operating
income does not exceed the NEW VAT
THRESHOLD (3 million) may elect to
change his status from VAT-registered
to non VAT registered.
Filing of returns and declarations
A taxable person is required to account
for and pay value added tax by reference to
each accounting period consisting of three
months, referred to as a taxable quarter
A VAT declaration for the month must
be filed within 20 days after the end of the
month
A VAT return covering the amount of his
gross sales or receipts and purchases for the
prescribed taxable quarter must be filed 25 days
following the close of the quarter
Beginning January 1, 2023 the filing and
payment shall be done 25 days following the
close of each taxable quarter (amended by
Train)
Payment of Tax
1. VAT must be paid every month
2. Taxable person must submit a monthly
VAT declaration form within 20 days
following the end of the month to
which it relates
3. The VAT return for the quarter must be
filed not later than 25 days after the
close of taxable quarter.
Revenue memorandum Order no.
10-2019
Grant of Value-added Tax (VAT)
Privileges to Resident Foreign Missions, their
Qualified Personnel and the Dependents of the
Latter
Based on the principle of reciprocity, a
resident foreign mission, its qualified personnel
and the latter’s dependent may be accorded tax
exemption on their purchase of goods and/or
services either at point of sale or on refund
basis.
Revenue Memorandum Order no.
25-2019
1. Provides uniform policies and guidelines
in the processing, verification, approval,
and payment of claims for VAT
refund/credit, except those under the
jurisdiction of the Legal Service
2. Prescribes the documents to be
attached to a VAT refund/credit docket
and required notice to claimants
3. Defines and delineate the duties and
responsibilities of different offices,
including the time frame to process,
review, approve, and pay the VAT
refund/credit claims.
Revenue memorandum circular no.
47-2019
Provides for guidelines and mandatory
requirements for the processing and grant of
Value-Added Tax (VAT) refund claims within the
90-day period
The taxpayers-claimants are required to
submit the listed documents within the 30 days
from the date of filing.
1. CERTIFICATE of VAT payment
2. Certificate of foreign
registration/incorporation/association of the
NRFC for purposes of the claims whose zero-
rated sales are anchored
3. Other Certifications required for
claims whose zero-rated sales are anchored
Revenue Regulation No. 13-2018
It amended RR No. 16-2005 to include the
amendments instituted under RA 10963.
Zero rated sales v. Exempted Sale
Zero rated sale
1. Taxable for VAT purposes
2. Does not result in output tax
3. Input tax is available for tax credit or
refund
Exempted sale
1. Not subject to input and output tax
2. No tax refund or tax credit
Zero rated sales of goods and properties
 Export sales of registered export traders
shall include their commission income.
 Also for exports to be deemed as export
sales and be subject to 0% VAT it must
first be sold by the consignee.
 The sale of electricity by any entity
including the NCPG shall be liable for
12% VAT.
VAT-exempt transactions
 Sale of capital assets used in the trade
or business of the seller is not exempt
from the imposition of VAT.
 Low cost housing (HUDCC Resolution
No. 2 Series of 2015) which values
PhP1,700,000.00
 Socialized housing (Subdivision)HUDCC
Resolution No. 1 Series of 2018 which
values:
22 – 24 sq.m. = PhP480,000.00
24 – 28 sq.m. = PhP530,000.00
28 – 32 sq.m. = PhP580,000.00
 Socialized housing (Condominuim)
HUDCC Resolution No. 2 Series of 2018
which values:
Value:
 Greater Manila Area:
• 22 sq.m.=PhP700,000.00
• 24 sq.m. =PhP750,000.00
 Outside GMA:
• 22 sq.m. =PhP600,000.00
• 24 sq.m. =PhP650,000.00
 If the monthly rent exceeds
PhP15,000.00 but the aggregate is less
than PhP3,000,000.00 it is exempt from
VAT but it is liable for 3% tax under Sec.
116 of the NIRC.
 Mixed Transaction Rule:
1.) Separate the monthly rent that exceeds
PhP15,000.00 from those that are equal or less
than PhP15,000.00.
2.) Separately compute for the gross aggregate.
3.) Apply the rules
 Example:
Cedy rents his 5 commercial and 10
residential units for monthly rent of 60,000 and
Php15,000 per unit, respectively. During the
taxable year the accumulated gross receipts
during the taxable year amounted to amounted
to Php5,400,000.( 3,600,000 from commercial
units and P1,800,000 from residential units)
Cedy is subject to tax with respect to the
Php3, 600,000 since it exceeded the threshold
which is Php3,000,000.
Cedy is not taxable with the Php1,800,000
from residential units since it does not exceed
P3,000,000 and the monthly rental does not
exceed the Php15,000 monthly rental
threshold.
  An individual that availed of the 8% tax
on the gross sales or receipts as long as
it does not exceed 3 million at the end
of the year or at any time within the
year is exempt from VAT.

Where to file tax refund

• BIR Office
• Revenue District Officer having
jurisdiction over the principal place of
business of the taxpayer
• Claims of tax refund of direct exporters
exclusively filed with VAT Credit Audit
Division

Tax on persons EXEMPT from Value added TAX

Any person whose sales or receipts are

exempt under section 109 (1) (bb) of the tax
code from the payment of value-added tax who
is not a VAT-registered person shall pay a tax
equivalent of 3% of his gross quarterly sales or
receipts.

Provided,

That the following shall be exempt from the

payment of the 3% percentage tax:

1. Cooperatives

2. Self-employed individuals and

professionals availing the 8% tax on
gross sales and/or receipts and other
non-operating income

Claims of Refund of Tax Credit Jurisprudence
Issue Addressed
1. Regarding the claim for refund or tax
credit for excess input taxes.
2. What date when the claims must be
filed with the BIR and the CTA?
CIR v. Aichi Forging Company (2010)
 On September 30, 2004, Aichi Forging
filed a claim for refund/credit of input
VAT attributable to its zero-rated sales
for the period July 1, 2002 to
September 30, 2002 with the CIR
through the DOF One-Stop Shop. On the
same day, Aichi Forging filed a Petition
for Review with the CTA for the same
action.
 The BIR disputed the claim and alleged
that the same was filed beyond the
two-year period given that 2004 was a
leap year and thus the claim should
have been filed on September 29, 2004.
 The CIR also raised issues related to the
reckoning of the 2-year period and the
simultaneous filing of the administrative
and judicial claims
Issues
1. W/N the Petitioner’s administrative
claim filed out of time?
2. W/N the filing of the judicial claim
premature?
DECISION
 Claim was filed on time
 The right to claim the refund must be
reckoned from the “close of the taxable
quarter when the sales were made” – in
this case September 30, 2004.
 The Court added that the rules under
Sections 204 (C) and 229 as cross-
referred to Section 114 do not apply as
they only cover erroneous payments or
illegal collections of taxes which is not
the case for refund of unutilized input
VAT. 
 Sec. 31 Chapter VIII Book I of the
Administrative Code of 1987 being the
more recent law governing legal period
applies making 1 year = 12 months.  The
principle of Lex Posterioni Derogati
Priori applies. Thus, the claim was filed
on time even if 2004 was a leap year.
 Filing of judicial claim was premature
 Section 112 mandates that the taxpayer
filing the refund must either wait for
the decision of the CIR or the lapse of
the 120-day period provided therein
before filing its judicial claim. Failure to
observe this rule is fatal to a claim.
 Thus, Section 112 (A) was interpreted to
refer only to claims filed with the CIR
and not appeals to the CTA given that
the word used is “application”.
 Finally, the Court said that applying the
2-year period even to judicial claims
would render nugatory Section 112 (D)
which already provides for a specific
period to appeal to the CTA --- i.e., (a)
 within 30 days after a decision within
the 120-day period and (b) upon expiry
of the 120-day without a decision.
Atlas Consolidated Mining v. CIR (2007)
 There are two levels which the claim of
tax credit or refund of value added tax
must be filled:
 Administrative BIR Level: 2 year period
for the filing of a written claim with the
BIR is counted from the “Close of the
taxable quarter when the sales or
importation or purchase was made”
(Sec 112(A) 1997 Tax code)
 Judicial CTA Level: 2 year period for the
filing of a petition for review with the
CTA shall be counted from “date of
filing of the VAT return and payment of
the tax” (Sec 204(C) & 229 of the 1997
Tax code)
CIR v. Mirant Pagbilao Corp (2008)
 The reckoning point of the 2 year period
for the filing of a written claim with the
BIR commences from the “Close of the
taxable quarter when the sales or
importation or purchase was made
pertaining to the input VAT” regardless
of whether said tax was paid or not.
 Sections 204 (C) and 229 of the 1997 tax
code do not apply in a claim for refund
of excess input VAT on Zero-rated sales
considering that it is not an erroneous
payments or illegal collections of taxes.  judicial relief with the CTA by way of
CIR v. Taganito Mining corp (2011)
 Following the Aichi case, the CTA en
banc dismissed the refund case for
having been prematurely filed by the
petitioner, considering that the
administrative claim was filed on
December 30, 2003 while the judicial
claim was filed on February 19, 2004.
CIR v. San Roque Power Co. (2013)
 As an exception to the mandatory 120 +
30 day period, a judicial claim for VAT
refund which was filed with the CTA
before the lapse of the 120-day period
is considered to have been timely made
if such filing occurred on or after Dec.
10, 2003 (date of issuance of BIR Ruling
No. DA-489-03) but before Oct. 6, 2010
(date of promulgation of Aichi  case).
 BIR Ruling No. DA-489-03, as a general
interpretative rule that may be relied
upon by the taxpayers, expressly stated
that the taxpayer need not wait for the
lapse of the 120-day period before it
could seek judicial relief with the CTA by
way of petition for review.
Taganito Mining corp v. CIR (2013)
• Petition filed before promulgation of
Atlas doctrine
• Can invoke BIR Ruling No. DA-489-03
which expressly stated that the
taxpayer need not wait for the lapse of
the 120-day period before it could seek
petition for review
• Since petition was filed before the
adoption of the Aichi doctrine Taganito
was considered to have filed on time.
CIR v. Aichi Consolidated Mining (2014)
 Same facts as previous Aichi case,
judical claim filed after December 10,
2003.
 This time BIR Ruling No. DA-489-03 was
invoked.
 Unlike in Aichi 2010 BIR Ruling No. DA-
489-03 was not raised by any party and
thus was not considered.
Decision
 Notwithstanding a strict construction of
any claim for tax exemption or
refund, the Court in San
Roque recognized that BIR Ruling No.
DA-489-03 constitutes equitable
estoppel in favor of taxpayers. BIR
Ruling No. DA-489-03 expressly states
that the "taxpayer-claimant need not
wait for the lapse of the 120-day period
before it could seek judicial relief with
the CTA by way of Petition for Review.“
 Therefore, respondent's filing of the
judicial claim barely two days after the
administrative claim is acceptable, as it
fell within the period during which the
Court recognized the validity of BIR
Ruling No. DA-489-03.
RA 10963 Train law
(1) The successful establishment and
implementation of an enhanced VAT refund
system that grants refunds of creditable input
tax within ninety (90) days from the filing of the
VAT refund application with the Bureau: 
Provided, That, to determine the
effectivity of item no. 1, all applications filed
from January 1, 2018 shall be processed and
must be decided within ninety (90) days from
the filing of the VAT refund application; and
(2) All pending VAT refund claims as of
December 31, 2017 shall be fully paid in cash by
December 31, 2019.
Provided, That the Department of
Finance shall establish a VAT refund center in
the Bureau of Internal Revenue (BIR) and in the
Bureau of Customs (BOC) that will handle the
processing and granting of cash refunds of
creditable input tax.