BIR assures 90-day process for claims on VAT refunds

The Bureau of Internal Revenue (BIR) has amended its rules to strictly implement the 90-day processing rule for value-added tax (VAT) refunds now that an enhanced refund system has been put in place.

Internal Revenue Commissioner Caesar Dulay issued Revenue Regulations 26-2018, amending certain provisions of RR 13-2018 to implement the 90-day processing of claims for VAT refund under the Tax Reform For Acceleration and Inclusion (TRAIN) law.

Under the new rules, the 90-day period to process refunds “shall start from the filing of the application/claim for refund up to the release of the payment of the VAT refund.”

“Provided, that, the claim/application is considered to have been filed only upon submission of the official receipts or invoices and other documents in support of the application as prescribed under pertinent revenue issuances,” it added.

Prior to this issuance, the 90-day period to process and decide claims filed from Jan. 1, 2018, was only up to the approval of the recommendation report on the application, pending the establishment of the enhanced VAT refund system.

The BIR said failure on the part of any official, agent, of employee of the BIR to act on the application within the 90-day period may be punishable under Section 269 of the Tax Code.

“In the event that the 90-day period has lapsed without having the refund released to the taxpayer-claimant, the VAT refund claim may still continue to be processed administratively,” it added.

Under the National Internal Revenue Code, qualified businesses are allowed to recover excess input VAT for certain transactions, mostly those involving exports, either through a VAT refund or tax credit certificate.

Finance Undersecretary Karl Kendrick Chua earlier said the government has already established an enhanced VAT refund system under the TRAIN law, which guarantees that all VAT refund claims are completed and paid out within 90 days from submission.

Under TRAIN, the VAT is treated purely as a consumption tax rather than as an incentive for businesses.

Chua said reforms implemented under the new system include the establishment of a special trust account in the so-called General Fund, which is sourced from five percent of the total VAT collections of the Bureau of Internal Revenue and the Bureau of Customs from the preceding year. This ensures that money is available for VAT refunds.

The DOF official said the new system also allows the conduct of a riskbased post-audit instead of auditing claims before giving the refund, and requires the implementation of an electronic invoicing and receipts system.

Republic Act 10963 or the TRAIN law sought to simplify the country’s tax system. Aside from reforms in the VAT refund system, the law also implemented cuts in the personal income tax rates of individual taxpayers.

It also increased excise taxes on other goods, such as oil products, sugar-sweetened beverages, tobacco, coal and mineral products.

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