NATURE OF VAT REFUND

• WHO MAY APPLY FOR A VAT REFUND?

 Any VAT-registered taxpayer claiming a refund of excess or unutilized input tax credits.
• WHAT IS A VAT REFUND?
 An application for the refund or issuance of a TCC representing excess or unutilized input tax credits attributable to zero-
rated or effectively zero-rated sales. Export sales are considered zero-rated sales while sales to entities registered with the
Philippine Economic Zone Authority (or other free trade zones) or entities registered with the Board of Investments whose
sales are 100% exported are effectively zero-rated sales
• WHEN TO FILE A VAT REFUND?
 Any VAT-registered person, whose sales are zero-rated 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 refund of creditable input
tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied
against output tax
 WHERE TO FILE A VAT REFUND?
 Claims/Applications for refund or issuance of a TCC representing excess input taxes attributable to export sales may be filed
either with the Revenue District Office (RDO)/Large Taxpayers District Office (LTDO) having jurisdiction over the taxpayer-
applicant or with the Bureau of Internal Revenue’s (BIR) VAT Credit Audit Division (VCAD).
DEFINITION OF TERMS NECESSARY FOR
THE REVIEW OF A VAT REFUND
1. TAX VERIFICATION NOTICES (TVNs) –pre-audit document issued by the revenue district office that has
jurisdiction on the taxpayer concerned.
• BIR Revenue Memorandum Order (RMO) 48-2018, dated Oct. 24, now allows the use of a Tax Verification Notice (TVN) to
check claims of tax refunds arising from erroneous or double payment of taxes made by individuals and businesses,
instead of a Letter of Authority (LoA) that can be issued only by the bureau’s chief.
2. Memorandum of Assignment –
3. Principle of Reciprocity -
LEGAL BASIS COMMONLY USED
IN ASESSMENT OF A VAT REFUND
1. SEC. 113. INVOICING AND ACCOUNTING REQUIREMENTS FOR VAT -REGISTERED
PERSONS

2. SEC 110
3. SEC 34: POWER OF COMMISSIONER TO GRANT REFUND
SEC. 113. INVOICING AND ACCOUNTING REQUIREMENTS FOR
VAT-REGISTERED PERSONS
(A) Invoicing Requirements. - A VAT-registered person shall issue:
(1) A VAT invoice for every sale, barter or exchange of goods or properties; and
(2) A VAT official receipt for every lease of goods or properties, and for every sale, barter or exchange of services .
 (B) IN F O R MATION C O N TAI N E D I N T HE VA T I N VO I C E O R VA T O F F I C I AL R E C E I P T . - THE
F OLLOWIN G IN F ORM A TION S HA LL BE INDICA TE D IN THE VA T INVOICE OR V A T OF F ICIA L RE CE IPT:

(2) The total amount which the purchaser pays 1. A statement that the seller is
or is obligated to pay to the seller with the a VAT-registered person,
indication that such amount includes the value- followed by his Taxpayer's
Identification Number (TIN)
added tax. Provided, That:
(a) The amount of the tax shall be known as a
separate item in the invoice or receipt; (3) The date of transaction,
(b) If the sale is exempt from value-added tax, quantity, unit cost and
the term "VAT-exempt sale: shall be written or description of the goods or
printed prominently on the invoice or receipt; properties or nature of the
(c) If the sale is subject to zero percent (0%) service;
value-added tax, the term "zero-rated sale" shall
be written or printed prominently on the
invoice or receipt.
(d) If the sale involved goods, properties or
services some of which are subject to and some
of which are VAT zero-rated or Vat exempt, the
invoice or receipt shall clearly indicate the
break-down of the sale price between its
taxable, exempt and zero-rated components, (4) In the case of sales in the
and the calculation of the value-added tax on amount of One thousand pesos
each portion of the sale shall be known on the (P1,000) or more where the
invoice or receipt: Provided, That the seller may sale or transfer is made to a
VAT-registered person, the
issue separate invoices or receipts for the
name, business style, if any,
taxable, exempt, and zero-rated components of address and Taxpayer
the sale. Identification Number (TIN) of
the purchaser, customer or
client.
(C ) A C C O UN TIN G R E Q U I R E ME N TS . - N OTWITHS TA N DIN G THE PROV IS ION S OF S E CTION 2 33, A LL
PE RS ON S S UBJE CT TO THE VA LUE -A DDED TA X UNDE R S E CTIONS 1 06 A ND 1 0 8 S HA LL, IN A DDITION
TO THE RE G ULA R A CCOUN TIN G RE CORDS RE QUIRE D, M A IN TA IN A S UBS IDIA R Y S A LE S JOURN A L A N D
S UBS IDIA RY PURCHA S E JOURN A L ON WHICH THE DA ILY S A LE S A N D PURCHA S E S A RE RE CORDE D.
THE S UBS IDIA RY JOURN A LS S HA LL CON TA IN S UCH IN F ORM A TION A S M A Y BE RE QUIRE D BY THE
S E CRE TA RY OF F IN A N CE .
(D) CONSEQUENCE OF ISSUING ERRONEOUS VAT INVOICE OR VAT OFFICIAL
RECEIPT. -
(1) IF A PE RS ON WHO IS N OT A V A T - RE G IS TE RED PE RS ON S IS S UE S A N IN V OIC E OR RE CE IPT
S HOWIN G HIS TA XPA Y ER IDE N TIF ICA TION N UM BE R ( TIN ) , F OLLOWE D BY TH E WORD "V A T";
(A ) THE IS S UE R S HA LL, IN A DDITION TO A N Y LIA BILITY TO OTHE R PE RCE N TA G E TA X E S , BE
LIA BLE TO:
(I ) THE TA X IM POS E D IN S E CTION 1 06 OR 1 08 WITHOUT THE BE NE F IT OF A NY INPUT TA X
CRE DIT; A N D
(II) A 50% S URCHA RG E UN DE R S E CTION 2 4 8( B) OF THIS CODE ( B) THE V A T S HA LL, IF THE
OTHE R RE QUIS ITE IN F ORM A TION RE QUIRE D UN DE R S UBS E CTION ( B) HE RE OF IS S HOWN ON THE
IN V OICE OR RE CE IPT, BE RE COG N IZE D A S A N IN PUT TA X CRE DIT TO THE PURCHA S E R UN DE R
S E CTION 1 1 0 OF THIS CODE .

(2 ) IF A VA T - RE G IS TERED PE RS ON IS S UE S A V A T IN V OICE OR V A T OF F ICIA L RE CE IPT F OR A V A T -

E X E MPT TRA N S A CTION , BUT F A ILS TO DIS PLA Y PROM IN E N TLY ON THE IN V O ICE OR RE CE IPT THE
TE RM ' VAT EXEMPT SALE ' , THE IS S UE R S HA LL BE LIA BLE TO A CCOUN T F OR THE TA X IM POS E D IN
S E CTION 1 06 OR 1 08 A S IF S E CTION 1 09 DID N OT A PPLY .

(E) TRANSITIONAL PERIOD . - NOTWITHS TA NDING S UBS E CTION ( B) HE RE OF , TA XPAY E RS M A Y

CON TIN UE TO IS S UE V A T IN V OICE S A N D V A T OF F ICIA L RE CE IPT F OR THE PE RIOD JULY 1 , 2 005 TO
DE CE M BE R 31 , 2005 IN A CCORDA N CE WITH BURE A U OF IN TE RN A L RE V E N UE A DM IN IS TRA TIVE
PRA CTICE S THA T E XIS TED A S OF DE CE M BE R 31 , 2 004 .