Aligning provisions of RMC 24-2022 with the provisions of CREATE Act

Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular (RMC) No. 49-2022 was issued on April 19, 2022 amending RMC No. 24-2022 to align the provisions with the CREATE Act and its Implementing Rules and Regulations (IRR).

I.  Deferment of RR No. 09-2021 (Answer in #10) Vat Zero-Rate Remains due to Non-retroactivities rule

The deferment of RR No. 09-2021 does not only affect registered business enterprises (RBEs), thus, the provisions of RMC 24-2022 were amended through RMC 49-2022 to include other taxpayers. The RMC also reiterated that sales that have been declared by the sellers as VAT zero-rated for the period of July 01, 2021 to December 09, 2021 or a day prior to the effectivity of RR No. 21-2021 shall remain as VAT zero-rated per the non-retroactivity rule under Section 246 of the Tax Code.

II. Following rules shall apply to the DME’s sale of goods and services: (Answer in #17) Vatability in Zero-rating status of Domestic Market Enterprises

Through the amendment of RMC 24-2022, it was also clarified that domestic market enterprises (DMEs) VAT zero-rating entitlement differs if they are registered prior to or during the effectivity of CREATE.

III. Change of status of Registered Export Enterprises (Answer in #31) REEs shifting from VAT zero-rate to VAT exempt after ITH expiration

REEs that shifted from ITH to 5% GIT or SCIT regime due to ITH expiration or who were in the 5% GIT regime at the time the CREATE Act took effect must change their registration status to non-VAT within two (2) months. On the other hand, a taxpayer who has other activities that are subject to VAT other than those registered with the IPA shall remain a VAT taxpayer and shall report the sales in the VAT returns as VATable, zero-rated, and/or VAT-exempt.

IV. Condition for sales to be accorded as VAT zero-rating (Answer in #33) Local Suppliers Transition to VAT zero-rating status/ accreditation to exempt within 3 months from RMC 24-2022 effectivity

Prior approval from the BIR is still required for local suppliers of goods/services to registered export enterprises to receive VAT zero-rating on their sales. However, if a transaction qualifies for VAT zero-rating but fails to secure an approved application with the BIR, prior approval may not be required until March 09, 2022 or before the issuance of RMC 24-2022, and will only be subject to the three (3) following documentary requirements:

1. Certificate of Registration and VAT Certification issued by the concerned IPA;
2. Sworn Declaration – stating that the goods/services being purchased shall be used directly and exclusively in the registered project; and
3. Other documents to corroborate entitlement to VAT zero-rating.

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