Removal of BIR Prior Approval for VAT Zero Rating Status of Registered Export Enterprises
Revenue Regulation No. 3-2023 removes the requirement for BIR prior approval for VAT zero rating, simplifying the process for taxpayers and reducing administrative burden
The Bureau of Internal Revenue (BIR) has recently issued Revenue Regulation (RR) No. 03-2023, amending certain provisions of RR No.16-2005, as amended by RR No. 21-2021. In accordance with the regulation, Registered Export Enterprises are no longer required to apply for approval of VAT zero rating with the BIR for their local purchase of goods and services directly and exclusively used in its registered activity/ies.
Further, RR No. 03-2023 emphasized the following local purchases of goods and services that are not considered as “directly and exclusively use” in the registered project or activity of a registered export enterprise:
- Janitorial services;
- Security services;
- Financial services;
- Consultancy services;
- Marketing and promotion; and
- Services rendered for administrative operations such as Human Resources (HR), legal, and accounting.
Moreover, pending applications will be accorded VAT zero-rating treatment effective from the date of their filing. However, this treatment will be subject to a post-audit by the BIR.
The new regulation will simplify the process for taxpayers, reduce administrative burden, and ensure that Registered Export Enterprises can efficiently access VAT zero-rating status for their local purchases of goods and services.
For your reading pleasure, you may refer to RR No. 03-2023 attached herein.
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