August 23, 2012

Do you have any VAT zero-rated sales and you were thinking of refunding the input VAT on these? Under the Tax Code, there are various transactions that are subject to zero-rated VAT such as export sales, sale to export-oriented enterprise or persons engaged in international shipping/air transport operations, or if you are providing services for entities outside the Philippines such as BPOs, you can apply for tax credit certificate or refund of your input tax attributable to such sales.

In a case [1] decided by the Supreme Court dated June 13, 2012, the Court denied the request of a taxpayer for the refund of its VAT attributable to zero-rated sales due to non-compliance with the invoicing requirements.

Duly registered receipts or sales or commercial invoices must show the following:

1.   the name, TIN and address of seller;

2.   date of transaction;

3.   quantity, unit cost and description of merchandise or nature of service;

4.   the name, TIN, business style, if any, and address of the VAT-registered purchaser, customer or client;

5.   the word “zero rated” imprinted on the invoice covering zero-rated sales; and

6.   the invoice value or consideration.

Failure to print the word “zero-rated” on the VAT invoices or official receipts in claims for a refund or credit of input VAT on zero-rated sales is crucial and such claim will be denied.

In application of refund or tax credit, it is necessary that the supporting documents are complete and must comply with the requirements of the law. Otherwise, it will be just a waste of time and money. Triple i provides assistance in application for tax refund or tax credit ensuring that the claim is supported by substantial evidence and in compliance with the accounting and invoicing requirements.

By: Atty Marissa C. Yambao

[1] Western Mindanao Power Corporation vs. CIR, G.R. No. 181136, June 13,2012

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