By Elijah Joseph C. Tubayan, Reporter
THE BUREAU of Internal Revenue (BIR) has extended the deadline for processing value-added tax (VAT) refund claims affected by a 2014 rule that had initially denied many of them.
BIR Commissioner Caesar R. Dulay issued Revenue Memorandum Circular (RMC) 53-2019 on June 13, extending the deadline from June 30 to December 14 “in order to give sufficient time to all concerned offices to complete the processing, review and approval of all pending VAT claims filed prior to the effectivity of RMC No. 54 — 2014.”
The BIR under previous leadership implemented RMC No. 54-2014 to lay out the 120+30-day rule, where the commissioner by law has 120 days to decide on VAT refund applications. Inaction after the period is “deemed a denial”. Applicants are then allowed to elevate their claims to the Court of Tax Appeals within 30 days after denial.
BIR implemented the rule retroactively, which effectively denied other taxpayers’ pending claims and the chance to elevate it to the tax court, upon the expiration of the 120+30-day period.
The BIR under the Duterte administration then issued Revenue Regulation 1-2017 in January last year to give a “fair and adequate relief to taxpayer-claimants”, following a Supreme Court ruling that taxpayers “have every right to pursue their claims in the manner provided by existing regulations at the time it was filed” and that RMC No. 54-2014 “cannot be applied retroactively as this would prejudice taxpayers whose VAT claims for tax credit or tax refund were filed and pending before June 11, 2014, the date RMC No. 54-2014 took effect.”
A month after allowing the said VAT refund claims to still be processed, the BIR issued another memorandum saying that “these claims shall be acted upon by the concerned offices not later than June 30, 2018.”
Tax Management Association of the Philippines President Raymund S. Gallardo in a mobile phone message on Friday welcomed the extension of the processing period “considering the lack of manpower and the mandate of BIR under the TRAIN Law Package 1 to process within 90 days claims for VAT refund filed starting Jan 1, 2018”.
Mr. Gallardo was referring to the Tax Reform for Acceleration and Inclusion law, or Republic Act No. 10963, provision reducing the processing period for VAT refund claims to 90 days from 120 days, while stating failure of any BIR official, agent or employee to act on claims within that period court criminal liability.
“This issuance is a welcome move for BIR officers as this will somehow ease their pressure to beat the June 30 deadline to process claims filed before the effectivity of RMC 54-2014,” Mr. Gallardo explained.
“However, this might again prolong the waiting and perhaps [entail] an additional cost of money for claimants expecting their claims to be released by June 30,” he added.
”But, overall, the extension even for just six months will be beneficial for everyone as BIR will be given more time to intelligently evaluate the refund application and lessen its reckless practice of denying an application for refunds just so to beat the deadline.”
Under the Tax Code, VAT-registered taxpayers can claim a refund of their creditable input tax due or apply for a tax credit certificate for their zero-rated sales within two years from the end of the taxable year when sales were made.