Guidelines on revamped VAT-zero rating out
The Bureau of Internal Revenue (BIR) has finally revised the regulations on implementing the revamped criteria for value-added tax (VAT) exemption on certain transactions of export-oriented enterprises.
Revenue Regulations (RR) No. 010-2025 dated Feb. 25 amended the old BIR rules to enforce the provisions on VAT zero-rating under Republic Act (RA) No. 12066, or the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy law.
The law – popularly known as the CREATE MORE Act and enacted last year – amended the Duterte-era RA 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, which cut corporate taxes and restructured tax perks deemed excessive.
There were many amendments that CREATE MORE had put in place in a bid to make the country more attractive to job-generating foreign capital and tackle investor woes, including concerns on the issuance of VAT zero-rating.
VAT zero-rating means no such levies will be collected on certain transactions of export-oriented enterprises to ease their tax burdens and make them more competitive.
Under CREATE MORE, sales of goods and services that were previously not qualified for VAT zero-rating –– like janitorial services, security services and human resources, among others –– are now qualified for such a perk as long as they are deemed “reasonably necessary” for export activity of these firms.
The expanded application of VAT zero-rating was then incorporated by the BIR in its regulations. Under the amended RR, export sales of the company must account for at least 70 percent of the total annual production of the preceding taxable year to qualify for VAT zero-rating.
The BIR said companies must present their VAT zero-rating certification to their local suppliers prior to the transactions.
The tax bureau may still conduct a “post audit investigation” to verify that the goods and services that were purchased by export-oriented enterprises from their suppliers were indeed necessary to support their key business activities.
