Question & AnswerQ&A (BIR REVENUE AUDIT MEMORANDUM ORDER NO. 1-91)
It governs the audit of claims for refund or tax credit of value-added tax arising from zero-rated transactions, as well as purchase or importation of capital goods.
Yes, every audit of claim for refund or tax credit shall be covered by a Letter of Authority (LA).
Any finding of deficiency internal revenue taxes other than value-added tax and other taxes covered in the LA shall be referred to the proper audit office.
The 60-day period starts on the day of submission of the last of the documents specified in the checklist of requirements.
Prior approval of application for zero-rating treatment is a mandatory condition to entitlement under special laws or international agreements.
Claims must be filed within two (2) years from the date of exportation.
Sales agreements with foreign buyers, export documents such as commercial invoices, bills of lading, export declarations, packing lists, and liquidation statements from the Central Bank showing actual inward remittances.
Input tax credit claims must be substantiated by purchase invoices issued in the name of the taxpayer with the VAT number of the seller, proper description of goods/services, invoice date within claim period, and printer's authority to print. For importation, import entries and payment receipts of VAT are required.
Input taxes for purchases that cannot be directly attributed are allocated between VAT taxable and exempt activities using the computation prescribed in Section 12 of RR 5-87, based on the ratio of sales from VAT taxable operation over total sales.
Withdrawals for personal use, distribution to shareholders, transfer to creditors in payment of debts, consignments not sold within 60 days, and retirement or cessation of business including change of ownership, dissolution of partnership, or death of a VAT-registered individual.
If VAT invoices are not used or the words ZERO-RATED or EXEMPT are not prominently stamped on invoices for such transactions, they may be considered taxable sales subject to VAT.
Multiply the gross amount of sales including tax by 1/11 or other applicable factor to determine the correct output tax.
The original purchase invoices and official receipts shall be cancelled with the word CANCELLED stamped on them, and cancellation shall be initiated by the canceling officer before preparation of the TCC or disbursement voucher.
Three copies of Application for VAT Credit/Refund (Form 2552), photocopy of approved Application for Zero-Rate (if applicable), photocopies of VAT purchases and official receipts, VAT returns, certificate of taxpayer showing sales breakdown, and additional documents depending on transaction type such as export documents and certifications from government agencies.