QuestionsQuestions (BIR REVENUE AUDIT MEMORANDUM ORDER NO. 1-91)
It governs the audit of claims for VAT refund or tax credit arising from zero-rated transactions (including effectively zero-rated), and claims involving purchase or importation of capital goods.
Every audit of a VAT refund or tax credit claim must be covered by a Letter of Authority (LA).
When the protest is filed in accordance with Revenue Regulations No. 12-85. Certification must be made by the Chief, Receivable Account Division not later than five (5) days from date of referral.
On the day of submission of the last of the documents specified in the checklist of requirements.
Within two (2) years from the date of exportation.
Within two (2) years after the lapse of 180 days from the last day of the quarter in which the purchase was made.
Within two (2) years from the date of the transaction.
Review export agreements and export documents (e.g., commercial invoice/receipt, bill of lading/airway bill, export declaration/permit, packing list), and verify actual inward remittance via liquidation statement from the Central Bank or accredited agent bank, including dates, conversion rate, and peso value.
That buyers are Filipinos residing abroad/returning OFWs/non-residents; goods are for household/personal use assembled/manufactured in the Philippines and delivered to residents in the Philippines; payment is in convertible foreign currency inwardly remitted through the banking system (evidenced by CB/accredited bank statement); and the sales do not exceed an aggregate value of US$1,000 (or equivalent).
Verify the contract (person for whom services were rendered, amount, description), documents evidencing actual payments, and inward remittance of proceeds in foreign currency in accordance with Central Bank rules, with a reconciliation of billed amounts and received amounts.
The claimant must submit Central Bank approval of the offsetting arrangement and CB certification of the constructively remitted amount. If inward remittance is less than total zero-rated sales, input tax allocable to the unremitted portion must be removed using the formula stated in the order.
Prior approval of application is a mandatory condition to entitlement to zero-rating.
Verify invoices bear required information including the VAT registration number; check use and authority to print invoices/receipts; ensure serial numbers are properly accounted for and no unauthorized receipts/invoices are used; check for double set of invoices; and ensure sales are properly recorded—delivery receipts/statements of account without sales invoices may indicate unrecorded sales (except bona fide consignment).
If actual sale is not made within 60 days following the date the goods were consigned; consigned goods returned within the 60-day period is not deemed sold.
Sales returns and allowances may be deducted only if previously recorded and properly supported by debit memos. Discounts can only be taken into account if indicated on the face of the invoice at the time of sale and without conditionality (e.g., not depending on prompt payment or fulfillment of sales goals).
Invoices/receipts must be in the name of the claimant, show the seller’s VAT number, adequately describe goods/services, bear invoice date within the period, and show printer’s authority to print. For purchases of services, they must be supported by official receipts.
Input tax credits from presumptive input tax and deemed paid input tax credit are not qualified for refund or TCC. Also, purchases from non-VAT/exempt persons do not generate input tax credit, and VAT invoices issued for exempt or zero-rated transactions will not generate input credits.