The government is streamlining the process of of granting value-added tax (VAT) perks under the Corporate Recovery and Tax Incentives for Enterprises of registered business enterprises (RBEs) which will finally address the long wait in getting a refund.
The Bureau of Internal Revenue (BIR) will issue a revenue regulation (RR) on the determination of goods and services directly and exclusively used in the registered project or activity of RBEs following a directive from Secretary Benjamin Diokno of the Department of Finance (DOF), according to a government source.
The RR will do away with the upfront VAT payment of RBEs on all goods and services purchases and later seek for a refund on those covered by zero rating.
The source said Diokno had given the directive to BIR commissioner Romeo Lumagui Jr. following a recommendation of the DOF-technical working group to set definitive or clarificatory guidelines to properly identify costs and expenses which may be treated as directly and exclusively used by qualified projects or activities to guide all investment promotion agencies (lPAs) and RBEs in applications for VAT zero-rating.
The source said the RR will adopt a negative list of services , or those which are not covered by VAT zero rating: janitorial services; security services; financial services; consultancy services;
marketing and promotion; and goods used or services rendered for administrative operations such as human resources, legal and accounting.
The concerned IPA will issue a VAT-zero-rating certificate for the local purchases.
The source said the RBE can appeal to the IPA if it can justify that one or more of the six expenses otherwise included in the negative list are still directly and exclusively used in their registered project.
The important feature of the RR, the source said, is that all claims will be subject to audit.
