RMC No. 57-2013: Circularizes BIR Ruling No. 123-2013 re: recovery of unutilized creditable input taxes attributable to VAT zero-rated sales

Key points

1. How input taxes are recovered. Under Sections 110(B) and 112(A) of the 1997 Tax Code, unutilized creditable input taxes tied to zero-rated sales can be recovered only through an application for refund or tax credit.
2. Proposal denied. The ruling denies, for lack of legal basis, the proposal to expense outright accumulated and unapplied input VAT from purchases after the 2 year prescriptive period expired.
3. Instruction to audit staff. Employees who audit and review audit cases are enjoined to disallow unutilized creditable input taxes on zero-rated sales that are claimed as deductions for income tax.

Who is affected

• Employees engaged in audit and review of audit cases
• VAT taxpayers with zero-rated sales

Deadlines and effectivity

• Prescriptive period: 2 years