RMC No. 36-2021: Prescribes changes and guidelines on the shift from final to a creditable system on the value-added tax (VAT) withheld on sales to government or any of its political subdivisions, instrumentalities or agencies, including Government-Owned or –Controlled Corporations (GOCCs)

Key points

1. Changes to BIR Form 2550M. Line 20B (input tax on sale to government closed to expense) and Schedule 4 are not filled out and are deactivated from eFPS. Line 23C and Schedule 8 are where the creditable VAT withheld on sales to government is reflected.
2. Changes to BIR Form 2550Q. Line 23B and Schedule 4 are not filled out and are deactivated from eFPS. Line 26D and Schedule 8 are where the creditable VAT withheld is reflected.
3. Withholding government entities. They use BIR Form No. 1600-VT (Monthly Remittance Return of Value-Added Tax Withheld) for filing and remittance, but eFPS users still use BIR Form No. 1600 since 1600-VT is unavailable.
4. Certificate issued. BIR Form No. 2307 is issued with ATC WV010 for purchases of goods or WV020 for purchases of services. BIR Form No. 2306 is no longer issued for this purpose.
5. Use of Form 2307. VAT taxpayers use BIR Form No. 2307 to claim VAT credit in monthly and quarterly VAT declarations. If it is wrongly reflected as a tax credit in the quarterly and annual Income Tax Return, the withheld amount is disallowed and forfeited in favor of the Government.

Who is affected

• Government, its political subdivisions, instrumentalities, agencies and GOCCs required to withhold VAT
• VAT taxpayers selling to government

Deadlines and effectivity

• Effective January 1, 2021