RMC No. 152-2022: Clarifies further the transitory provisions for the VAT zero-rate incentives under Sections 294(E) and 295(D), Title XIII of the Tax Code, as amended, and as implemented by Section 5, Rule 2 and Section 5, Rule 18 of the CREATE Act Implementing Rules And Regulations (CREATE IRR)

Key points

1. Background. Under RR No. 21-2021 and Q & A No. 26 of RMC No. 24-2022, Registered Export Enterprises (REEs) whose incentive periods have expired are subject to 12% VAT. They no longer qualify for VAT zero-rating on local purchases starting December 10, 2021.
2. Transitory rule. Retroactive application of RMC No. 24-2022 may prejudice suppliers. Transactions from December 10, 2021 up to March 8, 2022, the day before RMC No. 24-2022 took effect, remain VAT zero-rated.
3. Option to retain 12% VAT. If a qualified buyer was charged 12% VAT, the parties may keep it. The seller declares the sale as subject to 12% VAT, and a VAT-registered buyer uses it as input tax. A buyer in zero-rated activities may seek refund under Section 112(A), and a non-VAT buyer claims it as cost of sales or expenses.
4. Option to revert to zero-rated. The seller may amend declared VAT returns after returning the VAT paid by the REE buyer, adjusting sales only to the extent reimbursed. The VAT-registered buyer amends its returns to reduce its input VAT, and the seller replaces the original invoice or receipt with a zero-rated one.

Who is affected

• Registered Export Enterprises whose incentive periods have expired
• Suppliers of those REEs

Deadlines and effectivity

• RR No. 21-2021 effectivity: December 10, 2021
• Transactions from December 10, 2021 up to March 8, 2022 remain VAT zero-rated
• RMC No. 24-2022 issued March 9, 2022