Summary
RR No. 10-2025 amends RR No. 16-2005, as amended, to implement VAT zero-rating under Sections 106(A)(2) and 108(B), VAT exemptions under Sections 109(u) and 109(dd), and VAT refund or credit under Section 112(C).
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Key points
- Zero-rated sales of goods. A zero-rated sale is taxable but produces no output tax, and related input tax is available as credit or refund. The 0% rate covers export sales, sales to persons or entities whose tax exemption under special laws or international agreements effectively zero-rates them, and sales of raw materials, supplies and goods to RBEs qualified for zero rating on local purchases under Title XIII.
- Zero-rated services. Services by a VAT-registered person in the Philippines at 0% include processing, manufacturing or repacking for persons doing business outside the Philippines, and services to non-residents outside the Philippines, paid in acceptable foreign currency accounted for under BSP rules. Others include services to exempt entities, international shipping or air transport (exclusively for international operations), export-oriented enterprises, and qualified RBEs.
- Transport and renewable energy. Transport of passengers and cargo by domestic air or sea vessels from the Philippines to a foreign country is zero-rated, and sale of power or fuel from renewable energy sources is zero-rated. International carriers’ gross sales to another country are VAT-exempt but still liable to three percent (3%) percentage tax under Sec. 118 on cargo.
- VAT-exempt importations. Importation of fuel, goods and supplies for international shipping or air transport operations is VAT-exempt, but any portion used for other purposes is subject to twelve percent (12%) VAT. Importation by an export-oriented enterprise with export sales of at least seventy percent (70%) of total annual production or sales of the preceding taxable year is exempt, as determined by the EMB of the DTI.
- Refund claims. For VAT credit or refund claims under Section 112(A) and 112(B), the Regulations apply to claims filed starting April 1, 2025 onwards.
Who is affected
- VAT-registered persons making zero-rated sales
- Export-oriented enterprises
- Qualified RBEs
- International shipping and air transport operators
Deadlines and effectivity
- Applies to VAT refund or credit claims filed starting April 1, 2025 onwards
- Issued February 27, 2025
Summary by Tax Resources PH. It is not a substitute for the full text of the issuance or professional advice.
Copies of BIR issuances are hosted here for reference. For the official version, check bir.gov.ph. Summaries by Tax Resources PH are not a substitute for the full text or professional advice.