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RMC No. 21-2022: Prescribes the guidelines in the claim of Input VAT on purchases or importations of capital goods pursuant to Section 110 of the Tax Code, as amended by RA No. 10963 (TRAIN Law)

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Summary

RMC No. 21-2022 prescribes guidelines for claiming Input VAT on purchases or importations of capital goods under Section 110 of the Tax Code, as amended by RA No. 10963 (TRAIN Law).

Key points

  1. Rule under Section 110. Input tax on goods with an aggregate acquisition cost above ₱1,000,000.00, excluding VAT, was spread over the month of acquisition and the fifty-nine (59) succeeding months, or a shorter period if the estimated life is under five (5) years. This amortization was allowed only until December 31, 2021, after which unutilized input VAT may be applied as scheduled until fully utilized.
  2. Work-around while forms are revised. For BIR Forms 2550M and 2550Q (v. February 2007), Schedule 3(A) takes the number 1 under columns E and F instead of the useful life in months. The input tax claimed on capital goods above ₱1M is encoded in Column G.
  3. Effective January 1, 2022. All input tax on capital goods is allowed upon purchase or payment and is no longer deferred. The taxpayer enters Roman numeral I as the useful life and encodes the total input tax claimed in Column G, so Column H (Balance of Input Tax to be Carried to Next Period) shows nil.
  4. Purchases before January 1, 2022. Unutilized input VAT on these capital goods continues to be amortized as scheduled until fully used, and Schedule 3(B) is still filled out. If the capital good is sold or transferred within five (5) years or before the amortizable input tax is used up, the entire unamortized input tax is claimed as input tax credit in the month or quarter of the sale or transfer.

Who is affected

  • Taxpayers claiming input VAT on capital goods
  • Taxpayers with unutilized input VAT on capital goods bought or imported before January 1, 2022

Deadlines and effectivity

  • Amortization allowed until December 31, 2021
  • Input tax on capital goods allowed upon purchase effective January 1, 2022

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.