RMC No. 49-2022: Amends pertinent portion of the Questions and Answers in RMC No. 24-2022 to align them with the provisions of CREATE Act and its Implementing Rules and Regulations

Key points

1. Q&A No. 10 revised. Sales declared as VAT zero-rated from July 1, 2021 to December 9, 2021 stay zero-rated even if they do not qualify under CREATE, because the non-retroactivity rule under Section 246 of the Tax Code applies. Taxpayers who declared such sales as subject to VAT may follow the options in Q&A Nos. 8 and 9.
2. Q&A No. 17 revised. For sellers registered before CREATE, a non-export locator under 5% GIT is VAT-exempt only to the extent of its registered activity. One under ITH zero-rates sales to registered export enterprises for goods and services directly and exclusively used in their registered project, but its sales to non-export locators, DMEs and the customs territory are subject to VAT. For sellers registered during CREATE, the same zero-rate applies to registered export enterprises and VAT applies to sales to DMEs and the customs territory.
3. Q&A No. 31 revised. Registered export enterprises with sales only from the registered activity that shifted from ITH to 5% GIT or SCIT change to non-VAT registration within two (2) months from the expiration of their ITH. Those under the 5% GIT regime still VAT-registered when CREATE took effect do so within two (2) months from the effectivity of the Circular, unless they have other VAT-subject activities, in which case they remain VAT taxpayers.
4. Q&A No. 33 revised. Local suppliers need prior BIR approval for their sales to be VAT zero-rated, and its absence may result in disallowance. For qualified sales that lacked an approved application, a prior application may not be required until March 9, 2022, subject to the three documentary requirements in Q&A No. 37.

Who is affected

• Sellers to registered export enterprises and DMEs in Ecozones and Freeport Zones
• Registered export enterprises that shifted from ITH to 5% GIT or SCIT
• Local suppliers of registered export enterprises

Deadlines and effectivity

• VAT zero-rated treatment remains for July 1, 2021 to December 9, 2021
• Change to non-VAT status within two (2) months
• Prior application for VAT zero-rating may not be required until March 9, 2022