Summary
RMC No. 65-2024 clarifies issues on Section 19 of RA No. 11976, which added Section 110(D) of the Tax Code allowing an Output VAT credit on uncollected receivables.
Key points
- Who may claim and when. Only the seller of goods or services may deduct the output VAT credit on uncollected receivables from sales on account made after RR No. 3-2024 took effect. The deduction is taken from the output VAT of the next quarter after the agreed period to pay lapses. Using it is optional.
- Requisites. The sale must be after the effectivity of RR No. 3-2024, on credit, with a written credit term, and with VAT separately shown on the invoice. It must be specifically listed in the Summary List of Sales for the period of the sale, not lumped as various sales, and the output VAT must be declared in BIR Form No. 2550Q. The agreed period must have lapsed, and the VAT must not have been deducted as bad debt under Section 34(E).
- Documentation. The seller stamps Claimed Output VAT Credit on the seller’s copy of the invoice, showing any partial payment and balance, and may issue a credit memo or note. The buyer gets a copy so it can reverse the input VAT claimed. If the buyer does not, it is liable for deficiency VAT and penalties found on audit or on amended return.
- Recovery of the receivable. Collection of an amount previously credited is declared in the quarter of recovery. The seller stamps Recovered on the original invoice and may issue a debit memo or note stating Recovery of Previously Reported Uncollected Receivable.
- Disqualified taxpayers. Taxpayers tagged as cannot be located (CBL), those with DOJ complaints under the RAFT and RATE programs, and others identified by the Commissioner cannot claim the credit.
- Limits and work-around reporting. Receivables whose collection period lapsed before the effectivity of RR No. 3-2024 do not qualify. Until a new Form 2550Q version is issued, the credit and recoveries are reported on stated lines of the existing eFPS, eBIRForms and manual versions.
Who is affected
- VAT-registered sellers of goods and services
- Buyers of goods and services on account
Deadlines and effectivity
- Credit claimed in the next quarter after the agreed payment period lapses
- Applies to sales on account after the effectivity of RR No. 3-2024
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.