WITH the release of the Supreme Court’s decisions concerning the application of Value-Added Tax (VAT) refund or credit in the cases involving the Commissioner of Internal Revenue (CIR) vs. San Roque Power Corp. (GR Nos. 187485, 196113 and 197156 dated Feb. 12, 2013) and Mindanao II Geothermal Partnership vs. CIR (GR Nos. 193301 and 194637 dated March 11, 2013), the Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular No. 54-2014 last June 11 that summarizes the rules on filing and processing of applications for VAT refund or credit as follows:

1) Prescriptive period in filing administrative claims for tax refund or credit

Any VAT-registered taxpayer whose sales are zero-rated or effectively zero-rated, may within two years after the close of the taxable quarter, apply for the issuance of tax credit certificate or refund of creditable input tax to the extent that such input tax has not been applied against output tax.

The CIR will have 120 days from date of submission of complete documents to decide whether or not to grant the claim for VAT refund or credit. If such claim is not acted upon by the CIR within the 120-day period, such inaction shall be deemed a denial of the application for VAT refund or credit.

2) Filing and processing of administrative claims

The application for VAT refund or credit must be accompanied by complete supporting documents with an affidavit attesting to the completeness of the submitted documents. If the taxpayer is a juridical person, there should be a sworn statement that the officer signing the affidavit has been authorized by the Board of Directors of the company.

3) Mandatory 120+30 day period

In case of full or partial denial of the claim for tax refund or credit, the taxpayer can file a judicial claim within 30 days after the CIR denies the claim. In case of failure on the part of the CIR to act on the application within the 120-day period, the taxpayer can file a judicial claim within 30 days from the expiration of the 120-day period.

Failure to file a judicial claim with the Court of Tax Appeals within 30 days from the expiration of the 120-day period renders the CIR’s decision or inaction final and unappealable.

(Source: Punongbayan & Araullo)