Tax Notes: Optional VAT-registration of registered business enterprise

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Revenue Regulations No. 13-2023 highlights the following points in relation to the optional VAT-registration of Registered Business Enterprise (RBE) classified as Domestic Market Enterprise (DME) under the five percent tax on Gross Income Earned (GIE):

a. An RBE classified as DME may retain the five percent GIE incentive provided it secures from the Investment Promotion Agency (IPA) a certification specifically excluding VAT from the five percent GIE in lieu of all taxes granted to it.

b. The Certification shall expressly state that the five percent GIE shall be in lieu of all taxes except VAT.

c. The following documents are needed to be submitted by the RBE:

1. Request letter stating its intention to avail itself of the option to register as a VAT taxpayer with the Bureau of Internal Revenue (BIR);

2. Notarized “Deed of Waiver of Right to Avail of the VAT Exemption Incentive” in the form prescribed in the Regulations;

3. Other documents that may be prescribed by the concerned IPA.

d. The waiver of rights shall be irrevocable from the time it is made and shall be binding for the remaining transitory period.

e. Non-VAT-registered RBEs that have been issued the certification shall update their registrations with the concerned revenue district office.

f. A list of RBEs that have been issued the certification shall be furnished by the concerned IPA to the BIR through the Assessment Service within 20 days following the close of each taxable quarter.

g. These regulations shall apply prospectively in accordance with Section 3 of the amended IRR of CREATE.

DMEs inside the economic or freeport zone that will opt to register as VAT taxpayers pursuant to the regulations shall not be allowed to claim a VAT refund relating to their transactions prior to the amended IRR effectivity of CREATE.

Please be guided accordingly.


P&A Grant Thornton

Certified Public Accountants


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