The Bureau of Internal Revenue (BIR) issued Revenue Regulations (RR) No. 12026 to clarify and streamline the application of value-added tax (VAT) on local sales made by registered business enterprises (RBEs), whether classified as registered export enterprises (REEs) or domestic market enterprises (DMEs). The key amendments include:
1. Single VAT remittance for bulk shipments covered by multiple invoices
Filing of VAT on local sales by RBEs with business-to-business buyers is done on a per-transaction basis using BIR Form No. 0605. A single consolidated payment is allowed when a bulk shipment, such as a containerized delivery, is supported by multiple invoices. Before the release of goods, the buyer must present the validated payment form and the list of all covered invoices to the Bureau of Customs, streamlining processing while maintaining border control.
2. Exclusions from the buyer‑remittance scheme
The buyer‑remittance mechanism does not apply to local sales with DMEs, addressing DMEs’ concern that the mechanism prevents them from offsetting output VAT on sales against accumulated input VAT from purchases. Accordingly, VAT on local sales must be filed and paid by the DME-seller as a regular VAT taxpayer.
Additionally, the following are excluded from the buyer-remittance scheme:
a. Sale of the following goods or services:
VAT zero-rated goods under Section 106(A)(2);
VAT zero-rated services under Section 108(B);
VAT-exempt transactions under Section 109; and,
VAT-exempt or zero-rated transactions under Title XIII of the Tax Code;
b. Entities registered with the Board of Investments (BOI) under a special law that are not availing of incentives under Title XIII of the Tax Code, as amended; and,
c. Local sales made by RBEs relating to business activities not registered with any investment promotion agencies.
3. Extension of the deadline to reconfigure invoicing systems
RBEs using registered cash register machines, point‑of‑sale systems, computerized accounting systems, or other registered invoicing software have until Dec. 31, 2026, to reconfigure their systems to rename or include the label “VAT on Local Sales” in the sales breakdown.
RR No. 1-2026 takes effect on March 3, 2026, or 15 days after its publication on 16 February 2026 on the BIR website.
Please be guided accordingly.
Source:
P&A Grant Thornton
Certified Public Accountants