The Bureau of Internal Revenue (BIR) issued a new regulation on the optional value-added tax (VAT) registration of registered business enterprises (RBEs) classified as domestic market enterprises (DMEs).
Revenue Regulations (RR) No. 13-2023 prescribes the policies and guidelines for the optional VAT registration of DMEs that are under the 5-percent gross income tax (GIT) regime during the transitory period.
The agency issued the regulation on Nov. 10, 2023 following the amendment of the implementing rules and regulations (IRR) of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.
The amendment, specifically to Rule 18, Section 5 of the CREATE Act IRR, was promulgated by the secretaries of the Department of Finance and Department of Trade and Industry in August 2023 to address VAT issues raised by transitory RBEs.
With the amendment, transitory registered DMEs inside the economic or freeport zone availing of the 5-percent GIT regime now have the option to register as VAT taxpayers.
This will enable VAT-registered DMEs covered by the transitory provisions of CREATE to either charge output VAT to domestic customers or receive a refund from the BIR for the input VAT directly attributable to their zero-rated sales.
RR 13-2023 provides that for the DME to avail of this optional VAT registration, it should secure from the concerned investment promotion agency (IPA) a certification specifically excluding VAT from the 5-percent GIT.
The RBE should submit to the concerned IPA documentary requirements such as request letter stating its intention to avail of the option to register as a VAT taxpayer with the BIR; notarized “Deed of Waiver of Right to Avail of the VAT Exemption Incentive” in the form prescribed in the RR; and other documents that may be prescribed by the concerned IPA.
