Philippines: Businesses Cautioned on VAT Refund Claim Timing Changes

One of the most overlooked assets on a company’s balance sheet is an unutilized Value-Added Tax (VAT) input balance. For export-oriented businesses and other taxpayers entitled to VAT refunds, these amounts can represent significant cash recovery opportunities. However, many refund claims are delayed, reduced, or denied not because the taxpayer lacks entitlement, but because of procedural lapses and misunderstandings on when the applicable processing period begins. The Supreme Court recently underscored this point in Commissioner of Internal Revenue (CIR) vs. Team Sual Corp. (formerly Mirant Sual Corp.), a case that serves as a timely reminder that in VAT refund claims, timing can be just as important as substantiation. Based on a careful reading of the case, I have summarized the claim reckoning period for administrative claims for VAT refund as follows: I. For Administrative claims for VAT refund/credit prior to Jan. 19, 2021 For the administrative claims for VAT refund/credit prior to June 11, 2014, the 120-day period is reckoned from the date of the filing of the administrative claim when the taxpayer submits complete documents together with the administrative claim or manifests that the taxpayer will no longer submit additional documents. In case the Bureau of Internal Revenue (BIR) finds that documents are insufficient, they shall notify the taxpayer to submit additional documents within 30 days unless an extension is given. The 120-day period shall then be reckoned from the submission of the requested documents or lapse of the period given. In case the BIR does not notify the taxpayer of any deficiency and the taxpayer subsequently submits additional supporting documents, the 120-day period shall be reckoned from the submission of such additional supporting documents; For administrative claims for VAT refund/credit filed from June 11, 2014 until Dec. 31, 2017, the 120-day period is reckoned from the date of the filing of the administrative claim with complete supporting documents in which the taxpayer cannot submit additional documents after the filing of the administrative claim for refund. Due to amendment in our tax laws, the administrative claims for VAT refund/credit filed beginning Jan. 1, 2018 until Jan. 18, 2021, the 120-day period was shortened to a 90-day period which is reckoned from the submission of the official receipts or invoices and other documents in support of the application for VAT refund. In case the taxpayer fails to submit the complete documents in support of the claim, the application shall be treated as a non-acceptance of the application. No further documents shall be accepted once the administrative claim for VAT refund is filed and duly received by the BIR. Any unsupported claim shall be disallowed outright, resulting in full/partial denial of the claim. II. For administrative claims for VAT refund/credit filed beginning Jan. 19, 2021 until June 30, 2023: The 90-day period is reckoned from the submission of the official receipts or invoices and other documents in support of the application for VAT refund, only applications which have complied with the Checklist of Requirements under RMO 47-2020 shall be received by the authorized processing office. III. For administrative claims for VAT refund/credit filed beginning July 1, 2023 until Oct. 17, 2024: The 90-day period is reckoned from the submission of the official receipts or invoices and other documents in support of the application for VAT refund. Only applications which have complied with the requirements as enumerated in the Checklist of Requirements prescribed in RMC No. 71-2023 and RMO No. 23-2023 shall be received and processed by the authorized processing office. IV. For administrative claims for VAT refund/credit filed beginning Oct. 18, 2024 until March 31, 2025: The 90-day period is reckoned from the time the processing office accepts the claim or application for VAT refund with complete documentary requirements. During this period, the processing office shall review the following: • The completeness and propriety in the accomplishment of the application form for VAT refund particularly those falling under “General Requirements”; • Whether the schedules are compliant with the prescribed format and that the supporting documents are present, but without confirmation if all the indicated transactions are individually supported. In case of non-compliance with the completeness of requirements as enumerated in the Checklist of Requirements prescribed in RMC No. 115-2024, failure to comply shall result in the non-acceptance of the VAT refund application. V. For administrative claims for VAT refund/credit filed beginning April 1, 2025, onwards: Due to the conscious effort of the government to streamline these applications, changes have been made, such as the allowance of certified true copies of the invoices or receipts in lieu of the originals. The 90-day period is reckoned from the date of the submission of the certified true copies of the invoices or official receipts and other documents in support of the application. Only applications with complete documentary requirements as enumerated in the applicable Checklist of Requirements prescribed in RMC No. 37-2025 shall be received and processed by the authorized processing office. As highlighted in the case, Team Sual Corp. (TSC) filed an administrative claim for VAT refund for the taxable year 2003 on Dec. 20, 2004. On April 22, 2005, TSC filed a judicial claim before the Court of Tax Appeals which covered the first quarter of 2003 and on July 22, 2005, they filed another claim covering the second to fourth quarters of the same year. The Supreme Court affirmed the Court of Tax Appeal’s (CTA) ruling that the first judicial claim was timely filed. However, it held that the second judicial claim was filed beyond the prescribed 120+30-day period for claiming a VAT refund. The decision emphasizes the importance of knowing the correct reckoning point applicable to a claim for VAT refund, as the governing rules vary depending on when the claim was filed. Taxpayers should not assume that the 90-day or 120-day period automatically begins upon filing. Rather, they must carefully determine the applicable law and ensure strict compliance with documentary and procedural requirements. In VAT refund cases, timing remains as critical as substantiation. Accordingly, taxpayers should consider several practical measures in claiming for tax refund. First, they should determine which set of VAT refund rules applies to the claim. The applicable reckoning rule depends largely on the date when the administrative claim is filed. Applying the wrong rule may result in miscalculating critical deadlines. Second, they should ensure that documentary requirements are complete before filing. Taxpayers should therefore conduct a thorough internal review of supporting documents, schedules, certifications, and invoices before submitting a c