BIR Clarifies VAT Refund Rules for Export-Oriented Enterprises

 

Qualified export-oriented enterprises may now have a clearer path to recovering input VAT incurred during the transition to the Philippines’ updated VAT zero-rating certification system.

The Bureau of Internal Revenue has clarified that eligible exporters can seek refunds for VAT paid on qualified local purchases and importations made while their zero-rating certification from the Department of Trade and Industry was still being processed.

The clarification was issued through Revenue Memorandum Circular 96-2026, signed by BIR Commissioner Charlito Martin Mendoza on September 7. The circular amends the refund rules previously established under RMC 37-2025.

The updated policy applies to VAT incurred from November 28, 2024 until the date a qualified enterprise received its DTI-Export Marketing Bureau certification. To qualify under the transitional provision, the certification must have been issued within the prescribed transition period, which ended December 31, 2025.

The BIR said the measure is intended to prevent exporters from being disadvantaged by differences in the timing of certification issuance. In practical terms, businesses that had already met the requirements for zero-rated export sales but were still waiting for their formal certification may recover eligible VAT incurred during that interim period.

However, the refund is not automatic. Claims remain governed by Section 112 of the National Internal Revenue Code, as amended. Enterprises must provide sufficient documentation and establish that the input VAT being claimed is directly attributable to qualified zero-rated sales.

The rules also prohibit duplicate recovery. VAT that has already been reimbursed, credited, adjusted, recovered from a supplier, or otherwise used cannot be included in another refund claim.

The BIR likewise emphasized that meeting the export threshold alone does not guarantee refund eligibility. Enterprises that satisfied the 70 percent export requirement in the preceding taxable year but failed to secure the necessary DTI-Export Marketing Bureau certification, including during the transition period, will not qualify for a VAT refund for the immediately succeeding year.

For input VAT that cannot be refunded under the applicable rules, businesses may carry the unused amount into subsequent taxable quarters and apply it against future VAT liabilities, subject to existing tax regulations.

The new guidance effectively draws a line between legitimate transitional VAT costs and amounts that have already been recovered, giving qualified exporters a more definite basis for determining which input VAT may be claimed.