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Vat zero rating application bir - vat zero rating application bir |
- Vat zero rating application bir - vat zero rating application bir
This could mean that the denomination of such contract or agreement was in foreign currency and that the same is acceptable in Philippines as not all foreign currencies are acceptable in Philippine for trade or commerce. At any rate, actual payment could be more controlling and it should be in such acceptable foreign currency, e.
This would mean that the payment in foreign currency payment should have been accounted for in accordance with BSP rules and this would relate to BSP rules on disposition of export proceeds e.
CB Circular No. To document compliance, the common practice is for the Philippines BPO or service exporter to secure from the local bank a Certificate of Inward Remittance for each and every payment or a Certification on such inward remittances within the covered period.
The current times provides for more options to remit foreign currencies such as online payment platforms, money remittances, and the likes but the question is whether or not they would comply with the requirement on remittance in accordance with BSP rules. Zero-rated sales must be issued a BIR-registered official receipts with VAT zero-rated written or imprinted prominently on the face of the official receipts and the other details indicated accordingly.
Business process outsourcing companies are common targets of this kind of findings and some of them unfortunately ends up paying such an avoidable tax had they just been aware of the proper documentation for VAT zero-rating for BPOs and service exporters. Garry is a Certified Public Accountant CPA and a law degree holder in tax practice for two 2 decades helping further taxpayers on securing BIR Rulings, appeal of BIR Ruling denials, company registrations in Philippines, tax compliance, tax savings, tax assessments, tax refunds, and other related professional tax services.
He was formerly with the academe and is presently a frequent speaker of Tax and Accounting Center, Inc. Disclaimer : This is for purposes of academic discussions only as personally summarized by the author, not of Tax and Accounting Center, Inc. Mobile : Smart: Globe: Email : info taxacctgcenter. Toggle navigation. Your Name required.
Your Email required. Your Message. Check our Youtube Channel. Search our website:. Contact Us Tax and Accounting Center,. Rufino St. Ayala Avenue, Brgy. This is apart from the requirement for said local suppliers to issue a VAT zero rated official receipt OR for sales of services or sales invoice SI for sales of goods to REEs which are compliant with the invoicing requirements to support the existence of zero-rated sales. REEs should be clarified on the impact of non-compliance with these requirements.
While a transaction would, in substance, qualify as zero-rated local purchases attributable directly to the registered activity of an REE, would it be possible that, due to non-compliance with these requirements, the benefit of VAT zero-rating can no longer be enjoyed?
The frequency of the need to execute the sworn declaration, especially for recurring transactions with each concerned supplier, can be further clarified. Lastly, it would be best to clarify if a VAT zero-rate certification is required on a per project basis since validity periods must be specified in the annex to the VAT zero-rate certification. It is possible that REEs with several registered activities may have different incentive validity periods and a separate set of attributable goods and services.
With proper guidance, REEs can be better equipped to navigate through the new requirements and continue enjoyment of the VAT zero-rate incentive on qualified local purchases. After all, it cannot be denied that the continuous operation of these REEs in the Philippines is vital to the recovery of our economy from the adverse effects of the pandemic.
Based on these developments under CREATE, investors may now consider reassessing incentives that were previously location-based. In the case of common expenses, taxpayers were directed to adopt a method to best allocate goods or services purchased e.
The RMC also made it clear that services for administrative purposes, such as legal, accounting and other similar services, are not considered directly attributable to and exclusively used in the registered project or activity. Previously, a VAT zero-rating certificate was the only document that must be provided by a registered export enterprise to their local suppliers.
However, RMC No. Registered export enterprises should also expect some changes in the VAT zero-rating certificate that will be issued by its Investment Promotion Agency IPA , which would now include the applicable goods and services meeting the direct and exclusive use criteria. Registered export enterprises must strictly observe the abovementioned criteria and documentation in order to prove the VAT zero-rating of its local purchases of goods and services.
This means that registered export enterprises may need to factor in additional compliance requirements to avail of the VAT zero-rating and be able to sustain a claim of VAT zero-rating if eventually audited by tax authorities. The role of tax managers, compliance o ff icers, custodians of records, and the like may have to be expanded as well to ensure that the necessary documentary requirements are secured in a timely manner, compliant with the existing requirements under our tax rules, and would still be available in the event of a tax audit.
However, the direct and exclusive use criteria must still be met.
Proving VAT zero-rating on local purchases of IPA - KPMG Philippines - Let’s Talk Tax
Registered export enterprises should also expect some changes in the VAT zero-rating certificate that will be issued by its Investment Promotion Agency IPA , which would now include the applicable goods and services meeting the direct and exclusive use criteria.
Registered export enterprises must strictly observe the abovementioned criteria and documentation in order to prove the VAT zero-rating of its local purchases of goods and services. This means that registered export enterprises may need to factor in additional compliance requirements to avail of the VAT zero-rating and be able to sustain a claim of VAT zero-rating if eventually audited by tax authorities. The role of tax managers, compliance o ff icers, custodians of records, and the like may have to be expanded as well to ensure that the necessary documentary requirements are secured in a timely manner, compliant with the existing requirements under our tax rules, and would still be available in the event of a tax audit.
However, the direct and exclusive use criteria must still be met. The RMC further explained that any input VAT passed on for purchases of goods and services not directly and exclusively used in the registered project or activity may no longer be used to apply for a VAT refund.
Instead, the RMC presented three options that a registered export enterprise may avail of:. In which case, there would be no tax benefit on any input VAT passed on by its local suppliers.
Export enterprises with a more complex business structure i. Otherwise, without diligent study, a registered export enterprise may face a significant amount of input VAT that it may not be able to recover. Some court interpretations e. They are not required to be submitted, but very relevant during tax assessment or upon application for VAT refund on excess input VAT on zero-rating. This could mean that the denomination of such contract or agreement was in foreign currency and that the same is acceptable in Philippines as not all foreign currencies are acceptable in Philippine for trade or commerce.
At any rate, actual payment could be more controlling and it should be in such acceptable foreign currency, e. This would mean that the payment in foreign currency payment should have been accounted for in accordance with BSP rules and this would relate to BSP rules on disposition of export proceeds e. CB Circular No. To document compliance, the common practice is for the Philippines BPO or service exporter to secure from the local bank a Certificate of Inward Remittance for each and every payment or a Certification on such inward remittances within the covered period.
The current times provides for more options to remit foreign currencies such as online payment platforms, money remittances, and the likes but the question is whether or not they would comply with the requirement on remittance in accordance with BSP rules.
Zero-rated sales must be issued a BIR-registered official receipts with VAT zero-rated written or imprinted prominently on the face of the official receipts and the other details indicated accordingly. Business process outsourcing companies are common targets of this kind of findings and some of them unfortunately ends up paying such an avoidable tax had they just been aware of the proper documentation for VAT zero-rating for BPOs and service exporters.
Garry is a Certified Public Accountant CPA and a law degree holder in tax practice for two 2 decades helping further taxpayers on securing BIR Rulings, appeal of BIR Ruling denials, company registrations in Philippines, tax compliance, tax savings, tax assessments, tax refunds, and other related professional tax services.
He was formerly with the academe and is presently a frequent speaker of Tax and Accounting Center, Inc. Disclaimer : This is for purposes of academic discussions only as personally summarized by the author, not of Tax and Accounting Center, Inc.
Mobile : Smart: Globe: Email : info taxacctgcenter. Toggle navigation. Your Name required. Your Email required. Your Message. Check our Youtube Channel. Search our website:. Contact Us Tax and Accounting Center,. It is possible that REEs with several registered activities may have different incentive validity periods and a separate set of attributable goods and services. With proper guidance, REEs can be better equipped to navigate through the new requirements and continue enjoyment of the VAT zero-rate incentive on qualified local purchases.
After all, it cannot be denied that the continuous operation of these REEs in the Philippines is vital to the recovery of our economy from the adverse effects of the pandemic. Ilssa Ma. Tara T. This article is for general information purposes only and should not be considered as professional advice to a specific issue or entity. For questions and inquiries, feel free to send a message through social media or ph-fmmarkets kpmg. KPMG Personalization.
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