The Bureau of Customs (BOC) will allot more than P6 billion of its 2014 appropriations to pay claims for value-added tax (VAT) refund on importations. Importers’ claims have to be endorsed by the Bureau of Internal Revenue (BIR) or the Department of Finance (DOF) One-Stop Shop Center.
In a memorandum dated December 3, BOC said that in view of the special provision in the 2014 General Appropriations Act, the P6.532-billion fund, which was recorded as trust receipts from the current year’s revenue tax collections of the agency and deposited with the National Treasury, will be used to settle the claims.
These claims include the refund of input VAT on importations attributable to zero-rated transactions, in accordance with Section 112 of the National Internal Revenue Code (NIRC), and payment of the monetization of the VAT component of outstanding Duty Drawback Tax Credit Certificates (TCCs) as part of the TCC Monetization program.
Under Section 112 of NIRC, any VAT-registered person whose sales are zero-rated or effectively zero-rated may, within two years of the close of the taxable quarter when the sales were made, apply for a TCC or refund of creditable input tax due or paid attributable to such sales, except transitional input tax, as long as such input tax has not been applied against the output tax.
DOF and its attached revenue-collecting agencies, BOC and BIR, and the Department of Budget and Management (DBM) have signed Joint Circular 05-2012 to provide the guidelines for processing VAT refunds for importations.
Under the circular, DBM is tasked to prepare and execute the budget, while DOF will endorse the request for budget by the BOC to DBM.
BOC, for its part, must make sure that supporting documents are complete and verify the authenticity of the BIR endorsement.
Under Customs Memorandum Order No. 28-2014, signed December 16, the Tax Credit Secretariat (TCS) of BIR, on receiving the docket from the BIR approving a claim for refund by an importer, will check for supporting documents.
For the importer, he will be required to secure a clearance from the Collection Service attesting no outstanding liability with the BOC. The clearance will then be submitted to the TCS, and the endorsement authorizing payment will be prepared.
An importer with liability will be asked to settle it first before claiming the refund.
BOC noted that the release of cash payment for refund of VAT on importation “shall be subject to availability of funds appropriated for the purpose.” – Roumina Pablo
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