BIR orders tax credit refunds out in 75 days

Businesses with valid tax refunds must get their payments within 75 days, under an order issued by the Bureau of Internal Revenue (BIR) early this month.

“Each and every claim for tax refund that was approved by the concerned revenue offices, after the conduct of necessary audit and/or verification, as the case may be, shall be processed, approved and the corresponding check released within 75 days,” read Revenue Memorandum Order (RMO) No. 38-2014 issued by BIR Commissioner Kim S. Jacinto-Henares last Dec. 5.

RMO 38-2014 covers not only the cash conversion of valid and unexpired tax credit certificates (TCCs), but also the monetization of value-added tax (VAT) TCCs, refund of erroneously or excessively collected VAT and other taxes, as well as the refund of input taxes attributable to zero-rated or effectively zero-rated transactions.

Tax credits are refund payments that companies can claim as an incentive for the taxes and duties they earlier paid on their imported raw materials. Instead of granting cash refunds, the government issues TCCs, which firms can use as a form of payment to settle tax obligations.

The tax refund claims covered by RMO 38-2014 will be sourced from the BIR’s Trust Receipt Account, which was specifically created for this purpose.

The BIR nonetheless maintained that to get a refund, all outstanding delinquent tax liabilities must have been already fully paid.

“[O]utstanding delinquent tax liabilities of the concerned taxpayers whose claims for tax refund are already pending before the concerned revenue offices, including the regional finance divisions, responsible for the processing for payment thereof shall first be determined and deducted, if any, from the said claim, before the processing of the same shall proceed,” the order read.

Also, “[a]ll payments on claims for tax refund, net of outstanding delinquent tax liabilities, if any, shall be deducted from the revenue collections of all concerned revenue offices having jurisdiction over the taxpayer-claimants for the current year according to the specific tax type,” according to the BIR.

Meanwhile, “[t]he outstanding delinquent tax liabilities that are deducted from the claims for tax refund of the concerned taxpayers shall be recognized as revenue collection in favor of the revenue offices having jurisdiction over the taxpayer-claimants.”