Imported PPEs lose tax-free perk, but VAT refund claim deadlines extended

MANILA, Philippines — With the expiration of the Bayanihan to Heal as One Act, importation of personal protective equipment (PPEs) and other medical supplies lost its tax-exempt perk even as the government further extended the deadlines for firms to file their value-added tax (VAT) refunds.

In an advisory on Saturday, the Bureau of Customs (BOC) said that since Republic Act (RA) No. 11469 expired last June 24, the guidelines on tax and duty exemption for imported health equipment and supplies that had been issued to implement the Bayanihan Law also lapsed.

“Following the expiration of the said guidelines, the public is advised to pay the required duties and taxes for imports of PPE and other medical emergency supplies beginning June 25,” BOC said.

When the Bayanihan Law was still in effect, imported PPEs, medical supplies, and test kits had been exempted from paying import duties, 12-percent VAT, excise taxes, as well as other fees.

To fast track their release from ports, the Bureau of Internal Revenue (BIR) had also allowed an exemption of importations for COVID-19 response from the required authority to release imported goods (ATRIG).

During the period March 9 to June 26, BOC released a total of 13,534 PPE shipments under flexible arrangements amid a public health emergency caused by the COVID-19 pandemic.

Meanwhile, BIR on Saturday published Revenue Regulations (RR) No. 16-2020 signed by Finance Secretary Carlos G. Dominguez III and Internal Revenue Commissioner Caesar R. Dulay, which further extended due dates to apply and process VAT refund claims beyond the mandatory 90-day period under the Tax Code.

“Due to the unprecedented impact of the pandemic to business and government operations, taxpayers claiming for refund of unutilized input VAT find it difficult to complete the necessary documents relative to their VAT refund claim. Moreover, even for those with complete documents, the unavailability of the appropriate mode of transportation to make possible the filing of such application is another problem,” BIR noted.

While BIR earlier on issued RR 11-2020 giving taxpayer-claimants 30 days from lifting of quarantine to file their VAT refund claims, it may still be “difficult” for the country’s biggest tax-collection agency to handle an expected surge in these applications as earlier regulations designated the same due date for all taxable quarters in 2018.

As such, BIR through RR 16-2020 assigned separate deadlines to file VAT refund claims per taxable quarter, as follows: July 15, 2020, for the calendar quarter ending on March 31, 2018; July 31, 2020, for the fiscal quarter ending on April 30, 2018; August 15, 2020, for the fiscal quarter ending on May 31, 2018; and August 31, 2020, for the calendar quarter ending on June 30, 2018.

“This, however, does not apply to areas not yet declared to be in a general community quarantine (GCQ) state. In which case, the deadline shall be 30 days from the lifting of the enhanced community quarantine (ECQ) or modified enhanced community quarantine (MECQ) in the affected areas of taxpayer-claimant or the above-stated deadlines, whichever comes later,” BIR said.

Also, “the 90-day period of processing VAT refund claims shall be suspended in areas where ECQ or MECQ is still in force,” it added.