Rules on VAT exemption, zero rating for exporters out next month

The Export Marketing Bureau (EMB) of the Department of Trade and Industry plans to release a new set of procedures for local exporters seeking value-added tax (VAT) exemption and zero rating by next month.

“We are targeting to finalize the issuances and implement the certification process by the second half of March,” EMB Director Bianca Sykimte said in a message sent to the Inquirer.

On Wednesday, the EMB conducted a public consultation following the signing of the implementing rules and regulations for the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act.

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Under the planned rules of the EMB, export-oriented enterprises will be required to be VAT-registered with the Bureau of Internal Revenue (BIR).

The export sales of these enterprises must reach 70 percent of total sales in the preceding taxable year. Further, goods or services should be directly attributable to the export activity.

“Digital services consumed by export-oriented enterprises are VAT zero-rated as well,” said Sykimte.

For each sale to the buyer of the export-oriented enterprise, suppliers will also be required to issue a duly-registered VAT invoice with the words “VAT zero-rated” stamped in compliance with invoicing requirements.

Export-oriented enterprises must also avail of VAT-zero rating on local purchases of goods and services as well as VAT-exempt importation on the basis of the certificate of accreditation issued by the EMB. This, however, is subject to the conduct of a post-audit investigation by BIR that the goods or services and importation are directly attributable to the activity of the export-oriented enterprise.