28688rmo 7-2006 PDF
28688rmo 7-2006 PDF
DEPARTMENT OF FINANCE
BUREAU OF INTERNAL REVENUE
Quezon City
I. PURPOSE
This Memorandum Order is being issued to provide guidelines and procedures to:
1. All Applications for VAT Zero-Rate (Annex “A”) except those of Large
Taxpayers shall be processed and approved by the Audit Information, Tax
Exemption and Incentives Division (AITEID) under the Assessment Service.
The Large Taxpayers Audit and Investigation Divisions I and II (LTAID I and
II) and Large Taxpayers District Office (LTDO) shall process applications for
VAT zero-rating of effectively zero-rated transactions of Large Taxpayers
under their jurisdiction. Guidelines and procedures in the processing of the
same shall be covered by a separate revenue issuance.
3. The AITEID shall only accept Applications for VAT Zero-Rate as prescribed
under Annex “A” hereof, with complete supporting documents.
4. The Application for VAT Zero-Rate shall be accomplished and filed by the
seller (not by the purchaser of goods, properties and/or services) to cover
transactions qualified for effective zero-rating. The Application for VAT
Zero-Rate shall be filed only by VAT-registered sellers to cover sale of goods,
properties or services to qualified buyers certified or endorsed, whenever
necessary, by the concerned government regulatory agency.
7. Approval for VAT zero-rating shall be required only for transactions which
fall under the provisions of Sections 106(A)(2)(a)(3)(5) and (6); 106(A)(2)(c);
and 108(B)(3),(4) and (5) of the National Internal Revenue Code (NIRC) of
1997, as last amended by Republic Act No. 9337. Accordingly, transactions
falling under the provisions of Sections 106 (A)(2)(a)(1),(2), and (4);
106(A)(2)(b); and 108(B)(1),(2),(6) and (7) of the NIRC which are
automatically considered as zero-rated shall not be covered by this Order.
10. The approved Application for VAT Zero-Rate shall be revoked in the event
that the taxpayer-applicant was found to have committed misrepresentations
on the application or the exporter was found to have been erroneously
endorsed for VAT zero-rating. The revocation shall be retroactive to the date
when the application was approved.
11. The AITEID shall maintain a record of all applications received and
approved/disapproved. Every application received shall be assigned an
Application Number (AN) while different set of control numbers shall be
assigned to all approved/disapproved applications.
12. The LTAID I and II/LTDO shall submit to AITEID quarterly/annual list of
Approved Applications for VAT Zero-Rate, within 30 days following the
close of the quarter/year for consolidation by the latter for purposes of
dissemination to all concerned internal and external offices.
13. The AITEID shall receive the official annual masterlist and/or separate
endorsement letters from concerned government regulatory agencies
containing information on registered exporters entitled to VAT zero-rated
purchases. The AITIED shall furnish LTS with copy of the
masterlist/endorsement as reference in the processing of the application under
their jurisdiction.
III. PROCEDURES
A. Receiving Personnel
a. Review the details appearing in the application and check whether all
pertinent information are properly filled up and the application is
accomplished by the seller of goods, properties or services; and
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b. Ascertain the completeness of the pertinent documents required to be
attached to the application as specified in the checklist (Annex “B”, “B1”
and “B2”). In case of partial compliance, the applicant shall be informed
of the missing or additional requirements.
Example:
Office - Year - AN
The above serial number indicates that the application was the first
application received by the AITEID in the year 2006.
a. Date of receipt;
b. Application number;
c. Name and TIN of Applicant;
d. Name and TIN of Customer;
e. Transaction applied for; and
f. Remarks
5. Forward the application form together with all the attachments to the
Revenue Officer for processing of the Applications for VAT Zero-Rate.
B. Revenue Officer
1. Receive the Applications for VAT Zero-Rate together with all the supporting
documents from the Receiving Personnel.
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2. Review and evaluate the supporting documents attached to the application
form.
3. Ascertain the veracity of all the information contained in the application and
the authenticity of all submitted supporting documents.
b. Verify the correctness of the name, address and TIN of the taxpayer
against its ITS records.
b. In case the customer is not yet included in the annual masterlist, verify
if an individual endorsement letter from the concerned government
regulatory agency accompanies the application.
5. Fill up all the appropriate spaces in the application form indicating thereat the
results of the evaluation of the Application for VAT Zero-Rate as follows:
Item No. 8 Indicate the legal basis for VAT zero-rating (i.e. the
specific law or international agreement that grants the
benefit of VAT zero-rating)
Item No. 10 Mark the appropriate box provided to indicate which
government regulatory agency made the favorable
endorsement of the purchaser.
Item No. 11 State the result of evaluation and recommend for
approval or disapproval of the application. Should
there be partial approval, the disapproved portion must
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be clearly stated in the form.
C. Section Chief
1. Receive the duly accomplished Applications for VAT Zero-Rate together with
all the attachments from the Revenue Officer.
4. Forward the entire processed application and all supporting documents to the
Division Chief for final review and approval.
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5. Review the quarterly/annual List of Approved Applications for VAT Zero-
Rate (Annex “C”) prepared by the Releasing Personnel before transmittal to
the Division Chief.
D. Division Chief
1. Receive the duly validated Applications for VAT Zero-Rate together with the
attachments from the Section Chief.
2. Review the basis used in processing the application to ascertain if the same
conforms to all pertinent laws, rules, regulations and issuances. Refer
applications to the Law Division/VAT Review Committee of the National
Office if the same requires legal interpretation of vague provisions of the law.
5. Receive from the Section Chief the quarterly/annual list or consolidated list,
as the case may be, of Approved Applications for VAT Zero-Rate.
E. Releasing Personnel
Example:
Office - Year - CN
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The above serial number indicates that the application is the first application
approved by AITEID for the year 2006. The Control Number will not
necessarily match the Application Number referred to in Procedure A.3 above.
a. Date of receipt
b. Control Number (for approved applications only)
c. Application Number
d. Name and address of seller/applicant
e. TIN of seller/applicant
f. Name and address of purchaser
g. TIN of purchaser
h. Complete description of approved zero-rated sale of goods, properties
or services (for approved applications only)
i. Effectivity date (for approved applications only)
a. Control Number
b. Name, TIN of seller and RDO code
c. Name, TIN of buyer and RDO code
d. Complete description of approved zero-rated sale of goods, properties
or services
e. Effectivity date
1. Receive the Application for VAT Zero-Rate referred by AITEID for resolution
of legal issues.
2. Evaluate the merits of the case based on pertinent laws, rules, regulations
and/or issuances.
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3. Prepare and transmit necessary legal opinion to the AITEID within thirty (30)
days from receipt of referral.
V. EFFECTIVITY
(Original Signed)
JOSE MARIO C. BUÑAG
Commissioner of Internal Revenue