(1)

May 6, 1994

REVENUE MEMORANDUM ORDER NO. 40-94

Subject : Prescribing the Modified Procedures on the Processing of Claims for Value-Added Tax Credit/Refund

I.

Objectives:

A. To effectively facilitate and expedite the processing of claim for value-added tax credit/refund.
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B. To effectively implement the devolution of the value-added tax credit/refund processing function to the Revenue Regional/District Offices in the line with the Bureau's reorganization program under Executive Order No. 132.

II.

Guidelines:

A. The application for Tax Credit/Refund of value-added tax paid (BIR Form No. 2552) shall be accepted and processed at the Revenue District Office (RDO) where the principal place of business of the taxpayer/claimant is located. B. Claims for value-added tax credit by direct exporters (zero-rated taxpayers) filed pursuant to Administrative Order No. 266 and Revenue Audit Memorandum Order No. 2-93 shall be accepted and evaluated at the Tax and Revenue Group (BIR) of the One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center, Department of Finance (Center-DOF). Claims for VAT refunds by direct exporters shall be filed and processed at the Revenue District Office under RAMO 1-91. C. The Revenue District Office shall accept only applications with complete supporting documents as prescribed in the Checklist of Requirements under Annex "A" hereof. Value-added tax credit/refund shall be issued to the
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taxpayer/claimant within sixty (60) working days from the date the application was received. Applications are considered duly received only on the day of submission of the last of the documents specified in the aforementioned checklist of requirements. D. Claims for VAT credits/refunds shall be acted upon only after confirmation that no similar claims covering transactions for the same period have been filed by claimants/taxpayers with Board of Investments (BOI), Bureau of Customs (BOC), Center-DOF, and other agencies concerned. E. Every audit of claim for VAT refund or tax credit shall be covered by a letter of authority. F. All processing and audit investigation of claims for refund or tax credit of value-added tax arising from zero-rated transactions, as well as purchase or importation of capital goods must strictly adhere to the guidelines set forth under Revenue Audit Memorandum Order No. 1-91. G. The tax credit certificates issued for value-added tax credit requires the approval of the Regional Director. In case of VAT refunds, the Authority to Issue VAT Refunds must be approved by the Commissioner.

III. Procedures
REGIONAL OFFICE A. Revenue District Office In General: 1. Ascertain the completeness of the supporting documents prior to the receipt of the application for VAT credit/refund from the taxpayer.
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2. Receive application for VAT Credit/Refund (BIR Form No. 2552) in three (3) copies in the following manner: a. stamp the word "RECEIVED" on the appropriate space provided in all copies of application; b. indicate the claim number;

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c. d.

indicate the date of receipt; and initial by receiving officer.

The application shall be received only if the required attachments prescribed in RAMO 1-91 have been fully complied with. Copies of the application form are distributed as follows: Original - Revenue District Office (with the docket) Duplicate - Taxpayer Triplicate - Revenue District Office (File) 3. Maintain a Register exclusively for VAT Credit/Refund containing the following information: a. b. c. d. e. f. g. Claim Control Number Date of receipt Name of taxpayer Address of taxpayer TIN Taxable period involved Amount of claim

4. Prepare a VAT Credit Refund Control Card containing the following information: 1. 2. 3. 4. 5. Name of taxpayer Address of taxpayer Contact person and telephone number TIN Claim control number

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6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16.

Period covered LA number Date issued Name of examiner Amount claimed Amount recommended for refund/credit Amount approved or refund/credit Date reported Date approved TCC/Voucher Number Date of TCC/Voucher

17. Other information relevant to the claim such as details of disallowances/findings discovered in the investigation, etc. The control card shall be maintained for each taxpayer which should bear all information on every application. It shall at all times be updated and alphabetically arranged for easy reference. 5. Prepare and issue letter of authority. The letter of authority to be issued shall be exclusively for the verification of the claim for VAT refund/credit limited to the period covered in the application and the same shall be clearly indicated on the face of the letter of authority. Issuance of letters of authority shall be in consonance with the provisions of existing rules and regulations. 6. Post to the control card all the information available based on the approved letter of authority and the corresponding application for tax credit/refund before release of the authority to the investigating examiner. 7. Evaluate the application by strictly applying the audit procedures prescribed under RAMO 1-91.
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8. Prepare Delinquency Verification Form (Annex "B") to verify from the Collection Division if the taxpayer has any outstanding tax liability. The Chief, Collection Division shall forthwith certify as to existence of any delinquent account not later than five (5) days from the date of referral. Where practicable, similar requests for delinquency verification shall be made from other regional offices. a. In case of delinquency, any outstanding delinquency account shall first be settled by the claimant before the refund/tax credit certificate shall be issued whether
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(1) by agreeing to the issuance of a separate TCC that may be used only to pay the said account; or (2) by paying said account in cash. Under the former, the fact that it shall be used only for the payment of the delinquent account shall be indicated on the face of the TCC. Refund or TCC shall then be issued for the excess of the approved claim over the delinquent account. b. Where the assessment has been protested, the claim for refund/TCC may be given due course provided that the protest has been filed in accordance with Revenue Regulations No. 12-85. The original copy of the accomplished verification form shall form part of the docket of the case. 9. Prepare evaluation report supported by all the prescribed documentary requirements together with a recommendation for the favorable grant or denial of the claim for VAT refund/tax credit for approval by higher authorities. 10. Prepare Authority to issue VAT Credit/Refund (Annex "C") if the recommendation is for the issuance of TCC/Refund and attach the same to the docket of the case. The Authority to Issue VAT Credit/Refund shall be prepared in four (4) copies, distributed as follows: Original Duplicate Triplicate - Attached to the docket - Regional Office or Office of the Commissioner, as the case may be - Revenue District Office (File)

Quadruplicate - Bureau of Customs (BOC), if

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applicable Specify separately in the Authority the amounts of input taxes creditable/refundable by the BIR and BOC. a) Input taxes on local purchases shall be covered by TCC/refund to be issued by BIR, while b) Input taxes on importations verified by BIR shall be covered by TCCs to be issued by BOC. 11. Forward the entire docket to the Chief, Assessment Division for review and evaluation. Compliance for the requirements on returned dockets shall be made within fifteen (15) days from receipt thereof. 12. Receive copy of the approved Authority to issue VAT Credit/Refund together with the docket of the claim. 13. Cancel the original copies of purchase invoices or receipts evidencing sources of allowed or disallowed input tax credits, in the following manner: a. stamp prominently the words "VAT CREDIT/REFUND CLAIMED" on the face of said documents; b. c. indicate date of cancellation; and initial by the cancelling officer.

14. Prepare and send Notice of Approved Authority to Issue VAT Credit/Refund to BOC (Annex "D"), whenever the approved amount has input tax on importation component, together with the copies of the following: a) b) (ROVAR) c) d) Approved Authority to Issue VAT Credit/Refund Revenue Officer's Verification/Audit Report

Examiner's Audit Memorandum Report Checklist of Audit Procedures Undertaken (CAPU)

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e)

Delinquency Verification Form

f) Certification from BOI, BOC, and/or EPZA that no similar claim(s) has been filed thereat for the period covered by the application. g) h) i) Application of VAT Credit/Refund Approved Application for Zero-Rating (RR 2-88) VAT return(s)

j) Invoices, import declarations, import entry documents, official receipts/confirmation receipts evidencing payment of VAT, etc. k) l) Summary of importations made during the period Summary of export sales

If Application Is For VAT Tax Credit: 15. Forward approved Authority to Issue VAT Refund (ATIVR) with docket to Finance Division for processing of payment. 16. information: Maintain a TCC Register and record the following pertinent

a. b. c. d. e. f. g.

Name of taxpayer Address of taxpayer TIN Period covered Amount of TCC granted TCC Number Date issued
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17. Prepare Tax Credit Certificate (BIR Form 2320) in four (4) copies, distributed as follows:
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Original Duplicate Triplicate

- Taxpayer - Finance Division - Revenue District Office (Attached to the docket)

Quadruplicate - Revenue District Office (File) 18. Forward the TCC with the docket to the Regional Director for signature. 19. Receive the duly signed TCC together with the docket of the VAT credit/refund claim. 20. Post in the taxpayer's VAT Credit/Refund control card all the pertinent information relevant to the approved claim for VAT credit/refund. 21. Release the original copy of the TCC to the taxpayer or his duly authorized representative. 22. order. 23. Forward the docket to the Administrative Division for safekeeping. 24. Forward all the duplicate copies of the TCCs issued to the Finance Division within ten (10) days from the end of the month when such TCCs were issued. For district offices under Revenue Region Nos. 5, 6, 7, 8, and 9, the required transmittal shall be made within twenty four (24) hours from issuance of such TCCs. 25. Prepare monthly report of TCCs issued in three (3) copies to be distributed as follows: Original Duplicate Triplicate - Regional Director - Administrative Division - Revenue District Office (File) File the quadruplicate copy of TCC issued in sequential

Copies of the said report shall be transmitted to the concerned offices within ten (10) days of the following month when such TCCs were
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issued. If Application Is For VAT Refund: 26. Receive report of checks issued and cancelled for tax refunds from the Administrative Division and post all the appropriate information to the taxpayer's VAT Credit/Refund control card. B. Assessment Division

1. Receive docket containing results of verification of claims for VAT Credit/Refund. 2. Review the report of investigation and ascertain full compliance with the provisions of RAMO 1-91 and other pertinent regulations and issuances. 3. Return the docket to the RDO whenever there are still items which need to be thoroughly verified, explained or corrected within the prescribed period. 4. Inform in writing the taxpayer on the status of his claim in the following cases: a. b. when there is a denial of the claim; and when there is additional assessment.

5. Assign control number on Authority to Issue VAT Refund (ATIVR) and maintain a register for this purpose. Numbering shall be done in sequential order and shall indicate the region number, the year of issue and the number in the series. Example: The first ATIVR to be issued by the Assessment Division of Revenue Region No. I, Baguio City, for year 1994 shall be coded as follows:

CN 01-91-00001
6. Forward the reviewed docket as follows:

a. Claims for TCC - Regional Director for approval of Authority to Issue TCC (ATITCC) b. Claims for VAT refund - Commissioner's Office for approval of ATIVR.
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7. Receive the Disbursement Voucher (DV) with docket from the Finance Division for certification as to the lawfulness and necessity of expenses (CALNE). 8. Return DV with docket and the required CALNC to Finance Division. C. Collection Division

1. Receive request for verification of delinquent accounts from RDO concerned. 2. Verify the existence of any delinquent account of the taxpayer upon request by the RDO as mentioned in III (A) (8) hereof. 3. Accomplish the pertinent portion of the delinquency verification form indicating therein the outstanding tax liability of taxpayer concerned, if any. 4. Release the accomplished delinquency verification form to the RDO concerned within five (5) days from date of referral. D. Finance Division

If Application Is For TCC: 1. Receive duplicate copies of TCCs issued during the preceding month or day, as the case may be.
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2. Record in the books of accounts all TCC's issued by Revenue District Office based on the duplicate copies of TCCs received. 3. Transmit clear photocopies of offices to Revenue Accounting Division within thereof. Transmittal of photocopies of TCCs under Revenue Region Nos. 5, 6, 7, 8, and following day when such TCCs were received. 1. File TCCs in sequential order. TCCs issued by district ten (10) days from receipt issued by district offices 9, shall be made on the

If Application Is For VAT Refund: 1.

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Revenue District Office. 2. ATIVR. Prepare DV for VAT refund based on the approved

3. Forward the DV, ATIVR with docket to Assessment Division for certification as to lawfulness and necessity of the expenses (BOX A of DV). 4. Division. Receive DV, ATIVR, with docket from Assessment

5. Receive Sub-Allotment Advice (SAA ) and Notice of Fund Transfer (NFT) from Budget Division. 6. Draw Journal Voucher (JV) to record the receipt of NFT and SAA. 7. Prepare request for Obligation of Allotment (ROA) to cover payment for VAT refund. 8. 9. (JAO). 10. Certify DV as to availability of funds. Assign Obligation Number to ROA. Post ROA to Journal and Analysis of Obligation

11. Forward DV and ATIVR with docket to the Assistant Director for approval. 12. Receive Reports of Checks Issued and Cancelled from the Administrative Division and record in the Journal of Checks Issued 13. Prepare Trial Balance (Fund 105) and its supporting schedules, copy furnished Accounting Division. E. Administrative Division

1. Receive approved DV together with ATIVR and dockets from the Office of the Assistant Regional Director. 2.
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Draw check corresponding to the amount of approved VAT

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refund and forward the same to the Office of the Assistant Director. 3. Prepare Advice of Checks Issued and Cancelled for submission to LBP. 4. Receive countersigned check and release the same to taxpayer/claimant. 5. Prepare Report of Checks Issued and Cancelled for tax refunds in four (4) copies distributed as follows: Original Duplicate Triplicate Quadruplicate - Finance Division (for COA) - Finance Division (file) - Revenue District Office - Administrative Division (File)

The report shall be submitted not later than the fifth (5th) day of the following month: 1. Submit monthly report of TCCs issued to the Accountable Forms Division not later than ten (10) days of the following month when such TCCs were issued. F. Assistant Regional Director's Office

1. Receive Disbursement Voucher (DV), together with Authority to Issue VAT Refund (ATIVR), and docket from Finance Division. 2. Approved DV for payment of VAT refund.

3. Forward DV with ATIVR and docket to Administrative Division for preparation of check.
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4. G.

Countersign checks covering VAT Refund.

Regional Director's Office

1. Receive Authority to Issue TCC (ATITCC) with docket from the Assessment Division for approval. 2.
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Forward approved ATITCC with docket to Revenue

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District Office for preparation of TCC. 3. signature. Receive TCC with docket from Revenue District Office for

4. Return signed TCC with docket to Revenue District Office for posting and release. NATIONAL OFFICE H. Budget Division

1. Receive copy of approved ATIVR from Office of the Commissioner. 2. Prepare SAA in favor of the Regional Office concerned in 5 copies distributed as follows: Original Duplicate Triplicate Quadruplicate - Finance Division - Budget Division - Accounting Division - Accounting Division (for attachment to JV) - Accounting Division (for attachment to DV)

Quintuplicate

3. Forward SAA to Financial and Administrative Service (FAS) for approval. 4. Forward three (3) copies of approved SAA to Accounting Division for preparation of NFT to the regional office concerned and request for fund transfer addressed to Land Bank of the Philippines, Quezon City Branch. 5. Receive original copy of NFT from Accounting Division and forward the same together with the original copy of SAA to Finance Division of the concerned regional office. I. Accounting Division 1.
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Receive three (3) copies of approved SAA from the Budget

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Division. 2. Prepare DV in three (3) copies covering transfer of funds from the bank account of the National Office to the regional office concerned. 3. Prepare NFT in two (2) copies addressed to the regional office concerned on the basis of SAA issued by the Budget Division. 4. Prepare request for Fund Transfer addressed to the LBP, QC Branch based on the NFT. 5. Forward the request for fund transfer, NFT and the two (2) copies of DV to FAS for approval. 6. FAS. 7. Forward the original copy of NFT to Budget Division for mailing to regional office concerned. 8. Receive check from General Services Division (GSD). Receive approved NFT and request for fund transfer from

9. Forward the check together with the request for Fund Transfer to LBP, QC Branch. 10. Consolidate Trial Balance of all regional offices (Fund 105) and supporting schedules.
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J.

Revenue Accounting Division

1. Receive clear photocopies of TCCs issued by district offices from the Finance Division for monitoring purposes. K. General Services Division 1. Receive approved Disbursement Voucher (DV) from FAS.

2. Draw check in favor of LBP, QC Branch covering transfer of funds and forward the same to FAS. 3. Prepare Advice of Checks Issued and Cancelled and submit to LBP, Quezon City Branch. 4.
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Transmit the original copy of DV together with duplicate

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copy of the check and SAA to Commission on Audit (COA) for audit purposes. 5. Forward the check to Accounting Division for transmittal to LBP, QC Branch. L. Financial and Administrative Service 1. Receive SAA from Budget Division for approval.

2. Receive DV covering transfer of funds, NFT, and request for fund transfer from Accounting Division. 3. Prepare Advice of Checks Issued and Cancelled and submit to LBP, Q.C., Branch. 4. Review and approve the above documents.

5. Forward the approved DV with all the attachments to GSD for preparation of check. 6. Forward the signed NFT and request for fund transfer to the Accounting Division. 7. M. Countersign checks covering fund transfers.

Commissioner's Office

1. Receive prenumbered Authority to Issue VAT Refund (ATIVR) with docket from Assessment Division for final evaluation and approval. 2. Furnish Budget Division, National Office copy of the approved ATIVR within twenty-four (24) hours for facilitation of funding. 3. Return approved ATIVR with docket to the Revenue District Office concerned for cancellation of original invoices and receipts evidencing sources of allowed or disallowed input tax credits. 4. Return the ATIVR with docket to Revenue District Office concerned for appropriate action in case the report is denied or when additional documents are required.

IV. Effectivity
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This Order shall take effect immediately upon approval. All Orders inconsistent herewith are hereby considered revoked.

VICTOR A. DEOFERIO, JR. Acting Commissioner May 6, 1994 MEMORANDUM FOR:

The Acting Commissioner Submitted herewith is the proposed Revenue Memorandum Order on the Modified Procedures in the Processing of Claims for VAT Credit/Refund, for your review and approval.
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BEETHOVEN L. RUALO Deputy Commissioner May 5, 1994 MEMORANDUM FOR:

Acting Commissioner Victor A. Deoferio, Jr. Submitted for your review and approval is the proposed Revenue Memorandum Order (RMO) re: Modified Policies and Procedures on the Processing of Refundable Income Tax Returns and the Refund of Excess Taxes Withheld on Individual Income.

BEETHOVEN L. RUALO Deputy Commissioner

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Endnotes 1 (Popup - Popup)

Annex A (page 1)
Annex A (page 2) Annex B Annex C Annex D (page 1) Annex D (page 2)

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