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ILIPPINES
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REPUBLIC OF TH
REPUBLIC THEE PH
PHILIPPINES
DEPARTMENT OF
DEPARTMENT O F FINANCE
FINANCE
REAU OF INT
BUREAU
BU ERNAL RE
INTERNAL VENUE
REVENUE

II»l"l

Date:
Dat e: DEC Hn 3 ?0
DEC ?1
?D21

REVENUE REG
REVENUE NO.
ULATIONS NO.
REGULATIONS
9.09~i
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SUBJECT Amending ain Prov

Certain
nding Cert isions of Rev
Provisions enue Reg
Revenue Regulations (RR) No.
ulations (RR) 16-2005, as
No. 16-2005, as
SUBJECT Ame
Ame nded by RR
Amended RR Nos. 4-20
4-2007, 13-2018, 26-2
07, 13-2018, 26-2018, and 9-20
018, and 21 to
9-2021 t o IImpl e m ent
m p leme nt
ions 294 (E) and 295 (D), Title XIII of the Nati
Sections
Sect National Internal Reve
onal Internal Revenue Code of
nue Code of
1997 e), as Ame
Code),
1997 (Tax Cod nded by
Amended N o . 1153
by R.A. No. (CREATE Act)
115344 (CREATE and Sect
Act),, and ion 5,
Section 5,
Rule 2 and Section s, 5, Rule 18
18 of the CREATE Implementing Rule
CREATE Act Implementing Rules s and
and
Regulations
Regulations

TO All
All Internal Revenue Officials, Employees and Others
Others Concerned
Concerned
— —' ----------------------------------

SECTION 1.
SECTION 1, SCOPE. -
SCOPE. - Pursuant to to the provisions of
o f Sections 244 and 245 of the Tax Code of
1997, as amended,
amended, these Regulations are hereby hereby promulgated
promulgated to implement Sections
t o implement Sections 294
294 (E)
(E) and
and
295 (D) ofo f Title xiii
XHI of the
the National
National Internal
Internal Revenue Code, as introduced
introduced ini n Republic Act No.
N o . 11534
1 1534
or the "Corporate
"Corporate Recovery and Tax Incentives
Incentives for Enterprise Act" ("CREATE"),
{"CREATE"'), and Section
Section S,5, Rule
2 of its Implementing
Implementing Rules and Regulations
Regulations (IRR),
(IRR), which
which reads
reads:

sfcTlon.
SECT/O/V. 5. Value-added
Value-added Tax (VA T) zero-rating
(VAT) zero-rating and exemption
exemption. — TheThe VA
VAT T
exemption
exemption on importation
/mportooon and VAT zero-rating on local purchases she!!
shall only apply
to goods andond services directly and exclusively used
used in the registered project or
activity of
activity of o
a registered export a maximum period of
export enterprise, for o (1 Y)
of seventeen (17)
years from date of
from the dote of registration, unless otherwise extended under the SIPP
SIPP-

The direct
direct and exclusive use for the registered project or activity refers tto o raw
raw
materials,
materials, inventories, supplies, equipment,
equipment, goods, packaging materials, services
services,
including provision of ond maintenance, repair and
of basic infrastructure, utilities, and
overhaul of
overhouf of equipment,
equipment and and other e/penditures
expenditures directly attributable to t o the
registered project or activity without which the registered project or activity cannot
cannot
be carried out; Provided, That the vat zero-rating on focal local purchases shoif
sha/l be
granted upon the endorsement of of the concerned IPA, in addition to the
documentary
document requirements of
tary requirements the 8/R.
of the BfR

SECTION 2.
SECTION 2 . ZERO-RATED
ZERO-RATED SALE
SALE OF GOODS OR PROPERTIES. RR no.
4.106-5 of RR
PROPERTIES. - Section 4.106-5 16-
No, 16
13-2018, 26-2018, and
RR No. 4-2007, 13-2018,
2005, as amended by RR shall now
9-2021, shall
and 9-2021, read as
be read
n o w be follows:
as follows

fi
SEC 4.106-5.
SEC. 4.106-5. Zero-Rated Properties. * A
of Goods or Properties.
Zero-Rated Sales of -
sale of
zero-rated sole
A zero~roted goods
of goods
or properties by o
or properties VAT-registered
a VA taxable transaction for
a toxobfe
T-registered person is o VAT purposes
for VAT shall
b u t she!!
purposes but
not result in
n o t result any output
in any tax. However,
output rox. the input
However, the tax on
input rox purchases of
on purchases properties, or
goods, properties,
of goods, or

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services,
service attributable
attributab/e to such zero-
zero-rated she!! be
rated sale, shall available as
be available as tax
tox credit or refund
refund in
accordance with these Regulations
Regulations.

The following soles by VAT-registered

following sales VAT-registered persons
persons she!!
shall be subject to
to zero-percent (0%)
rote:

(a) --.
(a} Export sales ~ "Export
"Export Sales" shall
she!! mean
mean:

actual shipment of
(1) The sale and actual of goods fromfrom the Philippines to 0a foreign country,
country
irrespective of
of any shipping arrangement that may be agreed upon which may influence influence or
transfer of
determine the transfer of ownership of
of the goods so exported, poidfor
paid for in acceptable foreign
currency or its equivalent in goods or services, and accounted for in accordance with the
regulations of the Borlgko
rules and regufotions Bangko Sentral
Sentrol fng Pilipinas (BSP),
i g Pilipinos (BSP}; and

(2) The sale of

(2} of goods, supplies, equipment, and fuel to to persons engaged in
international
international shipping or international air transport
transport operations: Provided,
Provided, That the goods
goods,
international shipping
supplies, equipment, and fuel shall be used exclusively for international or air
shipping or air
transport operations
operations.

sole of
The Safe of goods, supplies, equipment and fuel to persons engaged in international
shipping or international air transport
transport operations is limited to goods, supplies, equipment
and fuel~that
fuel that shofl transport of
shall be used in the transport of goods
goods and passengers
passengers from o a port in the
Philippines directly to oa foreign port, or vice versa, without docking or stopping a
att any other
port in**the
port in*the Philippines unless the docking or stopping at any other Philippine port
port is for the
of unloading
purpose of unloading passengers
passengers and/or that originated from abroad, or to Iood
and/or cargoes that load
passengers aNd/or
passengers further, that if
and/or cargoes bound for abroad: Provided, further, portion of
if any portion of such
fuel,
fuel, goods, supplies or equipment is usedsed for purposes
purposes other than that
that mentioned
mentioned in this
paragraph, portion of
paragraph, such portion fuel, goods, supplies, and equipment shall
of fuel, shoff be subject to VA
to 12% VAT;

(b)
(b) Safes persons or entities whose exemption from direct and indirect
Sales to persons taxes
indirect taxes
under special lows or international
international agreements to which the Philippines is o signatory
a signatory
effectimfely subjects such sales
effectively s les to zero
z r rrate;
t

Sale of
(c) Safe raw materials,
ajfrgw inventories, supplies,
materials* inventories supplies* equipment, packoqinq materials
equipment* packaging materials*
and goods* to
and goods, tg ga registered
registered export
export enterprise,
enterprise* to be used directly
directly and
and excfusivefy
exclusively in its
registered
registered project
project or activity pursuant to Sections 294
activity pursugntto (E) and
294JE} (Dj of
295 (D)
gn<f295 of Republic Act NoNo,
11534
11534 or thethe "Corporate Recovery and Tax Incentives
' Corporate Recovery incentives for
for Enterprise
Enterprise Act"
Acff_ ("CREATE
( CREATE Act")
Ac f
and Section 5, Rule 2 of
5* Rufe of its IRR for o g maximum perfod of seventeen
maximum period seventeen (17) years from from the
the
date
date ofjegistrgtion*
of registration, unless
unless otherwise extended under time the SIPP;
$fPP; Provided
Provided, That the the term
f
fregistfered export enterprise"
req inéred export enterprise shall
shall refer
refer to an export
export en
enterprise
terprise as definedjmder Section
defined under Section
(M), Rule 1 of
4 (MJ* ofthe
the CREATE Act IRR, IRR* that
thatjsis also a registered
registered business enterprise as defined
business enterprise defined
Section 4 (W)
in Section (Wf of of the same fRR:
the same IRR; Provided
Provided further* That the
further, That the above-described
aboyezdescribed solessales to
to
existing reqrs
existing registered export en
tered export enterprises located inside ecozones
terprises focoted gcgzpnes and gndjneeport zones shall
Freeport zones shall also
also
qualifiedjprfor VAT zero-ratinq
be qualified zero rgting under thisthis sub-item
subdtem until
untif the
the expiration
expirgtjon ofofthetransitgry
the transitory
period.

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SECTION
SECTION 3.3. ZERO-RATED
ZERO-RATED SALE
SALE OF SERVICES. -
OF SERVICES. - Section 4.108-5 of RR RR No. 16-2005,
16-2005, as
amended be
amended by RR
RR No. 13-2018,
13-2018, 26-2018,
26-2018, and 9-2021, shall now be read as follows.
follows:

"SEC Sale of
Zero-Rated Sole
SEC. 4.108-5. Zero-Rated Services. -
ofSeryices. -
(a) In
(a) In general. -
general. - A
A zero-rated sole of
zero-rated sole of service
service (by D taxable
VAT-registered person) is a
(by 0a VAT*registered taxable
transaction for VAT purposes, but shall
VAT purposes, shelf not result in any output However, the input lox
fox. However,
output tax. row
on purchases ofof goods, properties or services attributable
attributable to such zero-rated sole
sale shall be
available as
as tax credit or refund in accordance with these Regulations.

Subject to Zero Percent (0%) VAT Rate. - Th

(b) Transactions Subject rhee following-
following services
performed
performed in the Philippines by a VAT-registered
VAT-registered person shall be subject to zero percent (0%)
VAT rate:
VAT rote

(1) Services other than processing, manufacturing or repacking of of goods rendered

to o business conducted outside the Philippines or
a person engaged in business to a
or to a non-resident
non-resident
person not
not engaged in business
business who is outside the Philippines when the services ore are
performed, the consideration for which is paid for in occeptobie
performed, acceptable foreign
foreign currency and
accounted for in accordance with the rules and regulations of
occoun tedfor of the BSP;
BSP;

(2)
(2j Services
Services rendered to persons or entities whose exemption from
from direct and
irect gnd
indirect taxes under special laws
lows or internotionof agreements to which the Philippines is a
international agreements o
signatory, effectively subjects the supply of
signatory, effectively rate;
of such services to zero percent (0%) rote;

(3) Sale
Sole of services
services, incfudinq provision of basic mfrasinjcture
including provision infrastructure, utilities,
utilities and
and
maintenance, repair
rngintengncg rgpoir gnd overhaul of
and gyerhgul equipment, to o
ofequipmentt registered expo#
a registered export enterprise,
enterprise, to be
used
used directly and exclusively
directfyjgnd exclusively in its registered
registered project
protect or activity pursuant
gcgctivit Sections 294
pursuant to Sections
(E)
(E} and. (Dj of
and 295 (D) of CREATE
CREATE Act, Section 5, Rule 2 of
Act and Section its Iff/?
of its IRR for
for o maximum period of
a maximum of
seventeen
seventeen (17)
(17f years
egrsjrqrn date of
from the date reqistrotion, unless otherwise
ofregjstrgtipn otherwise extended
extended under the
SlPP;
SIPPj Provided, That the
Provided That the term
term "registered
"registered export
export enterprise"
enterprise shall refer
shol[ refer to anon export
export
enterprise
enterprise osas defined
defined under
under 5ection
Section 4 (M), Rule 1 of
4' (Mf CREATE IRR,
of the CREATE IRQ that
that is also o g
registered business enterprise
registered enterprise os defined in Section
as defined W ) of the some
Section 4 ([W}gfjhe fRR: Provided
sgme IRR: Provided
further, That the
further the above-described sales to
obgve described soles existing registered
to existing gxport enterprises
registered export enterprises located
inside ecozones and freeport zones shall
ecozgnes qndjreepprt shall 01also
2. be qualified
guglifigd forfor VAT zero-rating under this
zerg rating under
subjtem
sub-item until the expiration
until the transitory period.
expiration of the transitory period.

(4) Services international shipping or air transport

Services rendered to persons engaged in internotionof
leases of
operations, including leases of property for thereof: Provided, that these services shall
for use thereof:
for international
exclusively for
be excfusivefy transport operations. Thus, the services
international shipping or air transport
referred to herein
herein shall those mode
not pertain to those
shall not carriers by air
common carriers
made to common see relative
and sea
air and relative
to transport of
to their transport passengers, goods or cargoes from one place in the Phifippines
of passengers, Philippines toto
another place in the Phifippines, the same
Philippines, the some being subject to
being subject twelve percent
to twelve (22%) VAT
percent (12%) under
VAT under
Sec. 108 of
Sec. of the
the Tax Code.
Code

(S) Transport of passengers

(5) Transport passengers and cargo by domestic air or sea see vessels from the
vessels from the
Philippines to a foreign country. Gross receipts of
of international oairr or shipping carriers doing
busine!5 from transport
m the Philippines derived from
business in of passengers
transport of passengers and and cargo from the
cargo from the
shall be exempt
Philippines to another country shoff liable to a
exempt from VAT; however, they are still fiobfe
to a

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percentage
percentag e tax of derived from
of three percent (3%) based on their gross receipts derived transport of
from transport of
Philippiness to another
cargo from the Philippine another country os provided for in Sec.
country as 118 of
Sec. 118 of the Code;
Tax Code,
the Tax
and and

Sale of
(6) Sole of power or fuel sources of
renewable sources
fuef generated through renewable such os,
energy such
of energy as,
but not hydropower, geotherm
limited to, biomass, solar, wind, hydropower,
not limited geothermalal and steam, ocean energy,
steam, ocean energy,
and other emerging sources using technolog fuel cells and
ies such os fue!
technologies and hydrogen fuels:
hydrogen fuels:
that zero-ratin
however, that
Provided, however, zero-rating apply strictly to the sale of
g shall oppfy power orfuel
of power generated
or fuel generated
renewable sources of
through renewable of energy, and shall not extend to the sole sale of
of services related
related to
to
the maintenan
maintenance of plants
ce or operation of plonts generatin
generating g said power.
power

SECTION
SECTION 5* 5. REPEALING CLAUSE. -- Any rules and regulation
REPEALING CLAUSE. s, issuances or parts thereof
regulations,
inconsistent
inconsiste the provision
with the
nt with provisionss of these Regulatio
Regulations or modified
amended or
ns are hereby repealed, amended modified
accordingly.
accordingly.

SECTION CLAUSE. -- If any of the provisions

SEPARABILIW CLAUSE.
SECTION 6. SEPARABILITY provisions of these Regulatio ns is
Regulations
subsequently tional, the validity
unconstitutional,
subsequently declared unconstitu provisions hereof shall
remaining provisions
validity of the remaining
remain in
in full effect
full force and effect.

SECTION EFFECTIVITY. -- This issuance shall take effect immediately

SECTION 7. EFFECTIVITY. following its
immediately following its
publication newspaperr of general circulation
fn a leading newspape
publication in entered
transactions entered
circulation,, and shall cover transactions
into
into the third quarter 2021 and onwards
Year 2021
quarter of Taxable Year onwards.

RLOS G. DOMING
RLOSG. DOMINGlC
Secretary of Finance
2021
DEE 0033 2021
DEC
Recommending Approval
Recommending Approval:

S.*'-* <=~»-A.,
CAESAR R. DULAY
CAESAR
Commissioner
Commiss ioner of Internal Revenue
0
044 7 5 066

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