VAT Claim for

Refund
Presented by:
Hazel T. Natanauan
 WHO may claim for refund/ apply for issuance of
Tax Credit Certificate (TCC)?
The following can avail of refund or tax credit:
1. Zero-rated and effectively zero-rated sales - Any VAT-
registered person, whose sales are zero-rated or effectively zero-
rated (Sec. 112 [A]).
2. Cessation of business or VAT status - A person whose
registration has been cancelled due to retirement from or
cessation of business, or due to changes in or cessation of status
under Section 106(C) of NIRC (Sec. 112[B]).
 WHAT are the requirements to claim for VAT
refund or credit of input VAT attributable to
purchased capital goods?
1. It is a VAT-registered entity;
2. Its input taxes claimed were paid on capital goods duly
supported by VAT invoices and/or official receipts;
3. It did not offset or apply the claimed input VAT payments on
capital goods against any output VAT liability; and
4. Its claims for refund was filed within the two-year prescriptive
period both in the administrative and judicial levels.
 WHERE to claim for refund or Credit
Certificate?
Claims shall be filed with the appropriate Bureau of Internal Revenue
(BIR) Office (Large Taxpayers Service (LTS), Revenue District Office
(RDO) having jurisdiction over the principal place of business of the
taxpayer.

Claims for input tax refund of direct exporters shall be exclusively

filed with the VAT Credit Audit Division (VCAD). (Sec. 4.112-
1[c],supra)
 WHEN?
Prescriptive Period on Claims or
Refunds under Zero-Rated Sales
 Prescriptive Period on Claims or
Refunds under Zero-Rated Sales
The taxpayer in applying Section 112 (A) and (C) must observe the
following:

1. AS TO ADMINISTRATIVE CLAIM:
• Must be within the two-year prescriptive period after the close of the taxable
quarter ;
• The 90-day period may extend beyond two-year prescriptive, as long as the
administrative claim is filed within the two-year prescriptive period
 Prescriptive Period on Claims or
Refunds under Zero-Rated Sales

2. MANDATORY 90-DAY WAITING PERIOD:

• Section 112(C) expressly grants the Commissioner 90 days within which to decide
the taxpayer’s claim;
• Compliance with the 90 days waiting period is mandatory and jurisdictional
• Otherwise, the petition with the CTA is a mere scrap of paper
 Prescriptive Period on Claims or
Refunds under Zero-Rated Sales
2. AS TO APPEAL (Petition for Review to Court of Tax Appeals):
• Appeal the decision of the Commissioner to the CTA within 30 days from receipt of
the Commissioner’s decision; or
• If the Commissioner does not act on the taxpayer’s claim within the 90-day period,
the taxpayer may appeal to the CTA within 30 days from the expiration of the 90-
day period or 30 days from the expiration of the 90-day period or 30 days after the
so called waiting period.
• Failure to appeal will make the decision or “deemed a denial” decision final and in
appealable.
 Amendments of Section 112 under
TRAIN Law on Change of Period and
Inaction Provisions
 AMENDMENTS OF SEC. 112 under
TRAIN LAW
1997 Tax Code R.A. 10963 (Jan. 1, 2018)
(Prior to TRAIN Law) TRAIN LAW
Period to
Decide Tax Waiting period of 120 Waiting period of 90 days
Payer's
days
Claim
 AMENDMENTS OF SEC. 112 under
TRAIN LAW
1997 Tax Code R.A. 10963 (Jan. 1, 2018)
(Prior to TRAIN Law) TRAIN LAW
Inaction Tax payer may elevate to the Court
of Tax Appeals (CTA) its claim for
Provision refund or tax credit of unutilized input
tax attributable to VAT zero-rated
sales in case the Commissioner fails to
act on the said claim within 120 days
from the submission of complete
documents.
Taxpayer's right to appeal an unacted
claim to the CTA was DELETED, with a
proviso, however, that failure on the part
of any official, agent, or employee of the
BIR to act on the application within the
90-day period shall be punishable,
which under Section 269 of the Code,
could be imprisonment of up to a period
of 15 years.
 AMENDMENTS OF SEC. 112 under
TRAIN LAW
1997 Tax Code R.A. 10963 (Jan. 1, 2018)
(Prior to TRAIN Law) TRAIN LAW
Full or In case of full or partial denial of the claim
for tax refund or tax credit, or the failure on
It is only when there is a full or partial
denial of the claim for tax refund that the
Partial the part of the commissioner to act on the taxpayer affected may, within 30 days
Denial of application within the period prescribed by
law, the tax payer affected may, within 30
from the receipt of the decision denying
Claim days from the receipt of the decision the claim, appeal the decision with the
denying the claim or after the expiration or CTA.
after the expiration of the 120-day period,
appeal the decision or the unacted claim
with CTA
Comparison of Sec. 204 and 229 of
the Tax Code
 TAX CODE Sec. 204 and 229
Comparison
SECTION 204 SECTION 229
TITLE Authority of the Commissioner or the Protesting a Refund - Recovery of tax
Chief of BIR to credit or refund taxes erroneously or illegally collected
ERRONEOUSLY or ILLEGALLY
received or penalties imposed without
authority
TAX CODE Sec. 204 and 229
Comparison
SECTION 204
Any request for conversion into refund
of unutilized tax credits may be
allowed subject to Sec. 230 (5 Years
Forfeiture). Provided that the
certificate is surrendered and refund
will not result for availment of
incentives pursuant to special laws for
which no actual payment was made.
SECTION 229
No suit or proceeding shall be
maintained in any court for the recovery
of any national revenue tax until a claim
for refund or credit has been duly filed
with the Commissioner; but such suit
may be maintained, whether or not such
tax, penalty, or sum has ben paid under
protest or duress.
 TAX CODE Sec. 204 and 229
Comparison
SECTION 204 SECTION 229
GROUNDS Taxes erroneously or illegally received Recovery of any national internal revenue tax
hereafter alleged to:
or penalties imposed without authority
1. to have been erroneously or illegally assessed
or collected; or
2. of any penalty claimed to have been
collected without authority;
3. of any sum alleged to have been excessively
or in any manner wrongfully collected without
authority; or
4. of any sum alleged to have been excessively
or in any manner wrongfully collected
 TAX CODE Sec. 204 and 229
Comparison
SECTION 204 SECTION 229
PERIOD Claim for credit or refund file within The taxpayer must file a judicial claim
two (2) years AFTER the payment of for refund within two years from his date
the tax or penalty. Provided, that a of payment.
return filed showing an overpayment
shall be considered as a written claim
for credit or refund
 TAX CODE Sec. 204 and 229
Comparison
SECTION 204 SECTION 229
Application Tax Credit Certificate may be applied
against any internal revenue tax;
of Tax Credit excluding withholding taxes.
Certificate
CASES AND DOCTRINES
 CONTEX CORPORATION, petitioner, vs. HON.
COMMISSIONER OF INTERNAL REVENUE, respondent.
433 SCRA 376, G.R. No. 151135 July 2, 2004
Facts: Petitioner Contex Corporation (CONTEX) is a domestic corporation located at the Subic Bay Freeport Zone (SBFZ).
Petitioner is exempt from all local and national internal revenue taxes except for the 5% preferential tax provided in RA 7227.
Petitioner is registered with the BIR as a NON-VAT Taxpayer. From 1997-1998, petitioner purchased various supplies and
materials necessary in the conduct of its manufacturing business. The suppliers SHIFTED UNTO PETITIONER the 10% VAT
which led the petitioner to pay input taxes. On the belief that it was exempt from all taxes, petitioner filed for tax refund it.
However, the application letter for refund was denied by the BIR. Petitioner elevated the matter to Court of Tax Appeal in a
Petition for Review which was partially granted. The Court of Appeals reversed the CTA’s ruling, hence, this petition.  
Issue: Whether or not CONTEX may claim Input VAT Credit or Refund?  
Held: No. Petitioner is entitled to claim refund. Petitioner’s claim for exemption from VAT for its purchases of supplies and
raw materials is incongruous with its claim that it is VAT-Exempt for only VAT-Registered entities can claim Input VAT
Credit/Refund.—Petitioner rightly claims that it is indeed VAT-Exempt and this fact is not controverted by the respondent. In
fact, petitioner is registered as a NON-VAT taxpayer per Certificate of Registration issued by the BIR. As such, it is exempt
from VAT on all its sales and importations of goods and services. Petitioner’s claim, however, for exemption from VAT for its
purchases of supplies and raw materials is incongruous with its claim that it is VAT-Exempt, for only VAT-Registered entities
can claim Input VAT Credit/Refund.
 ATLAS DOCTRINE
The Atlas doctrine, referred only to the reckoning of the prescriptive period
of
administrative claims, held that claims for refund or credit of input VAT must
comply with the two-year prescriptive period under Section 229, should be
effective only from its promulgation on 8 June 2007 until its
abandonment ON 12 September 2008 in Mirant.
 MIRANT DOCTRINE

The Mirant doctrine is referred only to the reckoning of the prescriptive

period of administrative claims. It counts the two-year prescriptive period
from the “close of the taxable quarter when the sales were made” as
expressly stated in the law, which means the last day of the taxable quarter.
The Mirant ruling, which abandoned the Atlas doctrine, adopted the verbal
egis rule, applying Section 112(A) in computing the two year prescriptive
period in claiming refund or credit of input VAT. (September 12, 2008)
 AICHI DOCTRINE

The Aichi case established the doctrine of strict observance of the period for

filing the judicial claim by way of petition for review with the CTA, the non-
observance of which will make the judicial claim premature. The 120 + 30
day (now 90+30) period is not only mandatory, but also jurisdictional.