EOPTA Revenue Regulations No. 5-2024: Tax Refunds

This regulation applies to tax credit/refund claims filed from July 1, 2024, onwards.

Vat Refunds:

• Risk Classification: VAT refund claims are sorted into low, medium, or high-risk categories based on claim amount, filing frequency, tax compliance history, and other factors.

• Verification Scope:

1. Low Risk: No verification of sales or purchases.
   
2. Medium Risk: At least 50% verification of sales and purchases.
   
3. High Risk: Full verification of sales and purchases.

Limitations:

1. First-time claimants are automatically high-risk for their first three claims.
   
2. Full denial of a claim leads to high-risk classification for the next claim.
   
3. Medium-risk claims with 30% disallowance will be fully verified.
   
4. After three consecutive low-risk claims, the fourth will be fully verified.
   
5. Claims by taxpayers with canceled VAT registration due to business cessation are high-risk.
   
6. Risk classification applies for each quarterly filing.

• Complete documentary requirements must be submitted for all VAT refund claims.
• The 90-day processing period starts upon submission of all required documents.
• Taxpayers can appeal a denial to the Court of Tax Appeals (CTA) within 30 days.

Refund of Excess Income Tax Credits for Taxpayers with “Going Concern” Status:

• Claims must be filed within two years from the Annual Income Tax Return (AITR) filing date.
• Income must be included in the AITR, with withholding tax certificates as proof.
• Priority processing for claims from dissolving or ceasing businesses to comply with the 180-day processing period.
• Claims for a Tax Credit Certificate (TCC) or refund are denied if the amount is carried forward, but it may be credited against future income tax liabilities.

Refund of Excess Income Credits for Taxpayers Undergoing Closure:

• Taxpayers opting to carry over credits may claim a refund if they cease operations permanently.
• The BIR must decide within two years from the date of business cessation.
• The 2-year period starts upon submission of the Application for Cancellation (BIR Form No. 1905) with complete documents.
• Refunds are released after mandatory audit and settlement of all tax liabilities.

Refund of Erroneously or Illegally Collected Tax:

• The CIR can refund taxes or penalties imposed without authority.
• Claims must be filed within two years from the tax or penalty payment.
• The BIR has 180 days to process and decide the claim.
• Taxpayers can appeal a denial to the CTA within 30 days.

IndividualJudicial Claim for Credit/Refund:s Exempt from Filing Income Tax Returns:

• No judicial claim can be filed until a claim is duly filed with the CIR.
• Judicial claims must be filed within 30 days from denial or inaction by the CIR.

Tax Refund Assistance

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