CLARIFICATION OF CERTAIN POLICIES AND PROCEDURES RELATIVE TO THE IMPLEMENTATION OF THE RISK-BASED APPROACH IN THE VERIFICATION AND PROCESSING OF VALUE-ADDED TAX (VAT) REFUND CLAIMS, AS INTRODUCED IN R

REVENUE MEMORANDUM CIRCULAR NO. 115-2024

This circular clarifies the risk-based approach in verifying and processing VAT refund claims, aiming to streamline the VAT refund process while ensuring compliance.

Taxpayers and all internal revenue officers must adhere to the outlined procedures and requirements to avoid delays and disallowances in refund claims.

The following are the clarifications discussed in this circular:

General Policies

• All documentary requirements mandated in the Checklist of Mandatory Requirements for VAT refund claims must be submitted, regardless of the identified risk level.
• Completeness of documentary requirements shall mean all documents as enumerated in the Checklist.
• Noncompliance shall result in the non-acceptance of the refund application.
• The 90-day processing period starts upon acceptance of the application with complete requirements.

VAT Refund Procedure
The sequence in the processing of VAT refund claims shall now be as follows:

1. Checklisting of submitted documents based on the Checklist of Mandatory Requirements;
   1. Verify completeness of application form particularly those under “General Requirements”;
   2. Check compliance with prescribed format and presence of required supporting documents but without confirmation if the transactions are individually supported;
2. Cursory checking of completeness of supporting documents submitted for sales and purchases of goods and services after acceptance of the application;
3. Determination of the risk level of the claim;
4. Processing and verification of medium and high-risk claims. Low-risk claims are automatically recommended for refund, net of sales and purchases tagged as “NSD”.

The verification procedures to be observed based on the risk level of the claim:

Impact of Specific Findings

This circular shall take effect immediately upon posting on the BIR website and will cover on-going VAT refund claims currently being processed that have not been endorsed for review by the relevant offices at the time of issuance.