Simplifying VAT Refunds and Expanding Incentives with CREATE MORE

In keeping with its mandate to promulgate the necessary rules and regulations for the effective implementation of the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy Act (CREATE MORE), the Bureau of Internal Revenue has released Revenue Regulations (RR) 10-2025 last Feb. 25, 2025.

- Jonathan Casey Angala

This regulation introduces amendments to RR 16-2005, also known as the Consolidated VAT Regulations, as amended, particularly on VAT zero-rated and VAT-exempt transactions and the key changes made to the process of VAT refund claims.

Under CREATE MORE, the local sale of goods and services to export-oriented enterprises which are directly attributable to the enterprises' export-oriented activity are subject to zero VAT, provided the 70 percent export sales threshold is satisfied.

This is based on Sections 106 and 108 of the Tax Code, as amended. As elaborated by RR 10-2025, the task of determining compliance (or non-compliance) by export-oriented enterprises is given to the Export Management Bureau (EMB) of the Department of Trade and Industry (DTI) which shall issue a certification for the taxable period applicable. However, the issuance of the certificate by the EMB is without prejudice to the conduct of a post audit/investigation by the BIR.

Export-oriented enterprises should not be confused with registered business enterprises (RBEs) which refer to those registered with Investment Promotion Agencies (IPA) such as the Philippine Economic Zone Authority (PEZA) or the Board of Investments (BOI), among others.

For RBEs, the VAT zero rating on local purchases of goods and services are based on Title XIII of the Tax Code, as amended, instead of Sections 106 and 108. The VAT zero-rating certification for RBEs is issued by the concerned IPA without prejudice to post audit verification by the BIR.