May 6, 1994

REVENUE MEMORANDUM ORDER NO. 40-94

SUBJECT : Prescribing the Modified Procedures on the Processing of Claims for Value-
Added Tax Credit/Refund

I. Objectives:

A. To effectively facilitate and expedite the processing of claim for value-added tax credit/refund.
cd

B. To effectively implement the devolution of the value-added tax credit/refund processing

II. Guidelines:

A. The application for Tax Credit/Refund of value-added tax paid (BIR Form No. 2552) shall be
accepted and processed at the Revenue District Office (RDO) where the principal place of business of
the taxpayer/claimant is located.

B. Claims for value-added tax credit by direct exporters (zero-rated taxpayers) filed pursuant to
Administrative Order No. 266 and Revenue Audit Memorandum Order No. 2-93 shall be accepted and
evaluated at the Tax and Revenue Group (BIR) of the One-Stop Shop Inter-Agency Tax Credit and Duty
Drawback Center, Department of Finance (Center-DOF). Claims for VAT refunds by direct exporters shall
be filed and processed at the Revenue District Office under RAMO 1-91.

C. The Revenue District Office shall accept only applications with complete supporting documents
as prescribed in the Checklist of Requirements under Annex "A" hereof. Value-added tax credit/refund
shall be issued to the taxpayer/claimant within sixty (60) working days from the date the application was
received. Applications are considered duly received only on the day of submission of the last of the
documents specified in the aforementioned checklist of requirements.

D. Claims for VAT credits/refunds shall be acted upon only after confirmation that no similar claims
covering transactions for the same period have been filed by claimants/taxpayers with Board of
Investments (BOI), Bureau of Customs (BOC), Center-DOF, and other agencies concerned.

E. Every audit of claim for VAT refund or tax credit shall be covered by a letter of authority.

F. All processing and audit investigation of claims for refund or tax credit of value-added tax arising
from zero-rated transactions, as well as purchase or importation of capital goods must strictly adhere to
the guidelines set forth under Revenue Audit Memorandum Order No. 1-91.

G. The tax credit certificates issued for value-added tax credit requires the approval of the Regional
Director.
In case of VAT refunds, the Authority to Issue VAT Refunds must be approved by the Commissioner.

III. Procedures

REGIONAL OFFICE

A. Revenue District Office

In General:

1. Ascertain the completeness of the supporting documents prior to the receipt of the application
for VAT credit/refund from the taxpayer. cd

2. Receive application for VAT Credit/Refund (BIR Form No. 2552) in three (3) copies in the
following manner:

a. stamp the word "RECEIVED" on the appropriate space provided in all copies of application;

b. indicate the claim number;

c. indicate the date of receipt; and

d. initial by receiving officer.

The application shall be received only if the required attachments prescribed in RAMO 1-91 have
been fully complied with. Copies of the application form are distributed as follows:

Original - Revenue District Office

(with the docket)

Duplicate - Taxpayer

Triplicate - Revenue District Office (File)

3. Maintain a Register exclusively for VAT Credit/Refund containing the following information:

a. Claim Control Number

b. Date of receipt

c. Name of taxpayer

d. Address of taxpayer

e. TIN

f. Taxable period involved

g. Amount of claim
4. Prepare a VAT Credit Refund Control Card containing the following information:

1. Name of taxpayer

2. Address of taxpayer

3. Contact person and telephone number

4. TIN

5. Claim control number

6. Period covered

7. LA number

8. Date issued

9. Name of examiner

10. Amount claimed

11. Amount recommended for refund/credit

12. Amount approved or refund/credit

13. Date reported

14. Date approved

15. TCC/Voucher Number

16. Date of TCC/Voucher

17. Other information relevant to the claim such as details of disallowances/findings discovered in
the investigation, etc.

The control card shall be maintained for each taxpayer which should bear all information on
every application. It shall at all times be updated and alphabetically arranged for easy reference.

5. Prepare and issue letter of authority. The letter of authority to be issued shall be exclusively for
the verification of the claim for VAT refund/credit limited to the period covered in the application and
the same shall be clearly indicated on the face of the letter of authority. Issuance of letters of authority
shall be in consonance with the provisions of existing rules and regulations.

6. Post to the control card all the information available based on the approved letter of authority
and the corresponding application for tax credit/refund before release of the authority to the
investigating examiner.
7. Evaluate the application by strictly applying the audit procedures prescribed under RAMO 1-91.

8. Prepare Delinquency Verification Form (Annex "B") to verify from the Collection Division if the
taxpayer has any outstanding tax liability. The Chief, Collection Division shall forthwith certify as to
existence of any delinquent account not later than five (5) days from the date of referral. Where
practicable, similar requests for delinquency verification shall be made from other regional offices.

a. In case of delinquency, any outstanding delinquency account shall first be settled by the
claimant before the refund/tax credit certificate shall be issued whether cd i

(1) by agreeing to the issuance of a separate TCC that may be used only to pay the said account; or

(2) by paying said account in cash. Under the former, the fact that it shall be used only for the
payment of the delinquent account shall be indicated on the face of the TCC. Refund or TCC shall then
be issued for the excess of the approved claim over the delinquent account.

b. Where the assessment has been protested, the claim for refund/TCC may be given due course
provided that the protest has been filed in accordance with Revenue Regulations No. 12-85.

The original copy of the accomplished verification form shall form part of the docket of the case.

9. Prepare evaluation report supported by all the prescribed documentary requirements together
with a recommendation for the favorable grant or denial of the claim for VAT refund/tax credit for
approval by higher authorities.

10. Prepare Authority to issue VAT Credit/Refund (Annex "C") if the recommendation is for the
issuance of TCC/Refund and attach the same to the docket of the case. The Authority to Issue VAT
Credit/Refund shall be prepared in four (4) copies, distributed as follows:

Original - Attached to the docket

Duplicate - Regional Office or Office of the

Commissioner, as the case may be

Triplicate - Revenue District Office (File)

Quadruplicate - Bureau of Customs (BOC), if

applicable

Specify separately in the Authority the amounts of input taxes creditable/refundable by the BIR
and BOC.

a) Input taxes on local purchases shall be covered by TCC/refund to be issued by BIR, while

b) Input taxes on importations verified by BIR shall be covered by TCCs to be issued by BOC.
11. Forward the entire docket to the Chief, Assessment Division for review and evaluation.
Compliance for the requirements on returned dockets shall be made within fifteen (15) days from
receipt thereof.

12. Receive copy of the approved Authority to issue VAT Credit/Refund together with the docket of
the claim.

13. Cancel the original copies of purchase invoices or receipts evidencing sources of allowed or
disallowed input tax credits, in the following manner:

a. stamp prominently the words "VAT CREDIT/REFUND CLAIMED" on the face of said documents;

b. indicate date of cancellation; and

c. initial by the cancelling officer.

14. Prepare and send Notice of Approved Authority to Issue VAT Credit/Refund to BOC (Annex "D"),
whenever the approved amount has input tax on importation component, together with the copies of
the following:

a) Approved Authority to Issue VAT Credit/Refund

b) Revenue Officer's Verification/Audit Report (ROVAR)

c) Examiner's Audit Memorandum Report

d) Checklist of Audit Procedures Undertaken (CAPU)

e) Delinquency Verification Form

f) Certification from BOI, BOC, and/or EPZA that no similar claim(s) has been filed thereat for the
period covered by the application.

g) Application of VAT Credit/Refund

h) Approved Application for Zero-Rating (RR 2-88)

i) VAT return(s)

j) Invoices, import declarations, import entry documents, official receipts/confirmation receipts

k) Summary of importations made during the period

l) Summary of export sales

If Application Is For VAT Tax Credit:

16. Maintain a TCC Register and record the following pertinent information:

a. Name of taxpayer

b. Address of taxpayer

c. TIN

d. Period covered

e. Amount of TCC granted

f. TCC Number

g. Date issued cda

17. Prepare Tax Credit Certificate (BIR Form 2320) in four (4) copies, distributed as follows:

Original - Taxpayer

Duplicate - Finance Division

Triplicate - Revenue District Office (Attached

to the docket)

Quadruplicate - Revenue District Office (File)

18. Forward the TCC with the docket to the Regional Director for signature.

19. Receive the duly signed TCC together with the docket of the VAT credit/refund claim.

20. Post in the taxpayer's VAT Credit/Refund control card all the pertinent information relevant to
the approved claim for VAT credit/refund.

21. Release the original copy of the TCC to the taxpayer or his duly authorized representative.

22. File the quadruplicate copy of TCC issued in sequential order.

23. Forward the docket to the Administrative Division for safekeeping.

24. Forward all the duplicate copies of the TCCs issued to the Finance Division within ten (10) days
from the end of the month when such TCCs were issued. For district offices under Revenue Region Nos.
5, 6, 7, 8, and 9, the required transmittal shall be made within twenty four (24) hours from issuance of
such TCCs.
25. Prepare monthly report of TCCs issued in three (3) copies to be distributed as follows:

Original - Regional Director

Duplicate - Administrative Division

Triplicate - Revenue District Office (File)

Copies of the said report shall be transmitted to the concerned offices within ten (10) days of
the following month when such TCCs were issued.

If Application Is For VAT Refund:

26. Receive report of checks issued and cancelled for tax refunds from the Administrative Division
and post all the appropriate information to the taxpayer's VAT Credit/Refund control card.

B. Assessment Division

1. Receive docket containing results of verification of claims for VAT Credit/Refund.

2. Review the report of investigation and ascertain full compliance with the provisions of RAMO 1-
91 and other pertinent regulations and issuances.

3. Return the docket to the RDO whenever there are still items which need to be thoroughly
verified, explained or corrected within the prescribed period.

4. Inform in writing the taxpayer on the status of his claim in the following cases:

a. when there is a denial of the claim; and

b. when there is additional assessment.

5. Assign control number on Authority to Issue VAT Refund (ATIVR) and maintain a register for this
purpose. Numbering shall be done in sequential order and shall indicate the region number, the year of
issue and the number in the series.

Example: The first ATIVR to be issued by the Assessment Division of Revenue Region No. I,
Baguio City, for year 1994 shall be coded as follows:

CN 01-91-00001

6. Forward the reviewed docket as follows:

a. Claims for TCC - Regional Director for approval of Authority to Issue TCC (ATITCC)

b. Claims for VAT refund - Commissioner's Office for approval of ATIVR.

7. Receive the Disbursement Voucher (DV) with docket from the Finance Division for certification
as to the lawfulness and necessity of expenses (CALNE).
8. Return DV with docket and the required CALNC to Finance Division.

C. Collection Division

1. Receive request for verification of delinquent accounts from RDO concerned.

2. Verify the existence of any delinquent account of the taxpayer upon request by the RDO as
mentioned in III (A) (8) hereof.

3. Accomplish the pertinent portion of the delinquency verification form indicating therein the
outstanding tax liability of taxpayer concerned, if any.

4. Release the accomplished delinquency verification form to the RDO concerned within five (5)
days from date of referral.

D. Finance Division

If Application Is For TCC:

1. Receive duplicate copies of TCCs issued during the preceding month or day, as the case may be.
cdt

2. Record in the books of accounts all TCC's issued by Revenue District Office based on the
duplicate copies of TCCs received.

3. Transmit clear photocopies of TCCs issued by district offices to Revenue Accounting Division
within ten (10) days from receipt thereof. Transmittal of photocopies of TCCs issued by district offices
under Revenue Region Nos. 5, 6, 7, 8, and 9, shall be made on the following day when such TCCs were
received.

1. File TCCs in sequential order.

If Application Is For VAT Refund:

1. Receive approved ATIVR with docket from the Revenue District Office.

2. Prepare DV for VAT refund based on the approved ATIVR.

3. Forward the DV, ATIVR with docket to Assessment Division for certification as to lawfulness and
necessity of the expenses (BOX A of DV).

4. Receive DV, ATIVR, with docket from Assessment Division.

5. Receive Sub-Allotment Advice (SAA ) and Notice of Fund Transfer (NFT) from Budget Division.

6. Draw Journal Voucher (JV) to record the receipt of NFT and SAA.

7. Prepare request for Obligation of Allotment (ROA) to cover payment for VAT refund.
8. Assign Obligation Number to ROA.

9. Post ROA to Journal and Analysis of Obligation (JAO).

10. Certify DV as to availability of funds.

11. Forward DV and ATIVR with docket to the Assistant Director for approval.

12. Receive Reports of Checks Issued and Cancelled from the Administrative Division and record in
the Journal of Checks Issued

13. Prepare Trial Balance (Fund 105) and its supporting schedules, copy furnished Accounting
Division.

E. Administrative Division

1. Receive approved DV together with ATIVR and dockets from the Office of the Assistant Regional
Director.

2. Draw check corresponding to the amount of approved VAT refund and forward the same to the
Office of the Assistant Director.

3. Prepare Advice of Checks Issued and Cancelled for submission to LBP.

4. Receive countersigned check and release the same to taxpayer/claimant.

5. Prepare Report of Checks Issued and Cancelled for tax refunds in four (4) copies distributed as
follows:

Original - Finance Division (for COA)

Duplicate - Finance Division (file)

Triplicate - Revenue District Office

Quadruplicate - Administrative Division (File)

The report shall be submitted not later than the fifth (5th) day of the following month:

1. Submit monthly report of TCCs issued to the Accountable Forms Division not later than ten (10)
days of the following month when such TCCs were issued.

F. Assistant Regional Director's Office

1. Receive Disbursement Voucher (DV), together with Authority to Issue VAT Refund (ATIVR), and
docket from Finance Division.

2. Approved DV for payment of VAT refund.

4. Countersign checks covering VAT Refund.

G. Regional Director's Office

1. Receive Authority to Issue TCC (ATITCC) with docket from the Assessment Division for approval.

2. Forward approved ATITCC with docket to Revenue District Office for preparation of TCC.

3. Receive TCC with docket from Revenue District Office for signature.

4. Return signed TCC with docket to Revenue District Office for posting and release.

NATIONAL OFFICE

H. Budget Division

1. Receive copy of approved ATIVR from Office of the Commissioner.

2. Prepare SAA in favor of the Regional Office concerned in 5 copies distributed as follows:

Original - Finance Division

Duplicate - Budget Division

Triplicate - Accounting Division

Quadruplicate - Accounting Division

(for attachment to JV)

Quintuplicate - Accounting Division (for

attachment to DV)

3. Forward SAA to Financial and Administrative Service (FAS) for approval.

4. Forward three (3) copies of approved SAA to Accounting Division for preparation of NFT to the
regional office concerned and request for fund transfer addressed to Land Bank of the Philippines,
Quezon City Branch.

5. Receive original copy of NFT from Accounting Division and forward the same together with the
original copy of SAA to Finance Division of the concerned regional office.

I. Accounting Division

1. Receive three (3) copies of approved SAA from the Budget Division.
2. Prepare DV in three (3) copies covering transfer of funds from the bank account of the National
Office to the regional office concerned.

3. Prepare NFT in two (2) copies addressed to the regional office concerned on the basis of SAA
issued by the Budget Division.

4. Prepare request for Fund Transfer addressed to the LBP, QC Branch based on the NFT.

5. Forward the request for fund transfer, NFT and the two (2) copies of DV to FAS for approval.

6. Receive approved NFT and request for fund transfer from FAS.

7. Forward the original copy of NFT to Budget Division for mailing to regional office concerned.

8. Receive check from General Services Division (GSD).

9. Forward the check together with the request for Fund Transfer to LBP, QC Branch.

10. Consolidate Trial Balance of all regional offices (Fund 105) and supporting schedules. cdasia

J. Revenue Accounting Division

1. Receive clear photocopies of TCCs issued by district offices from the Finance Division for
monitoring purposes.

K. General Services Division

1. Receive approved Disbursement Voucher (DV) from FAS.

2. Draw check in favor of LBP, QC Branch covering transfer of funds and forward the same to FAS.

3. Prepare Advice of Checks Issued and Cancelled and submit to LBP, Quezon City Branch.

4. Transmit the original copy of DV together with duplicate copy of the check and SAA to
Commission on Audit (COA) for audit purposes.

5. Forward the check to Accounting Division for transmittal to LBP, QC Branch.

L. Financial and Administrative Service

1. Receive SAA from Budget Division for approval.

2. Receive DV covering transfer of funds, NFT, and request for fund transfer from Accounting
Division.

3. Prepare Advice of Checks Issued and Cancelled and submit to LBP, Q.C., Branch.

4. Review and approve the above documents.

6. Forward the signed NFT and request for fund transfer to the Accounting Division.

7. Countersign checks covering fund transfers.

M. Commissioner's Office

1. Receive prenumbered Authority to Issue VAT Refund (ATIVR) with docket from Assessment
Division for final evaluation and approval.

2. Furnish Budget Division, National Office copy of the approved ATIVR within twenty-four (24)
hours for facilitation of funding.

3. Return approved ATIVR with docket to the Revenue District Office concerned for cancellation of
original invoices and receipts evidencing sources of allowed or disallowed input tax credits.

4. Return the ATIVR with docket to Revenue District Office concerned for appropriate action in
case the report is denied or when additional documents are required.

IV. Effectivity

This Order shall take effect immediately upon approval. All Orders inconsistent herewith are hereby
considered revoked.

VICTOR A. DEOFERIO, JR.

Acting Commissioner

ANNEX A

Checklist of Requirements in Filing VAT Credit/Refund Claims

ANNEX B

Delinquency Verification Form

ANNEX C

Authority to Issue VAT Credit/Refund

ANNEX D-1

May 6, 1994

MEMORANDUM FOR:

The Acting Commissioner

Submitted herewith is the proposed Revenue Memorandum Order on the Modified Procedures in the
Processing of Claims for VAT Credit/Refund, for your review and approval. acd

BEETHOVEN L. RUALO

Deputy Commissioner