BIR clarifies exporters’ VAT refunds during certification transition

Qualified export-oriented enterprises may claim refunds of value-added tax paid on eligible local purchases and importations while awaiting their zero-rating certifications during the transition period, the Bureau of Internal Revenue said.

The clarification could help eligible exporters recover funds tied up in input taxes, making more cash available for operating expenses, including wages and supplier payments. Documentary requirements and restrictions against duplicate claims remain safeguards for public funds.

The BIR, led by Commissioner Charlito Martin R. Mendoza, issued Revenue Memorandum Circular No. 96-2026 to clarify the treatment of VAT incurred while enterprises awaited certification from the Department of Trade and Industry’s Export Marketing Bureau, or DTI-EMB.

“Export-oriented enterprises received their VAT zero-rating certifications on different dates during the transition period. We are clarifying how VAT incurred while these certifications were being processed should be treated so qualified export-oriented enterprises will have a clear basis for their refund claims,” Commissioner Mendoza said.

Issued on Sept. 7, 2026, the circular amends the VAT refund guidelines under RMC No. 37-2025.

It covers VAT incurred on local purchases and importations attributable to qualified zero-rated sales beginning Nov. 28, 2024, and before an enterprise received its DTI-EMB certification.

To qualify, the enterprise’s certification must have been issued within the prescribed transition period, which ended Dec. 31, 2025.

“Our objective is to ensure fair and consistent tax treatment for qualified export-oriented enterprises during the transition to the new zero-rating certification system. If they complied with the requirements and their certification was issued within the prescribed period, the VAT they properly incurred while waiting may be refunded in accordance with the law,” Commissioner Mendoza added.

Refund claims remain subject to Section 112 of the National Internal Revenue Code, as amended, including proper substantiation and proof that the input VAT is directly attributable to qualified zero-rated sales.

VAT already reimbursed, credited, adjusted, recovered from suppliers or otherwise utilized cannot be included in a refund claim.

Enterprises that met the 70% export threshold in the preceding taxable year but failed to secure the required DTI-EMB VAT zero-rating certification, including during the transition period, are not entitled to a VAT refund covering the immediately succeeding year.

However, unused input VAT may be carried forward to subsequent taxable quarters and applied against future VAT liabilities under existing tax rules.

The certification system forms part of the implementation of Republic Act No. 12066, or the CREATE MORE Act, which provides VAT zero-rating for qualifying local purchases of goods and services and VAT exemption for qualifying importations by export-oriented enterprises.

The DTI-EMB determines and certifies compliance with the 70% export threshold, while the BIR retains authority to conduct post-audit verification.

The BIR said the issuance supports its continuing efforts to make tax administration clearer and more predictable for businesses.

The agency linked the measure to President Ferdinand R. Marcos Jr.’s direction to improve the business environment and Finance Secretary Frederick Go’s push for reforms supporting compliance, investment and ease of doing business.