BIR: VAT refund reforms to attract more investors

The Bureau of Internal Revenue (BIR) expects the recently issued rules simplifying the value-added tax (VAT) refund process to bolster the Philippines’ competitiveness as an investment destination, especially among foreign enterprises.

In an interview aired over the weekend, BIR Commissioner Romeo Lumagui Jr. said the reforms are aligned with the Marcos administration’s commitment to enhancing the ease of doing business in the country.

“Our expectation is that foreign investors will see that the government is serious about making it easier to do business in the Philippines,” Lumagui said. “We’re hoping that this will encourage more foreign companies to invest here.”

The changes are part of the implementation of Republic Act No. 12066, or the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act, which amended provisions of the National Internal Revenue Code to provide greater tax relief and investment incentives, particularly for exporters.

Signed into law in early 2025, CREATE MORE aims to build on the original CREATE Act by reducing red tape and strengthening the country’s tax incentive framework to attract high-value investments.

To operationalize this reform, the BIR issued Revenue Memorandum Circular (RMC) No. 37-2025 on April 10. The new circular significantly streamlines the documentary requirements for VAT refund applications, which has long been cited by businesses as a cumbersome and time-consuming process.

Under the revised guidelines, certified true copies of invoices or receipts may now be submitted in lieu of original documents. Three previously required documents — including proof of business registration and customs import declarations — have been removed. Exporters filing VAT refund claims after April 1, 2025, are also no longer required to present physical shipping documents such as bills of lading.

Instead, a certification from the Department of Trade and Industry’s (DTI) Export Marketing Bureau will serve as sufficient proof of export, based on a newly signed agreement between the BIR and DTI.

“We’ve simplified coordination with the DTI so that each agency can fulfill its role without duplication of requirements,” Lumagui said. “We continue to study which other processes we can streamline to improve business operations in the country.”

The new rules also allow for the reuse of prior certifications from the Bureau of Customs for capital goods VAT claims that involve amortization, provided they have been previously submitted.

In addition to reducing compliance burdens, the CREATE MORE Act also reverses certain transactions previously subject to 12 percent VAT under the TRAIN Law, restoring their eligibility for zero-rating and VAT refund claims. These include specific sales of goods and services related to export-oriented operations.

Government officials hope that the reforms will send a strong signal to international investors about the Philippines’ intent to create a more transparent, efficient, and investor-friendly tax environment.