Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

ECEWED

“ TNOV 2016

IT

SEVENTEENTH CONGRESS
First Regular Session

HOUSE BILL NO, 4267

Introduced by RE

, EVELINA G, ESCUDERO

EXPLANATORY NOTE

This bill has the intention of making efficient and effective the administration of claims for
tax refunds and tax credits under the National Internal Revenue Code, specifically Section 112,
Chapter I, Title IV thereof, as amended. It proposes a two pronged approach: 1) the Bureau of
Internal Revenue (BIR) is given more time to assess and deliberate on applications for claims for
refunds and tax credits; and 2) the Court of Tax Appeals (CTA) is relieved of the duty to rule on.
such claims more often thereby declogging its court dockets.

Consequently, as a primary administrative function where complete submission of all
documents is required from qualified taxpayers, claims for tax refunds and tax credits can
contribute to attracting investments, foreign and domestic, in the Philippines."As a form of a
business incentive, it is quite imperative that the policy on the matter must be defined and
administered with efficiency. Bringing it in practice as a litigated matter negates the purpose of
refunds and tax credits, which could only mean more expenses and lengthier realization of
benefits.

Hence, it is r

spectfully submitted that this proposed measure be acted upon with dispatch,



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
First Regular Session

4267

HOUSE BILL NO.

“UDERO

AMENDING SECTION 112, CHAP! £ LV OF THE NATIONAL INTERNAL
REVENUE CODE, AS AMENDED

Be it enacted by the Senate and the House of Representatives of the Republic of the
Philippines in Congress assembled:

SECTION 1. Section 112, Chapter I, Title IV of the National Internal Revenue Code, as
amended, is hereby further amended to read as follows:

“Section 112. Refimnds or Tax Credits of Input Tax. -

(A) Zero-rated or Effectively Zero-rated Sales. - any VAT-registered person,
whose sales are zero-rated or effectively zero-rated may, within [two (2) THREE
(3) years after the close of the taxable quarter when the sales were made, apply for
the issuance of a tax credit certificate or refund of creditable input tax due or paid
attributable to such sales, except transitional input tax, to the extent that such input
tax has not been applied against output tax: Provided, however, That in the case of
zero-rated sales under Section 106(A)(2)(a)(1), (2) and (B) and Section 108 (B)(1)
and (2), the acceptable foreign currency exchange proceeds thereof had been duly
ounted for in accordance with the rules and regulations of the Bangko Sentral
ng Pilipinas (BSP); Provided, further, That where the taxpayer is engaged in zero-
rated or vely zero-rated sale and also in taxable or exempt sale of goods of
properties or services, and the amount of creditable input tax due or paid cannot
be directly and entirely attributed to any one of the transactions, it shall be
allocated proportionately on the basis of the volume of sales

al

(B) Capital Goods. - A VAY -registered person may apply for the issuance of a tax
credit certificate ot refund of input taxes paid on capital goods imported or locally
purchased, to the extent that such input taxes have not been applied against output
taxes. The application may be made only within [two (2)] THREE (3) years after
the close of the taxable quarter when the importation or purchase was made.

(C) Cancellation of VAT Registration. - A person whose registration has been
cancelled due to retirement from or cessation of business, or due to changes in or
cessation of status under Section 106(C) of this Code may, within [two (2)]
THREE (3) years from the date of cancellation, apply for the issuance of a tax



credit certificate for any unused input tax which may be used in payment of his
other internal revenue taxes.

(D) Period within which Refund or Tax Credit of Input Taxes shall be Made. - In
proper cases, the Commissioner shall grant a refund or issue the tax credit
certificate for creditable input taxes within [one hundred twenty (120)] ONE
HUNDRED EIGHTY (180) days from the date of submission of complete
documents in support of the application filed in accordance with Subsections (A)
and (B) hereof,

In case of full or partial denial of the claim for tax refund or tax credit, WHICH
SHALL HAVE BASIS IN FACT OR LAW OR BOTH [or the failure on the
part of the Commissioner to act on the application within the period prescribed
above], the taxpayer affected may, within thirty (30) days from the receipt of the
decision denying the claim {or after the expiration of the one hundred twenty day-
period], appeal the decision [or the unacted claim] with the Court of Tax Ap
FAILURE ON THE PART OF THE COMM! IONER TO ACT ON THE.
CLAIM FOR TAX REFUND OR TAX CREDIT WITHIN ONE HUNDRED
EIGHTY (180) DAYS FROM THE DATE OF SUBMISSION OF
COMPLETE DOCUMENTS IN SUPPORT OF THE APPLICATION
FILED IN ACCORDANCE WITH SUBSECTIONS (A) AND (B) HEREOF
SHALL BE TANTAMOUNT TO APPROVAL.

(E) Manner of Giving Refund. - Refunds shall be made upon warrants drawn by
the Commissioner or by his duly authorized representative without the necessity
of being countersigned by the Chairman, Commission on Audit, the provisions of
the Administrative Code of 1987 to the contrary notwithstanding: Provided, That
refunds under this paragraph shall be subject to post audit by the Commission on
Audit.”

SEC, 2. Amendatory and Repeating Clause. — Republic Act No, 8424, as amended.
specifically Section 112, Chapter I, Title LV. thereof, and other provisions inconsistent herewith are
hereby amended, repealed or modified accordingly. Revenue Memorandum Circular No. 54-2014
of the Bureau of Internal Revenue and all other laws, orders and proclamations, rules, circulars, and
regulations or parts thereof, inconsistent with or contrary to the provisions of this Act or its
purposes are likewise hereby amended, repealed or modified accordingly

SEC. 3. Separability Clause, If any provision or part hereof is held in
unconstitutional, the remainder of the law or the provision not otherwise affected shall remain valid
and subsisting

SEC. 4, Effectivity Clause. This Act shall take effect fifteen (15) days from its publication

in the Official Gazette or at least two newspapers of national circulation,

Approved,