Supreme Court Clarifies Timelines for VAT Refund Claims

The Supreme Court (SC) has provided clarity on the deadlines for filing value-added tax (VAT) refund claims with the Bureau of Internal Revenue (BIR). In a recent ruling, the SC’s Third Division specified that for claims submitted before June 11, 2014, the 120-day period for the BIR to act on a claim starts when the taxpayer deems their documentation complete. This decision came to light in a case involving Dohle Shipmanagement Philippines Corporation, which sought a refund of unutilized input VAT for the year 2012. Dohle initially filed its claim on March 31, 2014, and later provided additional documents on July 28, 2014. According to Section 112 of the 1997 Tax Code, the BIR has 120 days from the submission of complete documents to make a decision. If the BIR does not act within this timeframe, the taxpayer has an additional 30 days to file a judicial claim with the Court of Tax Appeals (CTA), known as the 120+30-day rule. The BIR argued that Dohle’s judicial claim, filed on December 23, 2014, was late, asserting that the 120-day period should have started from the initial filing date. However, both the CTA and the SC ruled in favor of Dohle, stating that the 120-day period began on July 28, 2014, when additional documents were submitted. The SC emphasized that this rule benefits taxpayers by ensuring prompt action from the BIR. Furthermore, the SC clarified that the 30-day period for submitting additional documents, as per BIR Memorandum Circular 49-2003, applies only when the BIR requests more information, not when the taxpayer voluntarily submits it. Subsequent regulations, including RMC 54-2014 and the Tax Reform for Acceleration and Inclusion (TRAIN) Law, have altered these rules. Post-June 11, 2014, taxpayers must submit all documents at the time of filing, and since January 1, 2018, the BIR’s decision period has been reduced to 90 days. The SC outlined the rules for different periods, ensuring taxpayers understand their rights and obligations regarding VAT refund claims.