RR No. 5 – 2024

RR No. 5 – 2024 Ease of Paying Taxes on Tax Refunds

The Bureau of Internal Revenue issued RR No. 3-2024 Implementing Sections 112(C), 112(D), 76(C), 204(C), and 229 of the Tax Code as amended by the Ease of Paying Taxes (EOPT) Act., otherwise known as the “Ease of Paying Taxes Act” on Tax Refunds  

Sections covered include: 

  • 112(C): Risk-based verification of VAT refund claims. 
  • 112(D): Taxpayer and BIR liability in case of COA disallowance. 
  • 76(C): Refund of excess income tax credits for dissolved or ceased businesses. 
  • 204(C): Processing of tax refunds within 180 days, except for VAT refunds. 
  • 229: Policies for judicial claims. 

Key Provisions: 

1. Risk-Based Approach for VAT Refunds: 

  • Claims classified as low, medium, or high-risk. 
  • Medium/high-risk claims subject to audit. 
  • Specific conditions and limitations for classification. 
Risk Level Submission of complete documentary requirements prescribed by BIR Scope of verification of Sales Scope of verification of Purchases 
Low Yes No verification No verification 
Medium Yes At least 50% of the amount of sales and 50% of the total invoices/receipts issued including inward remittance and proof of VAT zero-rating At least 50% of the total amount of purchases with input tax claimed and 50% of suppliers with priority on “Big Ticket” purchases 
High Yes 100% 100% 

2. Liability in Case of COA Disallowance: 

  • Refunds approved by BIR are subject to the COA post-audit. 
  • Taxpayer liable for disallowed amounts; BIR employees may face administrative penalties. 

3. Credit/Refund of Excess Income Tax: 

  • Regular claims and those due to dissolution or cessation of business. 
  • Strict rules for application and verification. 
  • Refunds after mandatory audit and settlement of all liabilities. 

4. Processing of Tax Credit/Refund Claims: 

  • BIR to process within 180 days from complete document submission. 
  • Claims denied can be appealed to the Court of Tax Appeals (CTA). 
  • Penalties for BIR officials causing delays. 

5. Judicial Claims for Credit/Refund: 

  • Requires prior filing of a claim with the Commissioner. 
  • Can be filed after full/partial denial or no action within 180 days. 

See below:

RR No. 5 – 2024

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