RMC No. 21-2024

RMC No. 21-2024 clarifies Q&A No. 31 of RMC No. 49-2022. Under that earlier guidance, some importers of petroleum products in freeport zones or special economic zones that are Registered Export Enterprises (REEs) enjoying the 5% GIT or SCIT — with no other VAT-subject activities — changed their registration from VAT to non-VAT. However, Section 295(F) of the Tax Code (as amended by the CREATE Act) requires petroleum importers, including those in free zones, to pay applicable duties and taxes on importation, with refunds available for direct or indirect export of petroleum products and/or tax-exempt sales under RR No. 4-2022. Since Section 112(A) of the Tax Code allows only VAT-registered persons to file for VAT refund, the BIR now permits REEs on the 5% GIT or SCIT within freeport zones or special economic zones that directly import petroleum products and have no other VAT-subject activities to register as VAT taxpayers so they can claim refund of input VAT from petroleum importation attributable to zero-rated sales. The Circular applies prospectively; previous transactions of importers that changed to non-VAT under RMC No. 49-2022 are not covered.