by Maria Ofelia G. Mariano
Through challenging as it may seem, Section 112 of the National Internal Revenue Code of 1997, as amended (Tax Code) allows a taxpayer to apply for the issuance of a tax credit certificate/refund of input value-added tax (VAT) attributable to zero-rated or effectively zero-rated sales, or in case the taxpayer's registration has been cancelled due to cessation of business or due to changes in or cessation of status of his VAT registration.
It is proverbial in Philippine taxation that tax refunds are in the nature of tax exemptions and hence, strictly interpreted against the taxpayer. Tax refunds, in contrast with tax audit investigations, are generally not prioritized, much less favored, by the Bureau of Internal Revenue (BIR). Thus, a taxpayer claiming VAT refund must comply not only with the substantial, but also with the procedural, requirements prescribed under the Tax Code, specifically on the prescriptive periods in filing the claim.