Rajah & Tann Regional Round-Up
your snapshot of key legal developments in Asia
Issue 3 - Jul/Aug/Sep 2021

BIR Suspends Imposition of VAT on Local Purchases of RBEs

The Bureau of Internal Revenue ("BIR") suspended the implementation of Revenue Regulation ("RR") No. 9-2021, which would have imposed 12% VAT on the local purchases of Philippine Economic Zone Authority ("PEZA")-registered business enterprises ("RBEs"). 

Previously, the National Internal Revenue Code ("Tax Code") only imposed a 0% VAT on the sale of goods and services to RBEs. However, the Tax Reform for Acceleration and Inclusion ("TRAIN") Law – which amended the Tax Code in 2018 – imposed 12% VAT on the local purchases of RBEs, after fulfillment of certain conditions in the TRAIN Law.

 The Tax Code was again amended through the Corporate Recovery and Tax Incentives for Enterprises ("CREATE") Law, which reintroduced 0% VAT on local purchases of RBEs. To avail themselves of the 0% VAT, these local purchases must be directly and exclusively used in the RBEs' registered projects or activities. 

Despite the effectivity of the CREATE Law in April 2021, the BIR still issued RR No. 9-2021 in June 2021 that would have implemented the 12% VAT on local purchases of RBEs under the TRAIN Law. 

PEZA and various RBEs pointed out the apparent conflict between the TRAIN Law and the CREATE Law to the Department of Finance ("DOF"), which oversees BIR. They pleaded with DOF to defer the implementation of RR No. 9-2021 until DOF and BIR finally reconcile the conflicting provisions of the TRAIN Law and the CREATE Law on the VAT on local purchases of RBEs.

Thus, BIR enacted RR No. 15-2021 to suspend the implementation of RR No. 9-2021 until it enacts another issuance on the matter.

Please note that whilst the information in this Update is correct to the best of our knowledge and belief at the time of writing, it is only intended to provide a general guide to the subject matter and should not be treated as a substitute for specific professional advice.


Gatmaytan Yap Patacsil Gutierrez
& Protacio (C&G Law)
30/F 88 Corporate Center
Sedeño cor. Valero Streets
Salcedo Village, Makati City 1227


Ben Dominic R Yap
Managing Partner
D +632 8894 0377
F +632 8552 1978

Jaime Renato B Gatmaytan
D +632 8894 0377
F +632 8552 1978

Norma Margarita B Patacsil
D +632 8894 0377
F +632 8552 1978

Anthony Mark A Gutierrez
D +632 8894 0377
F +632 8552 1978

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