From zero to 12: VAT on exporters

It has been more than three years since the enactment of Republic Act (RA) 10963, otherwise known as the "Tax Reform for Acceleration and Inclusion (Train) Act." If you recall, under the Train Act, certain transactions previously taxed at zero rate shall be subject to 12-percent value-added tax (VAT) upon the implementation of the enhanced VAT refund system and cash refund of all pending VAT claims as of Dec. 31, 2017. This significant shift on VAT, which raised many concerns among the registered enterprises within separate custom territories back in 2018, mainly among Philippine Economic Zone Authority (PEZA)-registered entities, shall now be in full force and effect.

On June 9, 2021, the Bureau of Internal Revenue (BIR) issued Revenue Regulations (RR) 9-2021 to announce that conditions set forth in Train have been fully satisfied. As such, sales by local suppliers to exporters, such as PEZA-registered entities, are now subject to 12-percent VAT.