THE Bureau of Internal Revenue (BIR) just released Revenue Memorandum Circular (RMC) 24-2022 (RMC 24-2022), which expressly confirmed that the cross-border doctrine, as applied to economic zones (ecozones) or freeport zones has been rendered ineffectual and inoperative for value-added tax (VAT) purposes.
VAT is a transaction tax. It applies to sales of goods or services in the ordinary course of trade or business in the Philippines. The VAT system in general adheres to the "cross border doctrine," which means that no VAT shall form part of the cost component of products that are destined for consumption outside the territorial borders of the Philippines. Thus, export of products from the Philippines to foreign countries are subject to zero-percent VAT.
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