DEALING with tax compliance, especially when it comes to value-added tax (VAT) refunds, remains a complex challenge for businesses. In the case of zero-rated sales to persons not doing business in the Philippines, a taxpayer-claimant needs to submit the original sales documents to the Bureau of Internal Revenue (BIR) along with the contracts of customers, certificate of inward remittance and negative certification of the nonresident foreign clients from the Securities and Exchange Commission (SEC). This is in compliance with Section 108 (B) (2) of the National Internal Revenue Code of 1997 (Tax Code), as amended.
To validate input tax from purchases, the taxpayer-claimant should submit original sales invoices, official receipts from vendors and proof of payment for big-ticket items — purchases that account for more than 5 percent of the taxpayer's annual gross purchases — even though the Tax Code does not explicitly require proof of payment to substantiate big-ticket transactions.
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