In any social or professional collaboration, there may arise instances wherein there is a misinterpretation of certain facts, and in such cases, reconvening and circling back can prove to be one of the most efficient solutions. Much like any relationship, the one between the taxpayer and the BIR is one that revolves around effective communication.
However, in Revenue Regulation (RR) No. 08-2025, a review of questions of fact was not included as an option for taxpayers whose claims for VAT refunds were denied. In terms of factual issues, the taxpayer will no longer be provided with a chance to clear up any misinterpretations of the BIR, if any.
General Overview of an Input Tax Refund
Tax refunds are considered tax exemptions and are construed strictly against the taxpayer. Based on the Tax Code, a tax refund must conform to certain rules, procedures, and pertinent documentary requirements for compliance by the taxpayer. Some of these include the filing with the proper venue, adhering to the prescribed period by law, and the submission of the complete documentary requirements. Applications for tax refunds may be filed either with the Revenue District Offices (RDO) or the Large Taxpayers District Office (LT) of the Bureau of Internal Revenue (BIR) having jurisdiction over the taxpayer.
The application for VAT refund must be filed within two (2) years from the close of the taxable quarter when the sales were made. The BIR is then given a 90-day period to process and assess the VAT refund upon receipt of the said application. The results of BIR’s review can be approval, partial or full denial, or possibly, in some cases, not acted upon by the BIR.
Prior to the issuance of Revenue Regulation (RR) No. 08-2025, if the application is denied, the taxpayer may file a Request for Reconsideration within fifteen (15) days from receipt of the full or partial denial. The Commissioner shall decide on the request for reconsideration within fifteen (15) days from receipt thereof. Failure to file a request for reconsideration within the fifteen (15)-day period shall render the decision final.
In case of full or partial denial of the request for reconsideration, or failure on the part of the Commissioner to act on the application for refund or request for reconsideration within the periods prescribed above, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the request for reconsideration, or after the expiration of the ninety (90)-day period to decide on the application for refund, or after the lapse of the fifteen (15)-day period to decide on the request for reconsideration in cases where no action is made by the Commissioner on the request for reconsideration, appeal the decision with the Court of Tax Appeals.
A more in-depth discussion on the particularities of the tax refund may be found here: https://www.grantthornton.com.ph/insights/articles-and-updates1/lets-talk-tax/refund-of-excess-input-vat-clarified and https://www.grantthornton.com.ph/technical-alerts/tax-alert/2024/circularizing-republic-act-no-12066-amending-various-sections-and-adding-new-sections-of-the-national-internal-revenue-code-of-1997/.
The Issuance of Revenue Regulation 08-2025
On 27 February 2025, the BIR issued RR 08-2025 regarding Procedures in the Resolution of Requests for Reconsideration on the Denial of Claim for Refund on Value Added Tax, among others. The said RR covers all requests for reconsideration involving applications for refund filed on or after 01 April 2025.
What is a Request for Reconsideration?
Under Sec. 3 of RR 08-2025, a request for reconsideration is a plea of re-evaluation of a pure question of law on a given set of facts or circumstances based on previously submitted documents and arguments without the need for the introduction of new or additional documents.
To further understand the definition above, we must also distinguish what is a question of law and a question of fact. The same regulation provided definitions therein under the same section are as follows:
1. Question of Law – A question of law arises when there is doubt as to what the law is on a certain state of facts. For a question to be one of law, it must not involve an examination of the probative value of the evidence presented by the applicant. The resolution of the issue must rest solely on what the law provides on the given set of circumstances.
2. Question of Fact – Involves factual determination and appreciation of facts based on documentary evidence; it exists when the doubt or difference arises as to the truth or falsehood of alleged facts.
Based on the foregoing, the request for reconsideration may only deal with legal dilemmas revolving around a certain set of facts, evidence, and circumstances.
The Request for Reconsideration only covers questions of law
Sec. 4 of RR 08-2025 lists down guidelines for both the taxpayer-claimant and the BIR in the processing of requests for reconsideration. Things of note are those stated under paragraphs 2 and 3 of Sec. 4, which states:
2. All requests for reconsideration on full or partial denial of a claim for refund should be limited to questions of law. Any issue/s relating to factual determination or appreciation should have been threshed out during the initial processing of the claim for refund and contained in the notice of full or partial denial. Consequently, any factual issue raised in the request for reconsideration shall no longer be entertained.
3. Only the documents previously attached to the taxpayer-claimant’s application for a tax refund relevant to the issue raised may be submitted with the request for reconsideration. The introduction of new evidence/documents, as well as questions of law already addressed in the Notice of Full or Partial Denial, shall not be allowed during the request for reconsideration.
The aforementioned paragraphs do not consider questions of fact that may be tackled under the request for reconsideration. As discussed above, questions of fact involve factual determination and appreciation of facts wherein a disparity of interpretation may arise between the understanding of the Processing Office and the intent of the taxpayer-claimant.
The term ‘request for reconsideration,’ for assessment purposes, is also defined under Sec. 3.1.4 of RR No. 12-99, as amended by RR 18-2013, which defines it as “a plea of re-evaluation of an assessment on the basis of existing records without the need for additional evidence. It may involve both a question of fact or of law or both.”
It should be noted that after comparing the two definitions, the request for reconsideration for input tax refund purposes does not cover questions of fact and solely relies on the appreciation of the processing office of the documents submitted by the taxpayer-claimant. The taxpayer-claimant will no longer be afforded a chance to explain the documents or information submitted in instances wherein the Processing Office has a different appreciation of the documents or factual information given.
Lingering Questions
With the foregoing, does this mean that the decision of the BIR on the factual issues becomes final and executory since the same is not allowed to be the subject matter of the Request for Reconsideration? If yes, what are the remedies of the taxpayer if he wishes to challenge the denial based on factual issues? Should the taxpayer have the option to skip the Request for Reconsideration process and directly go to the CTA if he wishes to challenge the denial of BIR based on factual issues?
Nonetheless, we are one with the BIR in providing the taxpayer-claimants with much clearer guidelines in instances wherein the applications for its claim for refund are denied due to legal issues. We hope though that there can also be similar guidelines to resolve concerns regarding denial based on factual determination or appreciation of the documents and information submitted to BIR.
As published in BusinessWorld, dated 11 March 2025
