Last October 14, 2022, the BIR issued RMC No. 137-2022, clarifying the cost items under “other expenditures” which are subject to 0% VAT, being indispensable to the project or activity.
It provides that the list is not exclusive. Thus, expenditures not listed may be eligible for VAT zero-rating if they can be directly attributed to the REEs’ registered activity. This is the case for HMO plans acquired by REEs for personnel directly participating in the operations of their registered projects or activities as part of their compensation package. However, the VAT zero-rating does not apply to HMO plans purchased for dependents of employees or for employees who are not actively involved in the operations of registered projects or activities of REEs.
To ensure that only HMO expenses for eligible employees are given VAT zero-rating, all REEs availing of the VAT zero rate on the acquisition of HMO plans for the employees directly involved in their registered project or activity should provide their suppliers with a detailed account of the HMO plans acquired in accordance with the format in Annex "A" issued along with the circular.
This shall also be part of the documents to be submitted by the suppliers in filing the application for the VAT zero rate.
Please be guided accordingly.
Source:
P&A Grant Thornton
Certified Public Accountants
P&A Grant Thornton is the Philippine member firm of Grant Thornton International Ltd.
As published in SunStar Cebu, dated 27 October 2022
