Pursuant to the enactment of Republic Act (R.A.) No. 12066, otherwise known as the CREATE MORE (Maximize Opportunities for Reinvigorating the Economy) Act, the Bureau of Internal Revenue (BIR) issued Revenue Regulations (RR) No. 9-2025, which specifically applies to the treatment of local sales of goods and/or services by Registered Business Enterprises (RBEs).
Tax Treatment
All local sales of goods and services of RBEs shall be subject to 12% Value-Added Tax (VAT), regardless of the RBE's income tax regime or geographical location, including sales within freeports or economic zones. Since the CREATE MORE Act has shifted the liability to pay and remit VAT to the buyer of goods or services, it is important to consider whether the buyer is engaged in business or not.
Business-to-Business (B2B) Transactions
If the buyer is engaged in business or in the case of a Business-to-Business (B2B) transaction, the following rules shall be observed:
1. Invoicing by the RBE-Seller and Payment of the Buyer
a. The seller shall bill the transaction inclusive of VAT that is shown as a separate line item in the invoice tagged as “VAT on Local Sales.” However, the total amount due to the seller shall be exclusive of VAT since the remittance will be on account of the buyer.
b. The buyer shall pay the purchase price to the seller, exclusive of VAT.
2. Liability to File and Pay VAT – The buyer shall be liable to pay and remit the corresponding VAT to the BIR.
3. Manner of Filing and Payment by the Buyer
a. For purchase of goods from economic zones or freeports, the filing and payment of VAT on B2B local sales transactions shall be on a per transaction basis using the BIR Form to be prescribed by the BIR through a separate revenue issuance. Since this form is not yet available, BIR Form No. 0605 shall be used in the meantime, and it shall immediately be transmitted to the seller as a requirement prior to the release of goods from the economic zone or freeport.
b. For the purchase of services from economic zones or freeports, the filing and payment of VAT on B2B local sales transactions shall be on a monthly basis using the BIR Form to be prescribed by the BIR as a separate revenue issuance. Since this form is not yet available, BIR Form No. 1600-VT shall be used in the meantime, and it shall be filed on or before the tenth day of the following month in which the transaction transpired. The buyer shall then issue the withholding VAT Certificate (BIR Form No. 2307) to the seller either on the aggregated quarterly VAT or upon demand by the seller.
4. Compliance Requirement for RBE-Sellers
VAT-registered sellers are required to file quarterly VAT returns (QVRs) and shall declare as sales subject to VAT all B2B local sales with the corresponding BIR Form No. 2307/0605 issued by their buyers which shall serve as proof in claiming VAT credit therefrom. Non-VAT registered sellers are not required to file QVRs.
Non-VAT registered RBEs, or those under the 5% special corporate income tax (SCIT) regime, are not obligated to file QVRs but are required to submit a quarterly summary list of local sales to the BIR.
Business-to-Consumer (B2C) Transactions
Since the buyer is not engaged in business, payment and remittance of VAT is not administratively feasible. The buyer shall therefore pay the corresponding VAT due on the transaction, and the RBE-seller shall be responsible for remitting it to the government. The compliance requirements may vary, therefore, the BIR also clarified that there is a need to distinguish the income tax regime of the registered activity of the RBE-seller.
If the registered activity of the seller is under the 5% SCIT regime, for the VAT on local sales paid by the buyer, the seller shall file BIR Form No. 0605 in the meantime until a new form is prescribed by the BIR in a separate issuance. This shall be filed on the 10th day of the month following the transaction.
If the registered activity of the seller is under the Income Tax Holiday (ITH) or the enhanced deduction regime (EDR), since this requires VAT registration, the RBE-seller shall file the corresponding QVRs for the local sales subject to VAT.
Optional VAT Registration
RBE-sellers that are under the 5% SCIT regime may opt to register for VAT for its local sales. The registration will not affect any existing fiscal and non-fiscal incentives that are directly attributable to the registered activity of the RBE. However, if the RBE opts to do so, it shall not be entitled to cancel such registration for the next three (3) years pursuant to Section 236(G) of the Tax Code.
Claim of Input Tax by VAT-Registered Buyers
Only actual VAT payments can be claimed by VAT-registered buyers as input VAT. Documents supporting the claim, such as a sales invoice showing VAT and a copy of BIR Form No. 1600VT or 0605, are needed. Non-VAT registered buyers cannot claim input VAT, and the VAT paid is considered as part of the cost or charged to an expense account.
Transitory Provisions and Effectivity
RBE-sellers with remaining registered manual invoices with “VAT/VAT Amount” may be stamped with “VAT on Local Sales” until they are fully consumed without the need for BIR approval. Any new layout, upon subsequent application for Authority to Prin Invoices, should replace the term “VAT/VAT Amount” in the breakdown with “VAT on local sales.”
RBE-sellers using registered Cash Register Machines/Point-of-Sales (CRM/POS) or Computerized Accounting System (CAS) shall reconfigure their system by changing “VAT/VAT Amount” with “VAT on local sales” or adding the same in case such reconfiguration is not applicable, until December 31, 2025, subject to the post-verification of the BIR.
RR No. 09-2025 took effect on March 14, 2025, which is 15 days following its publication on the BIR official website on February 27, 2025.
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 02 April 2025
