On January 15, 2021, The Bureau of Internal Revenue (BIR) released Revenue Memorandum Circular No. 36-2021 (RMC No. 36-2021).
This announcement was released to inform Filipino Taxpayers that there will be a shift from a Final to a Creditable System on Value-Added Tax (VAT) Withheld on Sales to the Government or Any of Its Political Subdivisions, Instrumentalities, or Agencies, Including Government-Owned or -Controlled Corporations (GOCCs).
With this new amendment, the following changes have been made to the Monthly and Quarterly VAT Returns:
- BIR Form No. 2550M
- 20B: Input Tax on Sale to Government will not be filled out and deactivated on the Electronic Payment and Filing System (eFPS).
- 23C: VAT withheld on Sales to Government will be reflected in the creditable VAT.
- Schedule 4: Input Tax Attributable to Sale to Govt. will not be filled out and deactivated on the eFPS.
- Schedule 8: VAT withheld on Sales to Govt. will be reflected in the details of creditable VAT.
- BIR Form No. 2550Q
- 23B: Input Tax on Sale to Govt will not be filled out and deactivated on the eFPS
- 26D: VAT withheld on Sales to Govt. will be reflected in the creditable VAT
- Schedule 4: Input Tax Attributable to Sale to Govt. will not be filled out and deactivated on the eFPS
- Schedule 8: VAT withheld on Sales to Govt. will be reflected in the details of creditable VAT
The government or any of its political subdivisions, instrumentalities, or agencies that are required to withhold creditable VAT should use the “Monthly Remittance Return of Value-Added Tax Withheld” (BIR Form No. 1600-VT) for filing and remittance of the amount withheld. If eFPS is being used, then BIR Form No. 1600 can be used instead due to lack of availability.
Along with this, VAT taxpayers shall issue Certificate of Creditable Tax Withheld at Source through BIR Form No. 2307 using Alphanumeric Tax Code No. WV010 for purchases of goods or Tax Code No. WV020 for purchases of services. This can be used as proof by VAT taxpayers in claiming VAT credit during their monthly and quarterly VAT declarations.
How We’ve Adjusted our System
Prior to the RMC changes, a Schedule 4 banner would show when a Sales to Government transaction was added. Input Tax Attributable to Sales to Government must be completed before you will be allowed to file your VAT return.
With the new amendments, Schedule 4 will be removed as an option and you will no longer see this banner.
Along with this, we’ve also adjusted the ability to edit line 23C for Form 2550M and line 26D for 2550Q. Forms 2307 will only be shown if they have alphanumeric tax code WV010 (Goods) or WV020 (Services), as these are the only ATC codes allowed by the memorandum to be credited in your VAT Returns. When populating your Income Tax Returns and editing the Credits and Payment section, this process will be reversed. All Forms 2307 that have ATC WV010 (Goods) and WV020 (Services) will no longer be shown to prevent users from mistakenly adding them as creditable certificates.
You will now be able to file your Value-Added Tax Returns with the changes due to RMC 36-2021, implemented on our platform. Once registered with your company of choice, you can electronically generate, file, and pay your taxes through JuanTax! We do the work, so you don’t have to, sign up today for FREE to learn more.