Cutting the Red Tape: BIR Simplifies VAT Refund Documentary Requirements Under CREATE MORE Act

Tags: VAT refund, BIR RMC No. 37-2025, Republic Act No. 12066, CREATE MORE Act, Section 112 NIRC, VAT refund documentary requirements, tax reform Philippines, BIR updates 2025

---

On April 10, 2025, the Bureau of Internal Revenue (BIR) took a bold step towards reinforcing ease of doing business in the Philippines by issuing Revenue Memorandum Circular (RMC) No. 37-2025, streamlining the documentary requirements for VAT refund claims. 

This move is directly aligned with the implementation of reforms introduced under Republic Act No. 12066, otherwise known as the CREATE MORE Act, which amends several provisions of the tax code to encourage investments, improve taxpayer service, and foster economic growth.

Understanding the Legal Backbone: RA No. 12066 and Section 112 of the NIRC

Republic Act No. 12066, or the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act, builds upon the original CREATE law by enhancing the tax incentive system and correcting structural inefficiencies, particularly in the processing of Value-Added Tax (VAT) refund claims.

A key provision impacted by this reform is Section 112 of the National Internal Revenue Code (NIRC), as amended, which governs the refund or credit of input taxes. Under this section, a VAT-registered person whose sales are zero-rated or effectively zero-rated is entitled to claim a refund of unutilized input VAT—provided the claim is duly supported by complete documents.

However, the historical challenge has been the burdensome and voluminous list of documents required for VAT refund applications, leading to delays, taxpayer frustration, and backlogs in processing.

Enter RMC No. 37-2025: A Game-Changer for VAT Refund Efficiency

The issuance of RMC No. 37-2025 signals a fundamental shift in the way the BIR handles VAT refund claims. It simplifies the list of required documents, eliminates redundancies, and sets clearer expectations for both taxpayers and revenue officers.

Key Highlights of RMC No. 37-2025

1. Standardized Checklist of Requirements
   
   
   • RMC No. 37-2025 provides a standardized and streamlined checklist of documentary requirements applicable to all VAT refund claims under Section 112.
   • This ensures uniformity and consistency in submission and review, reducing instances of arbitrary or unnecessary document requests.
2. Elimination of Redundant Documents
   
   
   • Several previously required documents that merely duplicate information or are already in the BIR’s database have been removed.
   • For example, some documents already filed through eFPS or eBIRForms no longer need to be resubmitted.
3. Shift Towards Digital Verification
   
   
   • Emphasis is now placed on digital accessibility and cross-referencing, which encourages the use of electronically filed data and lessens the reliance on hard copies.
   • This is in line with the government’s push towards digital transformation in public service.
4. Application-Specific Clarifications
   
   
   • RMC 37-2025 clearly distinguishes between zero-rated sales, effectively zero-rated sales, and cancellation of registration due to retirement or cessation of business, allowing taxpayers to understand exactly what documents are required based on the type of VAT refund being claimed.
5. Removal of the Notarization Requirement
   
   
   • As a major relief to taxpayers, the BIR has removed the requirement to have supporting affidavits and application letters notarized, unless required by specific situations.

The Problem with the Old System

Before this reform, the VAT refund process in the Philippines was widely criticized for being:

• Cumbersome – with up to 30+ documentary requirements per claim;
• Inconsistent – with regional BIR offices interpreting and implementing rules differently;
• Slow – with refunds taking months or even years to process;
• Discouraging for investors – particularly for export-oriented companies entitled to VAT refunds on zero-rated sales.

This system created a cash flow strain, especially for foreign investors and exporters, who could not access funds locked up in input VAT credits.

CREATE MORE Act's Vision: A Refund System That Works

The CREATE MORE Act seeks to restore trust in the tax incentive system by ensuring that entitlements—such as VAT refunds—are timely, fair, and predictable. Section 112 explicitly provides a 90-day period for processing claims from the date of complete submission, a deadline the BIR has been mandated to observe.

By streamlining documentary requirements, RMC No. 37-2025 removes administrative bottlenecks and supports the BIR’s commitment to meet this 90-day deadline.

Implications for Taxpayers and Businesses

1. Better Cash Flow Management

• Faster refunds mean businesses get their money back sooner, enhancing liquidity and reinvestment potential.

2. Improved Ease of Doing Business

• Investors, especially exporters and PEZA locators, can operate with more confidence in the tax system.

3. Lower Compliance Costs

• Preparing fewer documents means lower professional fees and administrative burden for companies.

4. Enhanced Transparency

• The BIR’s move to publish a clear and concise checklist under RMC No. 37-2025 helps reduce discretion and potential corruption, strengthening taxpayer trust.

5. Encouragement of Voluntary Compliance

• When taxpayers see the system working efficiently, they are more likely to comply voluntarily with VAT rules and other tax obligations.

How to Prepare Your VAT Refund Application in 2025

To take full advantage of the streamlined process, here are practical tips for businesses:

1. Familiarize Yourself with the Updated Checklist
   
   
   • Read and understand RMC No. 37-2025 thoroughly. Ensure your tax team knows what documents are now mandatory, optional, or removed.
2. File Accurate and Timely VAT Returns
   
   
   • Ensure your quarterly VAT returns and supporting documents are accurately and electronically filed to avoid discrepancies.
3. Coordinate with your RDO
   
   
   • Some regional offices may still be in transition. It helps to proactively communicate with your Revenue District Office for clarifications.
4. Maintain Digital Records
   
   
   • The shift to digital verification means having scanned copies and soft files of all tax documents ready will speed up verification and reduce risk of delays.
5. Engage a VAT Refund Specialist
   
   
   • For large claims, it may still be wise to work with tax lawyers or consultants familiar with VAT refund litigation and administrative processing.

What This Reform Tells Us About the BIR’s Direction

The issuance of RMC No. 37-2025 is not just a tax administration change—it’s a signal of cultural and institutional transformation within the BIR.

It demonstrates a taxpayer-centered approach, where government agencies no longer see themselves solely as regulators and collectors, but also as service providers tasked to facilitate fair and efficient economic participation.

This also shows that the BIR is serious about aligning with the ease of doing business law, and actively working towards international best practices in tax administration.

Conclusion: A Brighter Road Ahead for VAT Refunds

With the implementation of RA No. 12066 (CREATE MORE Act) and the issuance of RMC No. 37-2025, the BIR has taken a major step in improving the VAT refund process—one of the most awaited reforms by the business sector.

While challenges may remain in implementation and awareness, this move sets a positive precedent for further reforms in taxpayer service. For now, it’s up to taxpayers to stay informed, comply diligently, and make the most of these reforms that are designed to return what is rightfully theirs—on time and with less burden.