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𝗗𝗢𝗙 𝗔𝗡𝗗 𝗕𝗜𝗥 𝗖𝗟𝗔𝗥𝗜𝗙𝗬 𝗥𝗨𝗟𝗘𝗦 𝗙𝗢𝗥 𝗩𝗔𝗧 𝗢𝗡 𝗟𝗢𝗖𝗔𝗟 𝗦𝗔𝗟𝗘𝗦 𝗢𝗙 𝗥𝗘𝗚𝗜𝗦𝗧𝗘𝗥𝗘𝗗 𝗕𝗨𝗦𝗜𝗡𝗘𝗦𝗦 𝗘𝗡𝗧𝗘𝗥𝗣𝗥𝗜𝗦𝗘𝗦 (𝗥𝗕𝗘𝘀)

The Department of Finance (DOF) and Bureau of Internal Revenue (BIR) issued Revenue Regulations (RR) No. 1-2026, which amends certain provisions of RR No. 9-2025, to clarify the manner of filing and payment for value-added tax (VAT) on local sales, provide optional VAT registration for certain RBEs, extend the deadline for system reconfiguration, and exclude certain enterprises and activities from the coverage of VAT on local sales of RBEs under Section 295(D) of the National Internal Revenue Code of 1997 (Tax Code), as Amended by Section 18 of Republic Act (RA) No. 12066, or more popularly known as the Corporate Recovery and Tax incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy Act (CREATE MORE Act).

The said revenue issuance was released to address concerns of the external and internal stakeholders in the implementation of VAT on local sales of RBEs that was introduced under the CREATE MORE Act. The most notable changes are as follow:

𝗖𝗹𝗮𝗿𝗶𝗳𝗶𝗰𝗮𝘁𝗶𝗼𝗻 𝗼𝗻 𝘁𝗵𝗲 𝗺𝗮𝗻𝗻𝗲𝗿 𝗼𝗳 𝗳𝗶𝗹𝗶𝗻𝗴 𝗮𝗻𝗱 𝗽𝗮𝘆𝗺𝗲𝗻𝘁 𝗼𝗳 𝗩𝗔𝗧 𝗼𝗻 𝗹𝗼𝗰𝗮𝗹 𝘀𝗮𝗹𝗲𝘀 𝗼𝗳 𝗥𝗕𝗘𝘀

For the sale of goods inside the economic zones or freeports classified as business-to-business (B2B) transaction, the filing and payment of the buyer shall be on a per transaction basis. However, it was further clarified that in cases where the shipment of the goods purchased in the economic zones or freeport is in bulk (e.g., delivered through a single container truck) and is covered by several invoices, the buyer may opt to pay the VAT due thereon in a single payment through BIR Form No. 0605, together with the list of all the invoices covered, which shall be presented to the BOC prior to the release of the goods.

𝗢𝗽𝘁𝗶𝗼𝗻𝗮𝗹 𝗩𝗔𝗧 𝗥𝗲𝗴𝗶𝘀𝘁𝗿𝗮𝘁𝗶𝗼𝗻

An RBE availing of the 5% Special Corporate Income Tax (SCIT) or Gross Income Earned (GIE) regime, and whose registered activities are all under the same income tax incentive, may opt to register as a VAT taxpayer solely for purposes of its local sales. Such VAT registration shall not affect the RBE’s entitlement to its existing fiscal and non-fiscal incentives, including VAT zero-rating on local purchases and VAT exemption on importation, provided these are directly attributable to its registered activities.

𝗘𝘅𝗰𝗹𝘂𝘀𝗶𝗼𝗻𝘀 𝗳𝗿𝗼𝗺 𝘁𝗵𝗲 𝗰𝗼𝘃𝗲𝗿𝗮𝗴𝗲 𝗼𝗳 𝗩𝗔𝗧 𝗼𝗻 𝗹𝗼𝗰𝗮𝗹 𝘀𝗮𝗹𝗲𝘀 𝗼𝗳 𝗥𝗕𝗘𝘀

This amendment to RR No. 9-2025 seeks to address the adverse tax implications arising from the application of Section 295(D) on certain RBEs, particularly Domestic Market Enterprises (DMEs) that are unable to recover input VAT due to ineligibility for VAT refund under Section 112(A) of the Tax Code, and other enterprises and transactions having similar concern. This move ensures consistency with the statutory framework and promotes equitable tax administration without necessarily eroding tax collection.

The following enterprises and transactions are, thus, excluded from the coverage of Section 295(D) of the Tax Code, as amended:

1. Local sales of VAT-registered Domestic Market Enterprises (DMEs) that do not qualify for VAT zero-rating on local purchases or VAT exemption on importation, despite being registered with any of the Investment Promotion Agencies;
2. Sales subject to VAT zero-rating under Sections 106, 108 and Title XIII of the Tax Code and VAT-Exempt Sales under Section 109 of the Tax Code;
3. Entities that have registered with the Board of Investments by virtue of a special law and are not availing of incentives under Title XIII of the Tax Code, as amended; and
4. Local sales made by RBEs that pertain to business activities not registered with any of the IPAs, including the sales of scrap materials, machineries, and property, plant and equipment.
For such transactions, the RBE-seller shall file and pay any corresponding VAT to the BIR.

𝗘𝘅𝘁𝗲𝗻𝘀𝗶𝗼𝗻 𝗼𝗻 𝘁𝗵𝗲 𝗱𝗲𝗮𝗱𝗹𝗶𝗻𝗲 𝗳𝗼𝗿 𝘀𝘆𝘀𝘁𝗲𝗺 𝗿𝗲𝗰𝗼𝗻𝗳𝗶𝗴𝘂𝗿𝗮𝘁𝗶𝗼𝗻

The effectivity of the provision under Section 7 of RR No. 9-2025, which requires RBEs using registered Cash Register Machines/Point-of-Sales (CRM/POS), Computerized Accounting System (CAS), Computerized Books of Accounts with Accounting Records, or other registered invoicing system/software to reconfigure or rename their system by replacing the term ‘VAT/VAT Amount’ in the breakdown of sales with ‘VAT on Local Sales,’ or adding the same where ‘VAT/VAT Amount’ is not applicable, has been extended until December 31, 2026.

As part of the BIR D.A.R.E.S. initiative, particularly “Service Excellence and Stakeholder Engagement”, BIR Commissioner Charito Martin S. Mendoza vows to improve taxpayer service by paying attention and immediately addressing the concerns of stakeholders particularly the taxpayers that are adversely affected in the implementation of newly introduced provisions of the Tax Code. Commissioner Mendoza recognizes the major role of investors in the economic growth and addressing their concerns is one of the aspects to improve the investment climate of the country.

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𝗕𝗜𝗥 𝗦𝗲𝗰𝘂𝗿𝗲𝘀 𝗖𝗼𝗻𝘃𝗶𝗰𝘁𝗶𝗼𝗻 𝗼𝗳 𝗖𝗼𝗿𝗽𝗼𝗿𝗮𝘁𝗲 𝗢𝗳𝗳𝗶𝗰𝗲𝗿𝘀 𝗕𝗲𝗵𝗶𝗻𝗱 𝗗𝗲𝗰𝗮𝗿𝗶𝗰𝗵, 𝗮 𝗚𝗵𝗼𝘀𝘁 𝗖𝗼𝗿𝗽𝗼𝗿𝗮𝘁𝗶𝗼𝗻 𝗜𝗻𝘃𝗼𝗹𝘃𝗲𝗱 𝗶𝗻 𝗙𝗿𝗮𝘂𝗱𝘂𝗹𝗲𝗻𝘁 𝗧𝗿𝗮𝗻𝘀𝗮𝗰𝘁𝗶𝗼𝗻𝘀/𝗙𝗮𝗸𝗲 𝗥𝗲𝗰𝗲𝗶𝗽𝘁𝘀 𝗦𝗰𝗵𝗲𝗺𝗲

The Bureau of Internal Revenue (BIR) has scored another significant victory in its campaign against ghost corporations and fraudulent tax practices following the conviction of the corporate officers of Decarich Supertrade, Inc. before the Regional Trial Court (RTC) of Quezon City. In a decision promulgated on January 21, 2026, the RTC of Quezon City, Branch 100, found Fernando Bitoon Lawas, also known as Fernando Bitongon Lawas, President of Decarich Supertrade, Inc., and Adeline Manngas y Cañas, a.k.a. Adeline Manggas y Cañas, its Treasurer, guilty beyond reasonable doubt for criminal tax violations under the National Internal Revenue Code of 1997, as amended.

The court held the accused liable for failure to supply correct and accurate information in the company’s Value-Added Tax (VAT) return for the first quarter of taxable year 2021, in violation of Section 255 of the Tax Code. After a full trial on the merits, the accused were sentenced to imprisonment of up to three (3) years and were ordered to pay a total fine of Php120,000.00. The conviction stemmed from the finding that Decarich Supertrade, Inc. was a ghost corporation engaged in fraudulent transactions involving the issuance and use of fake or ghost receipts.

Evidence presented during trial established that Decarich is a domestic corporation duly registered with both the Securities and Exchange Commission and the BIR, and as such, was required to file its Quarterly VAT return. However, during the investigation pursuant to a duly issued Letter of Authority (LOA) and Mission Order, investigators were unable to locate the corporation at its registered address. Certifications issued by barangay officials and the building administrator confirmed that Decarich could not be found at the stated address and did not conduct any business there.

In its ruling, the trial court emphasized that the act of supplying a non-existent and incorrect address to the BIR already constitutes a violation of the law. The court further noted that without a physical or actual office, Decarich could not have legitimately conducted business. While corporate records made it appear that the company was operating and continuing its business activities, the court found that its attempts to prove actual operations only revealed further lies and fabrications.

The prosecution also presented evidence showing inconsistencies in the data and documents submitted by the accused, as well as the scheme used to reduce the amount of tax due to the government. The court underscored that the patent inconsistencies clearly demonstrated that Decarich was deliberately misrepresenting facts. From these circumstances, the court concluded that the accused willfully acted with fraudulent intent, with the purpose of prejudicing the government’s right to collect the correct amount of taxes.

Specifically, Decarich failed to supply correct and accurate information when it declared in its Quarterly VAT return that it had sales worth millions of pesos to various buyers, when in truth, no such transactions ever occurred. These false declarations were made to conceal the anomalous and fictitious transactions of its clients or buyers and to create the illusion of legitimate sales, despite the company’s lack of capacity to engage in such transactions.