Tax Articles

Tax Refund Tango: Dancing Around CREATE MORE’s RRs

By: Atty. Jomel N. Manaig

Atty. Jomel N. Manaig Partner   +632 8403-2001 loc. 140 This email address is being protected from spambots. You need JavaScript enabled to view it. View Profile

Just last week, in the article entitled “CREATE MORE’s Draft RR,” our Firm’s Senior Partner, Atty Irwin Nidea, Jr., wrote about the then-recently issued draft revenue regulations for CREATE MORE. He identified possible issues concerning the rules and procedures for tax refunds, among others. Soon afterward, the draft regulations turned final as the BIR ultimately issued Revenue Regulations (RR) Nos. 5-2025 to 11-2025.

While the BIR appears to have addressed Atty. Nidea’s concern on the “restart” of the 90-day period to process, it would appear that several more refund issues are still left unresolved. Borrowing the words of Atty Nidea, some questions have been answered, but some answers have sparked more questions.

For today, we will focus on RR Nos. 6-2025 and 8-2025 which laid down the respective refund procedures involving claims relating to excise taxes on petroleum products sold to international carriers and tax-exempt entities as well as claims involving input taxes. Let me highlight some of the prevailing issues in these RRs:

First, the RRs implemented an innovation introduced by CREATE MORE: the request for reconsideration to the CIR. According to the rules, a request for reconsideration on the full or partial denial of the taxpayer’s claim for refund should be limited to questions of law. It should be noted that the “question of law” limitation is not in CREATE MORE.

Further, the RRs provided that appeal to the Court of Tax Appeals (CTA) is available only in cases of: (i) full or partial denial of the request for reconsideration; or (ii) inaction on the claim for refund or request for reconsideration.

Unfortunately, the limitation imposed by the BIR on what may be the subject of a request for reconsideration created a searing gap on the remedy available to taxpayers. What about claims that were wholly or partially denied based only on questions of fact?

If only questions of law may be the subject of a request for reconsideration, can taxpayers (whose claim for refund was denied on factual determinations) directly appeal to the CTA? It would seem that this may not be allowed since the remedy of appeal to the CTA under the RR is limited to the two (2) scenarios mentioned above.

Is the taxpayer then required to still file a request for reconsideration on claims for refund wholly or partially denied based on factual matters? Will the BIR accept the request for reconsideration notwithstanding the absence of a question of law? Or can taxpayers already seek judicial redress because of the ambiguity in the rules? This gap, if not filled, threatens to make tax refunds uncertain for taxpayers.

Second, CREATE MORE, in addition to the request for reconsideration, standardized the period for processing tax refunds. For claims involving excise taxes on petroleum products sold to international carriers and tax-exempt entities, the BIR now has 90 days (from the original 180 days) to process it which is similar to the period for processing refund claims involving input taxes. Further, the law provided that failure to promulgate the rules shall not prevent its implementation upon its effectivity (which was on November 28, 2024).

But what does the revenue regulations say? Once more in both RR Nos. 6-2025 and 8-2025, the BIR modified the implementation of the 90-day period to process refund claims to apply only to those filed on or after April 1, 2025. In other words, the RR is saying that for refund claims involving excise taxes on petroleum products sold to international carriers and tax-exempt entities which were filed from November 28, 2024, to March 31, 2025, the 180-day period should apply.

If the law (which includes the 90-day period revision) says that it must be implemented on November 28, 2024, can the rules modify this and effect the revision at a later date? What period should apply for refund claims filed from November 28, 2024, to March 31, 2025, when reckoning the period of inaction: 90 days or 180 days? The inconsistency may prove costly to certain taxpayers as it may result in the loss of their right to seek an appeal with the CTA in cases of inaction on their refund claims.

CREATE MORE was supposed to address the concerns in the original CREATE. I do hope that these gaps and inconsistencies are resolved soon to live up to the aspirations of CREATE MORE. There is still time.