From this definition, the term “other expenditures” has been specified to pertain to costs that are indispensable to the registered project or activity, or those without which the registered project or activity cannot proceed. Thus, local purchases of the above-mentioned services and goods related to these services are generally subject to VAT. In addition to the negative list of purchases, RR 3-2023 also simplifies the process for availing of the VAT zero-rating incentive for registered export enterprises. Ultimately, it is the responsibility of the taxpayers to determine whether their local purchases of goods and services qualify for a VAT zero-rating. Taxpayers must ensure that proper documentation is in place to support the VAT zero-rating of their local purchases as contemplated under existing rules.

Source: Philippine Star June 06, 2023 13:27 UTC