Amendments on VAT Rules on Local Sales of Registered Business Enterprises (RBEs)
(RR No. 1-2026, published in BIR Website on February 16, 2026)
This tax alert is issued to provide clarifications on the manner of filing and payment of VAT on local sales, optional VAT registration for certain RBEs, exclusion of certain enterprises and business activities from the coverage of VAT on local sales of RBEs, and extension of deadline for invoicing system reconfiguration.
A. Filing and Payment of VAT on Business-to-Business (“B2B”) Local Sales of Goods by RBEs
The VAT on B2B local sales of goods by RBEs shall be paid on a per transaction basis using the specific form that will be prescribed by the BIR through a separate issuance. In the meantime, BIR Form No. 0605 shall be used. The form shall be transmitted to the RBE‑seller as part of the mandatory supporting documents prior to the release of goods from the economic zone or freeport.
In cases where the shipment of goods is in bulk (e.g. delivered through a single container truck) and is supported by multiple sales invoices, the buyer may remit the corresponding VAT through a single consolidated payment. The buyer shall submit the BIR Form No. 0605 covering the payment of all the invoices together with the list of all invoices covered, to the BOC prior to the release of goods.
B. Optional VAT registration for Certain RBEs
RBEs that are 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 VAT taxpayer for the sole purpose of its local sales. Such VAT registration shall not affect the RBE’s entitlement to existing fiscal and non‑fiscal incentives, including VAT zero‑rating on qualified local purchases and VAT exemption on importation that are directly attributable to their registered activities.
Pursuant to Section 236(G) of the National Internal Revenue Code, an RBE that elects to register as a VAT taxpayer under this provision may not cancel such registration for a period of three (3) years from the date of registration.
C. Exclusion of Certain Enterprises and Business Activities from the Coverage of VAT on Local Sales of RBEs
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 shall not be covered by the buyer-remittance of VAT rule. The RBE-seller shall file and pay the corresponding VAT to the BIR as a regular VAT taxpayer.
In addition, the following transactions and taxpayers are also not covered by the buyer-remittance of VAT rule:
1. Sale of the following goods/services:
a. VAT zero‑rated sale of goods under Section 106(A)(2);
b. VAT-zero‑rated services under Section 108(B);
c. VAT‑exempt transactions under Section 109;
d. VAT‑exempt or zero‑rated transactions under Title XIII of the Tax Code.
2. Entities registered with the Board of Investments (“BOI”) under special laws that are not availing of incentives under Title XIII, as amended.
Local sales not pertaining to the RBE’s registered activities, including the sale of scraps, materials, and property, plant and equipment (PPE), which are subject to regular VAT at 12%. The RBE-seller shall file and pay the VAT to the BIR as a regular “VAT taxpayer”.
D. Extended Deadline for Invoicing System Reconfiguration
Under RR No. 9-2025, RBEs using BIR‑registered invoicing systems, including Cash Register Machines (CRM), Point‑of‑Sale (POS) systems, Computerized Accounting Systems (CAS), Computerized Books of Accounts with Accounting Records, and other registered invoicing system/software, were required to reconfigure or rename their system by replacing the term “VAT/VAT Amount” with the phrase “VAT on Local Sales,” or add the same where “VAT/VAT Amount” is not applicable. The deadline for compliance is extended from 31 December 2025 to 31 December 2026, with authority granted to the Commissioner of Internal Revenue to further extend the period as may be necessary.
These Regulations shall take effect fifteen (15) days following its publication in the Official Gazette or the BIR Official Website, whichever comes first. The Regulations was published in the BIR Official website on February 16, 2026.