VAT Zero Rating
Due to the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, the following are frequently asked questions relative to the revised requirements and processes for business customers with VAT zero-rating on their Meralco bill:
1. How are the VAT zero-rating rules under the CREATE Act different from the previous VAT zero-rating rules?
Before the CREATE Act, ecozones and freeport zones were regarded as foreign territories. Thus, following the cross border doctrine, the sale of goods and/or services by a VAT-registered service provider like Meralco to registered enterprises in these economic and freeport zones were treated as constructive export subject to 0% VAT. A VAT zero-rating certification is submitted by eligible business enterprises to Meralco to continue enjoying VAT zero-rating.
But considering the CREATE Act:
- a. VAT zero-rating on local purchases shall only be accorded to purchases of goods and/or services of Registered Export Enterprises (REEs), which are directly and exclusively used in the registered project or activity of said registered enterprise, excluding those used for administrative purposes.
- b. Registered Business Enterprises (RBEs), which are categorized as Domestic Market Enterprises (DMEs), are not entitled to VAT zero-rating on local purchases. 3. My business/company is registered with an IPA and is considered a REE. How do I get a VAT zero-rating on my Meralco bill?
2. My business/company is registered with an IPA and is considered a REE. How do I get a VAT zero-rating on my Meralco bill?
The following documents should be sent via email to VATzerorating@meralco.com.ph:
- a. Certified True Copy of the BIR Certificate of Registration
- b. Certified True Copy of the IPA Certificate of Registration
- c. Certified True Copy of the IPA VAT Certification for the year that the VAT zero-rating entitlement is invoked
- d. Notarized and original sworn affidavit executed by the customer, stating that the goods and/or services bought are directly and exclusively used for the production of goods and/or completion of services to be exported or for utilities and other similar costs, the percentage of allocation to directly and exclusively used for the production of goods and/or completion of services to be exported
- e. Other documents to corroborate entitlement to VAT zero-rating such as but not limited to duly certified copies of purchase order, job order or service agreement, sales invoices and/or official receipts, delivery receipts, or similar documents to prove existence and legitimacy of the transaction.
Hard copies of the requirements should also be sent to Meralco.
| For Biz customers, send to: Meralco Biz, 10/F, Lopez Building, Meralco Center, Ortigas Ave., Pasig City |
For Enterprise customers, send to: Enterprise and National Government, Group, 10/F, Lopez Building, Meralco Center, Ortigas Ave., Pasig City |
Once the required documents are provided to Meralco, we will review the completeness of the documents.
3. The electricity usage of our business/company is not exclusively for export operations as we have other offices/units that are not directly involved in production. How will you compute how much will be subjected to 0% and 12% VAT?
For REEs, only the portion of the electricity directly and exclusively used in the registered project or activity shall qualify for VAT zero-rating, excluding those used for administrative purposes. It is important that you specify the percentage of electricity directly and exclusively used for export operations in your sworn affidavit, which shall be the basis for VAT zero-rating.
4. Can you help us determine the best allocation for our VAT-zero application? Will Meralco validate the declared ratio or should the company secure authentication/validation?
A company having comprehensive knowledge of its business operations would be in the best position to determine the allocation for VAT zero-rating application. We will rely on the allocation percentage declared in the sworn certification. The documents, including the sworn certification indicating the allocation percentage, may be subjected to post-audit by the BIR.
5. What if I have multiple services under 1 account, do I need to submit requirements per service ID No.?
No, you can submit one set. However, the sworn affidavit may need to show the percentage of allocation per SIN especially if there are different allocation percentages per SIN. If one allocation percentage applies to all SIN, it is still advisable to list the SIN in the sworn affidavit so that it is clear that the allocation percentage applies to the listed SINs.
6. Can we send the requirements via delivery service (Grab, Lalamove, LBC, etc.)?
Yes, customers may send via delivery services (Grab, Lalamove, LBC, etc.). Please instruct the courier to leave the documents in the Meralco Lopez building lobby.
7. Can we submit requirements at the nearest Meralco Business Center?
For Enterprise customers, directly submit the requirements to Enterprise and National Government Group,10/F, Lopez Building,Meralco Center, Ortigas Ave., Pasig City.
For the Biz customers, please contact us at biz@meralco.com.ph or the Business hotline (02) 16210 to help verify your requirements. Once a Biz Customer Service Engineer has confirmed your requirements are complete, kindly send them to Meralco Biz, 10/F Lopez Building, Meralco Center, Ortigas Ave., Pasig City
8. What happens after we submit the requirements for VAT zero-rating?
Yes, customers may send via delivery services (Grab, Lalamove, LBC, etc.). Please instruct the courier to leave the documents in the Meralco Lopez building lobby.
9. If I get a VAT zero-rating, do I need to apply for renewal or is this perpetual? How often do I need to apply for renewal?
The submission of documents to invoke entitlement to VAT zero-rating shall be renewed on a yearly basis. The entitlement to VAT zero-rating shall be from the satisfactory submission of the complete documentary requirements until the last day of the year.
To ensure continuous entitlement to VAT zero-rating and avoid the imposition of VAT, a new set of documentary requirements covering the VAT zero-rating entitlement for the succeeding year should be submitted on or before the last day of the current year.
10. Our business/company enjoys VAT zero-rating on its purchases by virtue of special laws (i.e., other than being registered IPAs). Is my business/company affected by the changes brought by CREATE Act?
No, sales to enterprises covered by special laws such as renewable energy developers under R.A. No. 9513 (Renewable Energy Act of 2008, International Rice Research Institute, Asian Development Bank, etc.) or embassies are still subject to 0% VAT in accordance with the respective special laws.
11. Our business/company is registered with an Investment Promotion Agency (IPA) but does not engage in export. Are we entitled to VAT zero-rating on Meralco bills?
No, companies registered with IPAs (e.g., PEZA, BOI, freeport zones, ecozones) that are not engaged in export would be considered Domestic Market Enterprises (DMEs). DMEs are not entitled to VAT zero-rating on Meralco bills.
12. Will you be suspending the VAT zero-rating of your customers pending submission of documents?
Yes, we cannot accord VAT zero-rating without the satisfactory submission of the complete documentary requirements in Q&A No. 3.
13. If the switched account is under dual billing wherein the generation portion is billed by RES and the DWS is thru Meralco, will they also submit the requirements to both their RES and Meralco?
Under a dual billing scheme, a Distribution Utility (DU) becomes the direct supplier of the Contestable Customer (CC) as far as the Distribution Wheeling Service (DWS) is concerned and issues the billing to CCs. If the CC accepts a dual billing arrangement, a revised DWS agreement is signed between the DU and CC. Under dual billing, the CC needs to submit the documentary requirements to Meralco for the DWS charges and a separate set to the RES for the generation and other charges.