In continuing to build a more structured and efficient tax administration system, the Bureau of Internal Revenue (BIR) reshaped the tax refund landscape through Revenue Memorandum Circular (RMC) Nos. 74-2024 and 75-2024, which were subsequently amended by RMC Nos. 103-2026, dated Aug. 5, 2026, and 102-2026, dated Aug. 3 2026, respectively. These issuances refine the rules governing tax refund and tax credit claims, aiming to streamline claim processing while imposing more defined compliance standards on taxpayers seeking refunds or tax credits for taxes erroneously or illegally collected or for excess Creditable Withholding Taxes (CWT).
While the amendments promise clearer procedures and administrative efficiency, they also introduce certain compliance obligations that taxpayers should carefully navigate.
WHAT IS A CLAIM FOR TAX REFUND?
A claim for tax refund may arise from taxes erroneously or illegally collected consistent with the principle of solutio indebiti, or from specific statutory provisions allowing the recovery of excess tax credits. It may take either of two forms: a tax refund involving the actual reimbursement of tax; or a tax credit, under which the government issues a Tax Credit Certificate (TCC) that may be applied against any internal revenue tax, excluding withholding taxes, for which the taxpayer is directly liable.
THE FOUNDATION: RMC NOS. 74-2024 AND 75-2024
Historically, tax refund claims have been viewed as one of the most challenging areas of tax administration because of extensive documentation requirements, procedural issues, and prolonged verification processes. Despite legitimate overpayments or taxes erroneously collected, refund applicants often faced lengthy audits and procedural uncertainties. Recognizing these concerns, the BIR issued RMC No. 74-2024, dated July 1, 2024, to prescribe mandatory documentary requirements for claims involving taxes erroneously or illegally collected, or penalties imposed without authority, pursuant to Sections 204(C) and 229 of the National Internal Revenue Code of 1997, as amended (Tax Code).
Shortly thereafter, the BIR issued RMC No. 75-2024, which specifically covered claims for tax credit or refund of excess or unutilized CWT under Section 76(C) of the Tax Code, as amended. Under this issuance, taxpayers are required to submit, among others, BIR Form No. 1914 (Application for Tax Credits/Refunds), complete supporting documents as enumerated in the checklist of requirements, and a notarized taxpayer attestation certifying the completeness of submitted documents. The issuance likewise emphasized that claims would generally be processed based on documents initially submitted, limiting piecemeal submissions and encouraging taxpayers to present complete records from the outset.
Refund claims were often delayed by multiple requests for additional documents. By adopting a complete-submission framework, the BIR standardized the documentary requirements for refund claims and sought to minimize back-and-forth exchanges between taxpayers and revenue officers.
WHAT CHANGED UNDER RMC NO. 102-2026?
Among the recent issuances, RMC No. 102-2026 may have the most far-reaching impact, particularly for corporate taxpayers with excess or unutilized CWT. The Circular amends portions of RMC No. 75-2024, as previously amended by RMC No. 14-2025, and clarifies the procedures governing refund claims.
One of the most notable clarifications pertains to the long-standing “irrevocability rule.” Under Section 76(C) of the Tax Code, as amended, taxpayers that elect to carry over excess income taxes to succeeding taxable years generally lose the option to subsequently claim a refund for the same amount. This doctrine has been used in various cases wherein the Supreme Court (SC) held that, once a taxpayer elects in its Annual Income Tax Return (AITR) to carry over excess income tax credits to the succeeding taxable year, such choice becomes irrevocable and bars the taxpayer from subsequently claiming a refund of the same amount. For many years, this doctrine served as a strict reminder that taxpayers must carefully choose between the carry-over and refund options. A mistaken election could effectively result in the permanent loss of the refund remedy.
RMC No. 102-2026, however, clarifies the statutory exception under Section 76(C) of the Tax Code, as amended: taxpayers that have permanently ceased operations may still pursue a refund of excess and unutilized CWT despite having previously chosen the carry-over option. This clarification is particularly beneficial for businesses undergoing closure, dissolution, or cessation of operations because it enables them to recover tax assets that would otherwise remain unusable. It provides corporations with a pragmatic means of preventing excess tax credits from becoming permanently stranded after the business has ceased operations.
The circular further clarifies the distinction between an application for tax credit or refund by a going-concern taxpayer that elected the refund or tax credit option in its AITR and an application by a taxpayer undergoing dissolution or cessation of business. For the former, the application must generally be filed within two years from the date of filing of the AITR. The BIR’s 180-day processing period commences upon submission of BIR Form No. 1914 together with the complete documentary requirements, all within the two-year prescriptive period. For a taxpayer undergoing dissolution or cessation of business, the processing office must decide and issue the tax credit or refund within two years from the submission of BIR Form No. 1905 and the complete closure requirements. This two-year processing period is an exception to the 180-day period applicable to regular claims and recognizes the unique circumstances of companies winding down their operations.
CHANGES UNDER RMC NO. 103-2026
While RMC No. 102-2026 addresses claims involving excess CWT, RMC No. 103-2026 amended a key procedural provision of RMC No. 74-2024. The amendment specifically addresses the venue for filing refund claims involving Capital Gains Tax (CGT) and Documentary Stamp Tax (DST) arising from the sale of real property classified as a capital asset.
Prior to the amendment, refund claims were generally filed with the Revenue District Office (RDO) or Large Taxpayer office having jurisdiction over the taxpayer-claimant. Under RMC No. 103-2026, however, claims involving CGT and DST arising from the sale of real property classified as a capital asset must be filed with the RDO having jurisdiction over the location of the real property, rather than solely with the office having jurisdiction over the taxpayer’s registered address. All other refund claims remain subject to the jurisdiction of the taxpayer’s RDO or the appropriate Large Taxpayer office.
Although the change may appear administrative, it carries practical significance: real property transactions are typically documented and monitored by the RDO where the property is located, assigning jurisdiction to that office should promote more accurate verification and efficient processing. For taxpayers, the amendment provides certainty regarding the proper venue and should help avoid jurisdictional issues that may delay refund claims.
Taken together, these amendments provide greater clarity on filing procedures, documentary requirements, jurisdictional rules, and claims involving dissolved entities. However, the revised tax refund regime should not be viewed merely as a simplification measure. It reflects a trade-off: in exchange for a more structured and potentially faster refund process, taxpayers are expected to exercise greater diligence in record-keeping, claim preparation, and compliance.
Ultimately, taxpayers should no longer view tax refunds as a mere afterthought in tax compliance. With clearer rules now in place, refund management should form part of a taxpayer’s broader tax governance and cash flow strategy, ensuring that legitimate tax assets are timely identified, protected, and recovered.
Justine Alano is a senior associate for the Tax Advisory & Compliance practice area at P&A Grant Thornton.