Prescriptive Period for Tax Refunds in the Philippines: Two-Year Rule and CTA Deadlines

Atty. Yasser R. Aureada, CPA

Sep 15

11 min read

Updated: 10 hours ago

Short answer: File your refund claim with the BIR within two years: from payment for taxes wrongly collected, from filing of the annual return for excess income tax, or from the close of the quarter of the zero-rated sales for VAT. The BIR then has 180 days, or 90 for VAT, to decide. Go to the Court of Tax Appeals within 30 days after a denial or the BIR's inaction; a VAT denial needs a reconsideration request within 15 days first. Missing a deadline usually loses the refund.

What is the prescriptive period for a tax refund?

It is the deadline to ask the BIR to return or credit a tax: two years for most refunds, counted from a different day for each type:

Taxes erroneously or illegally collected, and penalties imposed without authority: two years after payment (Sections 204(C) and 229, National Internal Revenue Code (NIRC), as amended by Republic Act (RA) No. 11976).
Excess income tax, including excess creditable withholding tax: two years from filing of the final adjustment (annual) return (Commissioner of Internal Revenue v. Primetown Property Group, Inc., G.R. No. 162155, August 28, 2007; Revenue Regulations (RR) No. 5-2024).
Input VAT on zero-rated or effectively zero-rated sales: two years after the close of the taxable quarter when the sales were made (Section 112(A), NIRC).
Unused input VAT after cancellation of VAT registration for retirement, cessation of business or change of status: two years from the cancellation (Section 112(B), NIRC, as amended by RA No. 11976).

Two years means 24 calendar months, not 730 days (Section 31, Chapter VIII, Book I, Administrative Code of 1987). In Primetown, the return was filed on April 14, 1998, and a case filed on April 14, 2000, the last day of the 24th month, was on time. The same count applies to VAT claims (Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc., G.R. No. 184823, October 6, 2010).

For the BIR's own deadline to assess you, see how far back the BIR can audit your business.

When does the two-year period start?

Erroneous or illegal payments. From the date you paid (Section 204(C), NIRC, as amended). If you amend a return and pay more, "the prescriptive period for the adjusted amount is reckoned from the later date" (Melco Resorts Leisure (PHP) Corp. v. Commissioner of Internal Revenue, G.R. No. 271261, April 2, 2025).

Excess income tax and excess creditable withholding tax. Quarterly payments and taxes withheld are only credits against the year's tax, so any overpayment is known only when the final adjustment return is filed. The two years run from that filing, not from each payment (Commissioner of Internal Revenue v. Philippine American Life Insurance Co., G.R. No. 105208, May 29, 1995; Primetown). For calendar-year taxpayers, that return is due April 15; see our BIR compliance calendar.

A return showing an overpayment counts as a written claim (Section 204(C), NIRC, as amended), but RR No. 5-2024 expects the refund or tax credit certificate (TCC) application within the two years.

Choosing on the return to carry the excess over to later quarters is irrevocable for that period, and no cash refund or TCC is then allowed. A corporation that cannot carry it over because it dissolves or stops doing business may apply for a refund, which the BIR must decide and pay within two years from the dissolution or cessation (Section 76, NIRC, as amended by RA No. 11976). RR No. 5-2024 counts those two years from the filing of BIR Form 1905 (cancellation of registration) with complete documents.

Zero-rated sales (VAT). From the close of the quarter when the sales were made, whether or not the input VAT was paid, and not from filing of the VAT return (Section 112(A), NIRC; Aichi). Section 229 does not govern input VAT refunds (Aichi; Commissioner of Internal Revenue v. San Roque Power Corp., G.R. Nos. 187485, 196113 and 197156, February 12, 2013). The supporting documents must also be submitted within the two years (Commissioner of Internal Revenue v. Dohle Shipmanagement Philippines Corp., G.R. No. 246379, August 19, 2024).

How long does the BIR have to decide a refund claim?

Non-VAT refunds, such as erroneous or illegal payments and excess income tax: 180 days from submission of complete documents (Section 204(C), NIRC, as amended by RA No. 11976). RR No. 5-2024, which covers claims filed from July 1, 2024, counts the 180 days up to payment of the approved refund or receipt of the TCC.
VAT refunds: 90 days from submission of certified true copies of invoices and the other documents prescribed in BIR issuances (Section 112(C), NIRC, as amended by RA Nos. 11976 and 12066). Claims are classified as low, medium or high risk, and medium- and high-risk claims are audited or verified.
Refunds on dissolution or cessation of business: two years (Section 76, NIRC, as amended).

A denial must state its legal and factual basis, and an official who does not act within the period may be penalized (Sections 112(C), 204(C) and 269(j), NIRC, as amended).

Plan for an audit. An income tax refund claim brings an electronic Letter of Authority (eLA) covering all internal revenue taxes for that year, while a VAT refund claim is verified under a Tax Verification Notice (TVN) limited to the claim (RMO No. 22-2026; see what triggers a BIR audit). For the forms, documents and common reasons for denial, see how to file a tax refund claim.

When must you go to court for a non-VAT refund?

Section 229, as amended by the Ease of Paying Taxes (EOPT) Act, RA No. 11976, effective January 22, 2024, sets three steps:

Claim with the BIR first. No court case may be filed until a claim for refund or credit has been filed with the Commissioner.
Wait for a decision or for the 180 days to pass. A case may be filed only after a full or partial denial, or after the Commissioner fails to act within the 180 days.
Appeal within 30 days from receipt of the denial, or after the 180 days expire (Section 229, NIRC, as amended; Section 11, RA No. 1125, as amended by RA No. 9282).

RR No. 5-2024 also lets you skip the appeal on inaction and wait for the Commissioner's final decision.

Before EOPT, Section 229 barred any suit filed more than two years after payment. Both the BIR claim and the court case had to be filed within those two years, even if the BIR had not yet decided (Muller & Phipps (Manila), Ltd. v. Collector of Internal Revenue, G.R. No. L-10694, March 20, 1958; Primetown). In 2025, on a claim filed in 2017, the Supreme Court restated that "both administrative and judicial claims must be filed within the two-year period counted from the payment of the tax" (Melco). The CTA's rules also still require a petition on an unacted claim for taxes erroneously or illegally collected to be filed within the two years (Rule 4, Section 3(a)(2) and Rule 8, Section 3(a), Revised Rules of the Court of Tax Appeals or RRCTA).

We have not found a Supreme Court decision that applies the amended Section 229 to a claim filed after EOPT. Until one settles the point, protect the refund under both rules:

File the BIR claim, with complete documents, at least 210 days (180 plus 30) before the two years from payment end.
If the 180 days lapse without a decision, appeal within the next 30 days instead of waiting.

What is the VAT refund timeline now?

Section 112 of the NIRC, as amended by RA No. 11976 and by RA No. 12066 (the CREATE MORE Act, approved November 8, 2024), works in five steps:

File within two years after the close of the quarter of the zero-rated sales (Section 112(A)).
The BIR decides within 90 days from submission of the documents. A denial must be in writing, within the 90 days, with its legal and factual basis and the claim's deficiencies (Section 112(C)).
Ask for reconsideration within 15 days from receipt of a full or partial denial. If you do not, the decision becomes final (Section 112(C)).
The Commissioner decides the request within 15 days from receiving it (Section 112(C)).
Appeal to the CTA within 30 days from receipt of the denial of your request, or after the 90 days lapse without a decision on the claim, or after the 15 days lapse without a decision on the request (Section 112(C)).

The two years limit only the BIR claim. The court case follows these periods even if they end after the two years (Aichi; San Roque).

How do Aichi, San Roque and the 120+30-day rule apply today?

The courts measure a VAT claim against the rules in force when it was filed (San Roque; Dohle):

Filed before January 1, 2018. The BIR had 120 days from submission of complete documents, and the taxpayer then had 30 days to appeal from a denial or from the lapse of the 120 days. Both periods are mandatory and jurisdictional (San Roque). An early petition was dismissed (Aichi), unless filed between December 10, 2003, when BIR Ruling No. DA-489-03 told taxpayers they need not wait, and October 6, 2010, when Aichi was decided (San Roque). A late petition, filed 426 days after the 30 days ended, was barred (San Roque).
Filed from January 1, 2018. The TRAIN Law (RA No. 10963) cut the BIR's period to 90 days. Its text allowed an appeal within 30 days from a denial and made failure to act punishable under Section 269 instead (Dohle, quoting Section 112(C), as amended by RA No. 10963).
Under EOPT. The 90 days stayed, and the right to appeal within 30 days after the 90 days lapse returned (Section 112(C), as amended by RA No. 11976). RR No. 5-2024 covers claims filed from July 1, 2024, and lets the taxpayer wait for the decision instead.
Under CREATE MORE. The 15-day reconsideration step above was added (Section 112(C), as amended by RA No. 12066).

We have not found a Supreme Court decision on the newer periods. Treat each as strictly as San Roque treated the old ones: do not appeal early or late.

Which refund cases does the CTA hear, and where do you file?

The Court of Tax Appeals (CTA) has exclusive appellate jurisdiction over the Commissioner's decisions on refunds of internal revenue taxes, fees, charges and penalties. It also hears the Commissioner's inaction where the Tax Code sets a specific period to act; the inaction is then deemed a denial (Section 7(a)(1) and (2), RA No. 1125, as amended by RA No. 9282). The 180-day, 90-day and 15-day periods above are such periods.

How: by petition for review, heard first by one of the CTA's three Divisions (Section 11, RA No. 1125, as amended; Rule 4, Section 3(a), RRCTA). RA No. 9503 enlarged the court to nine Justices.
When: within the 30 days described above. The period is jurisdictional (San Roque), and the RRCTA provides no extension (Rule 8, Section 3(a), RRCTA).
What to file: a verified petition showing the dates that establish jurisdiction, with a certification against forum shopping and a copy of the decision, and with docket fees paid (Rule 6, Sections 2 and 3, RRCTA). See how to appeal a BIR decision to the CTA.
After the Division: a motion for reconsideration within 15 days, then the CTA en banc, then the Supreme Court. See our CTA guide.

What must you prove in a CTA refund case?

The taxpayer has the burden of proving its claim (Dohle), and the CTA considers only evidence formally offered (Rule 132, Section 34, Rules of Court). Prove three things:

That you filed on time, with proof of each key date, from payment or return filing to the petition.
That the law gives you the refund.

For an erroneous or illegal payment: that the tax was paid and was not due. In Melco, both claims were on time, but the refund failed because the VAT passed on by suppliers "formed part of the purchase price," so its payment was not erroneous or illegal.
For excess creditable withholding tax: that the income was declared in your return, that the tax was withheld, as shown by the payor's certificate (BIR Form 2307), and that you did not choose to carry the excess over (Section 76, NIRC; RR No. 5-2024).
For VAT: VAT registration, zero-rated or effectively zero-rated sales, and input VAT attributable to them that was not applied against output VAT. Where required, the foreign currency proceeds must have been accounted for under Bangko Sentral ng Pilipinas rules, and input VAT shared with taxable or exempt sales must be allocated by volume of sales (Section 112(A), NIRC).

The amounts, through invoices, returns and records. A court-commissioned independent CPA may examine and summarize voluminous records (Rule 13, RRCTA). See our evidence guide.

What happens if you miss a refund deadline?

BIR claim filed after two years: the refund is barred (Sections 112(A), 112(B) and 204(C), NIRC, as amended).
No VAT reconsideration request within 15 days: the denial becomes final (Section 112(C), NIRC, as amended by RA No. 12066).
Petition filed too early, before a decision or before the BIR's period lapses: the CTA has no jurisdiction (Aichi; San Roque; Section 229, NIRC, as amended).
Petition filed after the 30 days: barred (San Roque). Under the old Section 229 rule, so was a court case filed more than two years after payment (Melco).

The Supreme Court has said the two-year period for non-VAT refunds "is not jurisdictional and may be suspended for reasons of equity and other special circumstances" (Philamlife). Such cases are rare.

Frequently asked questions

Does filing a refund claim with the BIR stop the two-year period?

Not for the court case under the old rule: both claims had to be filed within two years (Melco). The amended Section 229 ties the court deadline to the BIR's denial or the lapse of its 180 days, but file early enough to meet both rules. For VAT, the two years apply only to the BIR claim (Aichi).

How long does it take to get an income tax refund in the Philippines?

The BIR has 180 days from submission of complete documents to decide, or two years if the corporation dissolved or stopped doing business (Sections 76 and 204(C), NIRC, as amended). Expect an eLA audit covering that year (RMO No. 22-2026).

Can I file a refund case directly with the Court of Tax Appeals?

No. The claim must first be filed with the Commissioner, and the CTA reviews the Commissioner's decision or inaction (Section 229, NIRC, as amended; Section 7(a), RA No. 1125, as amended).

What if the BIR approves only part of my claim?

A partial denial can be appealed like a full one (Sections 112(C) and 229, NIRC, as amended). For VAT, first ask for reconsideration within 15 days.

Can I still get a refund of excess creditable withholding tax I chose to carry over?

Not for that period; the choice is irrevocable. The excess remains creditable against later income tax, and a corporation that dissolves or stops doing business may apply for a refund of what remains (Section 76, NIRC, as amended; RR No. 5-2024).

Sources

National Internal Revenue Code of 1997, as amended, Sections 76, 112(A) to (C), 204(C), 229 and 269(j)
Republic Act No. 10963 (TRAIN Law, effective January 1, 2018), amending Section 112(C)
Republic Act No. 11976 (Ease of Paying Taxes Act, approved January 5, 2024, effective January 22, 2024), Sections 10, 20, 31 and 32
Republic Act No. 12066 (CREATE MORE Act, approved November 8, 2024), amending Sections 112 (by Section 9 of the Act) and 269 of the NIRC
Republic Act No. 1125, as amended by Republic Act No. 9282 (March 30, 2004) and Republic Act No. 9503 (June 12, 2008), Sections 7 and 11
Revised Rules of the Court of Tax Appeals, A.M. No. 05-11-07-CTA (November 22, 2005), as amended on September 16, 2008 and February 10, 2009, Rule 4, Section 3(a); Rule 6, Sections 2 and 3; Rule 8, Section 3(a); Rule 13
Administrative Code of 1987, Book I, Chapter VIII, Section 31
Rules of Court, Rule 132, Section 34
Revenue Regulations No. 5-2024 (April 11, 2024)
Revenue Memorandum Order No. 22-2026
BIR Ruling No. DA-489-03 (December 10, 2003)
Melco Resorts Leisure (PHP) Corp. v. Commissioner of Internal Revenue, G.R. No. 271261, April 2, 2025
Commissioner of Internal Revenue v. Dohle Shipmanagement Philippines Corp., G.R. No. 246379, August 19, 2024
Commissioner of Internal Revenue v. San Roque Power Corp., G.R. Nos. 187485, 196113 and 197156, February 12, 2013, and Resolution of October 8, 2013
Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc., G.R. No. 184823, October 6, 2010
Commissioner of Internal Revenue v. Primetown Property Group, Inc., G.R. No. 162155, August 28, 2007
Commissioner of Internal Revenue v. Philippine American Life Insurance Co., G.R. No. 105208, May 29, 1995
Muller & Phipps (Manila), Ltd. v. Collector of Internal Revenue, G.R. No. L-10694, March 20, 1958

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This article is general information as of its publication date, not legal advice, and does not create a lawyer-client relationship. For advice on your situation, consult a lawyer.