PEZA Clarifies VAT Zero-Rating Rules Under CREATE More Act

The Philippine Economic Zone Authority (PEZA) has issued Memorandum Circular No. 2025-052 to clarify the application of VAT zero-rating on local purchases made by registered export enterprises and high-value domestic market enterprises under the CREATE More Act (RA 12066). PEZA, as the determining authority, emphasized that VAT zero-rated purchases must be directly attributable to a registered project or activity—meaning they must be incidental to and reasonably necessary for the Registered Business Enterprise (RBE) operations.

The Circular provides a comprehensive positive list of goods and services that qualify for VAT zero-rating, including raw materials, supplies, equipment, fuels used in production, utilities, rent, computer hardware, office and OSH supplies, and various operational and administrative services. Covered services include janitorial, security, financial, consultancy, HR, marketing, legal, accounting, and logistics support.Importantly, the list is not exhaustive. RBEs may request PEZA confirmation for items not explicitly listed, supported by justification and a notarized Sworn Affidavit. PEZA’s guidance aims to streamline VAT zero-rating applications, but RBEs must maintain strong documentation, as the BIR may conduct post-audit verification to ensure compliance.