Selling to a PEZA Company? Why You Need a VAT Zero-Rating Certification, Not Just BIR Form 2303

Q: Can a local supplier automatically zero-rate a sale to a PEZA-registered company?

No. VAT zero-rating on a local sale of goods or services to a registered export enterprise (REE) like a PEZA locator is not automatic — the supplier must obtain a VAT Zero-Rating Certification from the buyer's Investment Promotion Agency (IPA), such as PEZA, confirming the goods or services are directly and exclusively used in the buyer's registered project or activity.

Q: Do suppliers still need prior BIR approval before zero-rating a sale to a registered export enterprise?

No, not anymore. Revenue Regulations No. 3-2023 removed the earlier requirement (under RR No. 21-2021 and related circulars) that suppliers obtain the BIR's own prior approval before zero-rating such sales. Zero-rating is now available based on the annual VAT Zero-Rating Certification issued by the buyer's IPA instead.

Q: What documents does the buyer need to give the supplier?

The registered export enterprise buyer furnishes the supplier a copy of its own BIR Certificate of Registration (BIR Form 2303) and the annual VAT Zero-Rating Certification issued by its Investment Promotion Agency, confirming the goods or services purchased are directly and exclusively used in its registered project or activity.

Q: What happens if the supplier doesn't get the VAT Zero-Rating Certification before the sale?

Without the certification on file, the supplier has no documented basis for zero-rating and should charge the standard 12% VAT on the sale instead — the BIR retains post-audit rights to disallow zero-rating a supplier claimed without a valid certification.

Q: Is a BIR Certificate of Registration (Form 2303) enough on its own to zero-rate a sale?

No. A copy of the buyer's Form 2303 shows the buyer is a registered export enterprise in general, but it does not, by itself, establish that a specific purchase is directly and exclusively used in the buyer's registered project or activity — that's what the separate VAT Zero-Rating Certification from the IPA is for.

A local supplier selling goods or services to a PEZA-registered company or other registered export enterprise (REE) cannot treat that sale as VAT zero-rated just because the buyer holds BIR Form 2303 as a registered enterprise. Revenue Regulations (RR) No. 3-2023 requires the buyer to furnish the supplier a separate, annually issued VAT Zero-Rating Certification from its Investment Promotion Agency (IPA) — such as PEZA — confirming the specific purchase is directly and exclusively used in the buyer’s registered project or activity, before the supplier can zero-rate the sale.

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What changed under RR No. 3-2023? #

RR No. 3-2023 removed the requirement that suppliers obtain the BIR’s own prior approval before zero-rating local sales to a registered export enterprise, replacing it with an annual certification the buyer’s own Investment Promotion Agency issues. Under the earlier regime — RR No. 21-2021 and related circulars including RMC Nos. 24-2022 and 49-2022 — a local supplier needed the BIR to pre-approve zero-rating on a per-transaction or per-application basis before charging 0% VAT on qualifying sales to a PEZA locator or similar registered enterprise. That prior-approval step created delay and uncertainty for ordinary supplier relationships.

RR No. 3-2023, effective April 28, 2023, replaced that prior-BIR-approval step with a simpler mechanism: the buyer’s own IPA (PEZA for PEZA-registered enterprises, or the relevant IPA for enterprises registered elsewhere) issues an annual VAT Zero-Rating Certification confirming that specific goods or services purchased are directly and exclusively used in the buyer’s registered project or activity. RMC No. 80-2023 later clarified implementation details for suppliers and buyers adjusting to the new certification-based process.

The “directly and exclusively used” standard itself traces back to the CREATE Act’s own zero-rating provisions for registered export enterprises:

The sale of raw materials, inventories, supplies, equipment, packaging materials, and goods to a registered export enterprise to be used directly and exclusively in its registered project or activity qualifies for zero-percent (0%) VAT rate pursuant to Sections 294(E) and 295(D) of Republic Act No. 11534 (the CREATE Act).

RR No. 3-2023 and its certification mechanism exist to give suppliers and the BIR a documented, workable way of confirming that same “directly and exclusively used” test on a transaction-by-transaction basis, without requiring the BIR itself to pre-clear each sale.

What exactly does a supplier need on file? #

A supplier zero-rating a sale to a registered export enterprise needs two documents from the buyer, not one — the buyer’s BIR Certificate of Registration and a current VAT Zero-Rating Certification from the buyer’s IPA — because the two documents answer different questions.

Document	What it confirms
BIR Form 2303 (Certificate of Registration)	The buyer is a registered taxpayer and, generally, a registered export enterprise
VAT Zero-Rating Certification (from the buyer’s IPA, e.g. PEZA)	The specific goods or services being purchased are directly and exclusively used in the buyer’s registered project or activity

A copy of Form 2303 alone tells a supplier the buyer is registered — it says nothing about whether a particular invoice’s goods or services are actually going toward the buyer’s registered activity, which is exactly the gap the IPA certification closes. The BIR retains post-audit verification rights, so a supplier that zero-rated sales without the certification on file risks having that zero-rating disallowed on examination, with the difference reassessed as output VAT.

What happens without the certification? #

Absent a valid, current VAT Zero-Rating Certification, the safer and correct position is to charge the standard 12% VAT on the sale rather than zero-rating it. This mirrors the general principle already covered in VAT Zero-Rating for Exporters and in this site’s coverage of PEZA-adjacent VAT disputes such as Coral Bay Nickel v. CIR and Hedcor v. CIR — zero-rating for a registered enterprise’s transactions is never automatic just because of the buyer’s status; it depends on documentation actually connecting the specific transaction to the registered activity.

Worked example: a local supplier billing a PEZA locator #

A packaging supplier billing a PEZA-registered electronics exporter ₱1,000,000 zero-rates the sale only after confirming the buyer’s current VAT Zero-Rating Certification covers packaging materials for its registered manufacturing activity.

Before invoicing, the supplier requests and receives from the buyer: (1) a current copy of BIR Form 2303 showing PEZA registration, and (2) the buyer’s VAT Zero-Rating Certification from PEZA for the current year, confirming packaging materials are directly used in the registered export manufacturing activity.

Item	Amount
Sale of packaging materials to the PEZA locator	₱1,000,000.00
VAT rate applied (zero-rating certification on file and valid)	0%
VAT that would apply without a valid certification	12% (₱120,000.00)

Had the buyer been unable to produce a current VAT Zero-Rating Certification — for example, if its certification had lapsed or didn’t cover packaging materials specifically — the supplier’s correct position would be to charge the full 12% VAT rather than zero-rate the sale on the strength of the buyer’s registration status alone.

Frequently asked questions #

Can a local supplier automatically zero-rate a sale to a PEZA-registered company? #

No. The supplier must obtain a VAT Zero-Rating Certification from the buyer’s Investment Promotion Agency confirming the goods or services are directly and exclusively used in the buyer’s registered project or activity.

Do suppliers still need prior BIR approval before zero-rating a sale to a registered export enterprise? #

No. RR No. 3-2023 removed the earlier prior-BIR-approval requirement under RR No. 21-2021. Zero-rating is now based on the annual VAT Zero-Rating Certification from the buyer’s IPA.

What documents does the buyer need to give the supplier? #

The buyer furnishes a copy of its BIR Certificate of Registration (Form 2303) and the annual VAT Zero-Rating Certification from its Investment Promotion Agency.

What happens if the supplier doesn’t get the VAT Zero-Rating Certification before the sale? #

Without the certification on file, the supplier should charge the standard 12% VAT — the BIR retains post-audit rights to disallow zero-rating claimed without valid certification.

Is a BIR Certificate of Registration (Form 2303) enough on its own to zero-rate a sale? #

No. Form 2303 shows the buyer is registered generally, but it doesn’t establish that a specific purchase is directly and exclusively used in the buyer’s registered project — that’s what the separate certification is for.

Summary #

Zero-rating a local sale to a PEZA or other registered export enterprise requires the buyer’s VAT Zero-Rating Certification from its Investment Promotion Agency under RR No. 3-2023, not just a copy of BIR Form 2303 — and without it, 12% VAT is the correct default. See VAT Zero-Rating for Exporters for the broader export zero-rating framework.