A taxpayer who has overpaid, or paid an erroneous or illegal tax, may recover it either through a tax refund (a return of the money) or a tax credit (an amount that can be applied against other tax liabilities). The claim must be pursued within a strict deadline: a claim for refund or credit of any national internal revenue tax erroneously or illegally assessed or collected must be filed with the BIR within two years from the date of payment of the tax, regardless of any supervening cause. Filing an administrative claim with the BIR is generally a prerequisite; and if the BIR denies the claim or fails to act, the taxpayer may appeal to the Court of Tax Appeals, but the appeal must also be made within the two-year period from payment (the periods overlap, so the taxpayer must be careful not to let the two years lapse while waiting for the BIR). For creditable withholding taxes and excess input VAT, there are specific rules and periods for claiming refunds or credits. Because the two-year period is strictly applied and jurisdictional, a taxpayer entitled to a refund can still lose the right by filing late. Documentation proving the payment and the basis for the refund is essential.
Two Ways to Recover
An overpaid or erroneously/illegally paid tax can be recovered by a refund (money returned) or a tax credit (applied against other tax liabilities).
The Two-Year Deadline
A claim must be filed with the BIR within two years from the date of payment — regardless of any supervening cause. An administrative claim with the BIR is generally a prerequisite.
Appeal to the CTA
If the BIR denies or fails to act, the taxpayer may appeal to the CTA, but still within the two-year period — so do not let it lapse while waiting. Documentation of the payment and basis is essential.
Practical Takeaways
- Recover overpaid tax by refund or credit;
- File within two years from payment — strictly applied;
- File the administrative claim first, and appeal to the CTA within the same two years.
Frequently Asked Questions
Can I recover an overpaid or wrongly paid tax? Yes. You may recover it through a tax refund (money returned) or a tax credit (applied against other tax liabilities), by filing a claim with the BIR.
How long do I have to claim a tax refund? Within two years from the date of payment of the tax, regardless of any supervening cause. The two-year period is strictly applied and jurisdictional.
What is the difference between a refund and a tax credit? A refund is a return of the overpaid money, while a tax credit is an amount that can be applied against other tax liabilities of the taxpayer.
What if the BIR does not act on my claim? You may appeal to the Court of Tax Appeals, but the appeal must still be made within the two-year period from payment, so you must not let the two years lapse while waiting for the BIR.
This commentary is for general informational purposes only and does not constitute legal advice. For guidance specific to your situation, please consult a licensed attorney.
If you have questions about your rights or options under Philippine law, our firm is available to assist. You may reach us via Viber or WhatsApp, call us at 0995 433 5550, or send an email to vivasnobles@gmail.com. We look forward to hearing from you.