THE Court of Tax Appeals (CTA) has denied Philippine Geothermal Production Co., Inc.’s (PGPCI) refund claim worth P13.62 million representing its excess input taxes traced to zero-rated sales for the 2015 fiscal year.
In a decision dated Jan. 9 and made public on Jan. 11, the CTA full court said that it did not commit an error in granting a reduced value-added tax (VAT) refund amount of P10.03 million in 2020.
“As a claim for refund, [it] must establish its claim by quantum of evidence and not by assumption,” Associate Justice Erlinda P. Uy said in the ruling.
The Bureau of Internal Revenue (BIR) partially granted PGPCI’s claim in the amount of P3.59 million, which prompted the appeal.
The firm argued that the CTA made an error in deducting the amount approved by the BIR from its original refund claim, which the court disagreed with.
The court said it had already thoroughly considered and evaluated the entire refund claim when assessing the eligibility for zero-rated sales.
Under the law, taxpayers that engage in transactions with foreign corporations doing business outside the Philippines are entitled to zero-rated sales that do not translate to output tax.
The term “zero-rated sale” must be written on the company’s official invoices
The CTA also denied the commissioner of internal revenue’s (CIR) petition to dismiss the overturn of its decision to refund P10.03 million.
The CIR argued that PGPCI did not prove that its taxes were “creditable and directly attributable” to its products. It also said the firm did not present a certificate of endorsement from the Department of Energy (DoE) to qualify for tax refunds.
The tax tribunal noted that input tax receipts do not have to always be directly attributable to a taxpayer’s final products.
“Hence it is not required that the claimed input tax be directly attributable to zero-rated sales in order to be creditable.”
Citing the DoE’s rules, the court said a taxpayer does not need to submit a certificate of endorsement to qualify for zero-rated taxes.
It said an endorsement certificate is only required for incentives such as the exemption from tariff duties on the importation of machinery and the sale or transfer of other equipment.
“Thus, the Court in Division was correct in ruling that PGPCI would still be able to avail of a zero-percent VAT rate regardless of its procurement of the certificate of endorsement,” it said. — John Victor D. Ordoñez