THE Court of Tax Appeals (CTA) has denied the plea of Procter & Gamble (P&G)International Operations Pte., Ltd. to review and to set aside its alleged excess input value-added tax (VAT) worth P51.74 million traced to zero-rated sales from July 1 to Dec. 31, 2015.
In a 39-page decision on Oct. 5 and made public on Oct. 7, the CTA First Division said the firm did not provide enough evidence to prove its claim for the VAT refund.
“It is indispensable that a claimant of tax refund must prove that the services it rendered to its foreign affiliates must have been performed or rendered in the Philippines and not abroad,” Associate Justice Marian Ivy F. Reyes-Fajardo said in the ruling.
The tribunal noted that a claim for excess VAT is essentially a tax exemption, which requires the taxpayer to prove its entitlement with sufficient evidence.
Under the country’s tax code, zero-rated sales are transactions made by VAT-registered taxpayers that do not translate to any output tax.
If a sale is subject to 0% VAT, the term “zero-rated sale” must also be written on the company’s official invoices.
The petitioner is the Philippine regional operation headquarters of a Switzerland-based multinational firm.
The firm argued that it engaged with foreign corporations doing business outside the country. It noted that the subject VAT was paid for in accordance with the law and had been properly substantiated.
The tax court also disallowed some of the receipts presented due to the firm’s failure to prove that the transactions were paid in acceptable foreign currency and were accounted for with the central bank’s rules.
“In view of petitioner’s failure to prove that its alleged VAT zero-rated sales were performed in the Philippines, petitioner failed to show that it is entitled to the claim for refund or tax credit under the substantive law,” the CTA pointed out. — John Victor D. Ordoñez