THE Court of Tax Appeals (CTA) has granted a partial value-added tax (VAT) refund of P9.82 million to Manulife Data Services, Inc. out of its P96.28-million claim for its tax-exempt sales in 2016.
In a 45-page ruling dated Nov. 23, CTA Special Third Division determined that only P9.82 million can be refunded from the valid zero-rated sales of P1.28 trillion in 2016.
The final approved amount was less than the initially requested sum after the tax court determined that only a certain amount met the criteria for the refund, considering conditions such as the utilization of input VAT against output VAT liability and adjustments over successive quarters.
Manulife Data Services, a foreign corporation, asserted its eligibility for a VAT refund as a registered entity engaged in zero-rated sales paid by inward remittances of foreign currency, as permitted by the Tax Reform for Acceleration and Inclusion or the TRAIN Law.
The Bureau of Internal Revenue (BIR) denied the company’s refund claim on May 30, 2018, arguing that it failed to provide a certificate of incorporation from a foreign country — a requirement to prove eligibility for tax exemption under the TRAIN Law.
The CTA ruled the BIR should not have disapproved the refund claim based on Manulife Data Services’ failure to file the said certificate, stating that the law does not limit the requirements an entity can file to prove its eligibility for the exemption.
The appellate court said the tax law “did not contemplate any restriction on the documentary requirements that may be submitted by the taxpayer to prove that its NRFC (nonresident foreign corporation) clients are not doing business in the Philippines,” according to the ruling penned by Associate Justice Ma. Belen M. Ringpis-Liban. — J.R. Paguian
