NextGen Day

The Court of Tax Appeals (CTA) has ruled in favor of a local beverage maker, ordering a refund of erroneously paid taxes on beer products from five years ago.

In its decision, the CTA Second Division directed the issuance of a tax credit certificate amounting to PHP146,874,555.07 million to San Miguel Brewery Inc., excluding legal interest. This refund represents the “erroneously, excessively, and/or illegally collected excise taxes” imposed on the removal of various beer products in cans, bottles, and kegs.

The taxes in question were imposed in 2018 for 248,939,935 liters of beer removals from the company’s six brewery plants, which were subjected to excise taxes at PHP25.03 per liter.

The court acknowledged that the correct excise tax rate for the beer should have been PHP24.44 per liter rather than the imposed PHP25.03 per liter.

San Miguel Brewery Inc. challenged the Bureau of Internal Revenue (BIR) through a petition on December 11, 2019, arguing that the excise tax rate of PHP25.03 per liter imposed on its beer products from January 1 to December 31, 2018, contradicted provisions of the National Internal Revenue Code (NIRC), as amended by Republic Act 10351, also known as the Sin Tax Reform Law.

The company cited Section 143 of the NIRC, which states that if the net retail price per liter is PHP50.60 or less, the tax rate should be PHP15 per liter. If the net retail price per liter exceeds PHP50.60, the tax rate should be PHP20 per liter, effective January 1, 2013.

San Miguel Brewery Inc. further argued that starting January 1, 2017, the tax on all fermented liquors should be PHP23.50 per liter.

With the CTA’s decision, San Miguel Brewery Inc. is now eligible for the tax credit, providing financial relief to the company.

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