NextGen Day

A petition for a PHP12-million tax refund filed by a data processing and preparation firm was denied by the Court of Tax Appeals (CTA).

The tax court’s Second Division disallowed the suit filed by Regus Service Center Philippines, a firm based in Bonifacio Global City in Taguig, for lack of merit in a 21-page ruling dated February 9 and written by Associate Justice Juanito C. Castaeda Jr.

The company applied for a tax refund of PHP12.295 million for 2017, claiming that it was erroneously collected input value-added tax (VAT) as part of zero-VAT-rated sales to a non-resident overseas client not doing business in the Philippines.

The tax court dismissed the firm’s claim, saying it failed to establish that the services it offered to the non-resident client were performed in the Philippines, which is one of the tax code’s prerequisites for a sale of services to be subject to the zero percent VAT rate.

“Petitioner failed to demonstrate its compliance in a clear and concise manner” (with essential elements). The identical services agreement contains no indication that the petitioner was to conduct the subject services in the Philippines. “There is no other evidence that tends to prove actuality,” it continued.

Laws granting tax exemptions, including tax refunds, are interpreted harshly against the party claiming the exemption, according to the CTA.

Associate Justice Lanee S. Cui-David joined the majority, while Associate Justice Jean Marie A. Bacorro-Villena joined the minority.

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