SC VAT RULING REVIEW PUSHED

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THE business community on Monday joined the clamor for clear and transparent rules from the judiciary on value-added tax (VAT) refunds.

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The call came after the Supreme Court in a resolution dated October 8, 2013, turned down the claim of San Roque Power Corp. to recover P483.8 million in excess input VAT from the Bureau of Internal Revenue (BIR).

They said that the ruling unfortunately leaves the business community (and the lower courts) with unclear dates of effectivity, and hurting a string of other refund seekers.

Local and foreign business groups said that there should be equal protection under the law.

Henry Schumacher, external affairs vice president for the European Chamber of Commerce of the Philippines (ECCP), earlier expressed alarm over the “retroactive” rulings of the High Tribunal and the BIR.

In October 2013, after voting 8-7, the whole of the High Tribunal turned down the motion for reconsideration filed by San Roque, as it affirmed its ruling reversing the earlier verdict of the Court of Tax Appeals (CTA), which granted its claim on an adjusted amount of P483.8 million.

In the same decision, the High Tribunal also denied with finality the motion for reconsideration filed by the BIR questioning its decision granting the petition for a tax refund from Taganito Mining Corp. worth P8.4 million.

The High Tribunal held that San Roque prematurely filed its claim with the CTA in April 2003, when its claim was still pending before the internal revenue agency.

In the ruling penned by Senior Associate Justice Antonio Carpio, the High Tribunal reiterated its pronouncements in its decision that, “at the time San Roque filed its petition for review with the CTA, the 120+30 day mandatory periods were already in the law.”

The court said that San Roque failed to comply with the 120-day waiting period, the time expressly given by law to the BIR commissioner to decide whether to grant or deny the company’s application for tax refund or credit.

Carpio stated that the effectivity of the new interpretation should be from the date of effectivity of Republic Act 8424 (Tax Reform Act of 1997) on January 1, 1998, until December 10, 2003, date of issuance of BIR Ruling DA-489-03. From December 11, 2003, up to October 5, 2010, the 120+30 day periods requirement will be deemed discretionary. Then from October 6, 2010, (date of promulgation of Aichi case) onwards, the 120+30 day period requirement is again deemed mandatory and jurisdictional.

But on Associate Justice Presbitero Velasco’s dissent, he opined that “judicial claims filed from January 1, 1996 [effectivity of Revenue Regulation 7-95]up to October 31, 2005 [prior to effectivity of Revenue Regulation 16-2005], should be exempt from strict enforcement of the 120+30 day period requirement, provided that both administrative and judicial claims are filed with two years from close of the relevant taxable quarter.”

In other words, the 120+30 day period requirement is non-mandatory from January 1, 1996, until October 31, 2005, given that the prevailing rule at that time was RR 7-95, which allowed simultaneous filing of administrative and judicial claims.

“Turning away investors”
Schumacher said that the San Roque case could turn off investors looking to do business in the Philippines, adding that “the High Court and the BIR were ganging up on foreign investors, making it difficult for them to receive fiscal incentives such as duty and tax-free imports for capital equipment of priority sectors.”

He said that the long process of claiming such refunds is also burdensome to investors, since they have to go through the BIR only to be forced to go to the CTA and then to the High Tribunal, where long delays cause businesses to claim their refunds only years after.

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