THE Court of Tax Appeals (CTA) has affirmed its division’s ruling denying Maxima Machineries, Inc.’s appeal to review and set aside its tax liabilities worth P32.14 million for the fourth quarter of the 2016 fiscal year.
In a 43-page decision on July 25 and made public on July 28, the CTA full court said the company’s appeal lacked merit since it failed to prove that it was entitled to an input value-added tax refund traced to zero-rated sales.
It added that it found no compelling reason to overturn its division’s ruling.
The company is a subsidiary of Japanese business conglomerate Marubeni Corp.
“As to Marubeni Corporation, while petitioner was able to submit proof of its foreign incorporation, it failed to present Marubeni Corporation’s Securities and Exchange Commission (SEC) Certificate of Non-Registration,” according to the ruling penned by CTA Associate Justice Lanee S. Cui-David.
“We have determined that petitioner (Maxima Machineries) has no excess input VAT (value-added tax), which will entitle it to a refund.”
The court added that the conglomerate is doing business in the Philippines since it maintains a branch office through Maxima Machineries.
Under the country’s revenue code, companies must be supported by an SEC certificate of non-registration of corporation and proof of incorporation/registration in a foreign country.
The revenue code provides that a sale may qualify for a 0% VAT rate if the recipient of services is a foreign corporation doing business outside the Philippines, the payment for services was made in acceptable foreign currency based on the Philippine central bank rules, and if the services fall under services other than “processing, manufacturing or repacking goods.”
“Accordingly, a foreign corporation with a branch office is deemed to be doing business in the Philippines,” said the tax court. “It cannot be classified as a non-resident foreign corporation for purposes of taxation.”
It added that a company applying for a tax refund or tax credit certificate must not only prove its entitlement to the claim but also comply with all documentary requirements provided by the country’s tax laws.
The tax court noted that a company must prove every minute aspect of its case for entitlement to a refund.
“The burden is on the taxpayer to show that he has strictly complied with the conditions for the grant of the tax refund or credit,” said the tribunal. — John Victor D. Ordoñez
