CTA rejects review of Macquarie’s refund claim

THE Court of Tax Appeals (CTA) has affirmed its ruling that denied Macquarie Offshore Services Pty., Ltd.’s (Macquarie) appeal to review and set aside its excess input value-added tax (VAT) worth P85.1 million allegedly traced to zero-rated sales for the fiscal year 2016.

In an 18-page decision dated Jan. 25 and made public on Jan. 30, the CTA full court said the firm failed to prove that its transactions with its foreign clients were paid in a foreign currency accepted by the Philippine central bank.

“The Court En Banc finds that [we] cannot rely on the amounts and other information reflected in the documents submitted by petitioner (Macquarie) to prove that the payments were duly reflected in the Certificates of Inward Remittances and that these payments were accounted according to the rules and regulations of the Bangko Sentral ng Pilipinas.”

The tax tribunal said the firm failed to prove that its payments to the foreign clients were reflected in the certificates of inward remittances or the document that verifies the validity of the foreign money received by the beneficiary.

Macquarie cited a report from an independent certified public accountant that said the official receipts from its foreign clients showed that they were paid in acceptable foreign currency and were reflected in the firm’s bank statements.

“Clearly, the independent certified public accountant’s findings are not conclusive upon the court as the same is subject to its verification to determine its accuracy, veracity and merit,” the High Court said.

“However, despite having been duly supported by official receipts, the Court in Division found that petitioner was unable to sufficiently prove that the payments were duly reflected in the Certificates of Inward Remittances.”

The tax court said it was unable to determine if the payments were accounted for in line with the central bank regulations.

Under the country’s revenue code, taxpayers that engage with foreign firms outside the Philippines are entitled to zero-rated sales that do not translate to output tax.

Sales that qualify for 0% VAT include services other than processing, manufacturing, or repacking of goods; services performed in the Philippines by VAT-registered persons and sales paid in acceptable foreign currency in line with the central bank’s rules.

“Accordingly, the pieces of evidence presented entitling a taxpayer to an exemption must also be duly proven,” the court said.

“In this case, petitioner was not able to prove with competent evidence its entitlement to a refund or issuance of a tax credit certificate.