CTA junks Zuellig Pharma’s P59M tax refund

THE Court of Tax Appeals (CTA) has turned down for lack of merit a suit filed by Zuellig Pharma Asia Pacific Ltd. for tax refund amounting to PHP59 million for 2011.

The company had claimed that it is entitled to the tax refund when it rendered services for its foreign affiliate, citing that among zero-rated transactions are services performed to a person engaged in business conducted out the country, when it is paid for in foreign currency.

"Statutes that grant of tax exemptions are construed strictissimi juris (of the strictest right or law) against the taxpayer and liberally in favor of the taxing authority," the tax court's third division said in its 20-page decision dated April 19.

"Tax refunds in relation to the VAT (value added tax) are in the nature of such exemptions. It is a claimant's burden to prove the factual basis of a claim for refund or tax credit," the court said.

The court pointed out the basis for the claim refund was not substantiated in the supporting official receipts, "particularly, the nature of the services performed by petitioner."

The court further explained that the invoicing and substantiation requirements should be followed because “it is the only way” to determine the veracity of the taxpayer's claims. “More importantly, it must be emphasized that compliance with all the VAT invoicing requirements provided by tax laws and regulations is mandatory," the CTA said.