THE Court of Tax Appeals (CTA) has denied Melco Resorts Leisure Corp.’s P898-million refund claim in excess input value-added tax (VAT) for the fourth quarter of 2014 up to the second quarter of 2015.

In a 26-page decision on May 23 and made public on May 25, the CTA Third Division said the company’s sales did not qualify as zero-rated or effectively zero-rated.

“In the instant case, the records are bereft of any showing that petitioner (Melco) is engaged in zero-rated or effectively zero-rated transactions, as provided under sections 106 and 108 of the National Internal Revenue Code,” according to a copy of the ruling written by CTA Associate Justice Erlinda P. Uy. “This is fatal to the petitioner’s cause and bars it from claiming refund of input VAT.”

The tax court’s First Division previously consolidated the tax assessments for both years after a separate motion submitted by the petitioner.

The tribunal noted that the petitioner was able to file its administrative claim for refund within the two-year period prescribed by law.

Under the country’s tax code, zero-rated sales are transactions made by VAT-registered taxpayers that do not result in any output tax.

The commissioner of internal revenue reiterated in its counter-argument that the petitioner did not list any sales subject to zero-percent VAT.

The tax court noted that the company was entitled to a tax exemption due to it being licensed by the Philippine Amusement and Gaming Corp.

The petitioner is a domestic corporation that handles the operation of City of Dreams Manila resort and casino in Parañaque City.

It argued that even if its revenue from gaming operations were not considered zero-rated sales, it is still entitled to a refund due to its license.

The tribunal said that being exempt from VAT does not remove the tax burden relieved by zero-rated sales.

“Simply put, both the tax liability to pay the output VAT on the sales and the tax burden as a result of shouldering the input VAT on the purchases are removed in favor of the taxpayer-claimant engaged in zero-rated sales,” it noted.

“As petitioner is simply VAT exempt and has not been shown to be engaged in any of the zero-rated or effectively zero-rated transactions, it cannot claim a refund of its input VAT.” — John Victor D. Ordoñez