THE Court of Tax Appeals (CTA) denied Ammex I-Support Corp.’s refund claim worth P626,151.31 traced to its excess unutilized input value-added tax (VAT) for the third quarter of 2015.
In a 15-page decision on July 14 and made public on July 18, the court’s special third division ruled that the petition lacked merit since the company failed to prove that it was engaged in zero-rated sales.
“Petitioner (Ammex I-Support) failed to submit in evidence the service agreement between petitioner and its clients that would establish the nature of services to be performed,” according to the ruling penned by CTA Associate Justice Maria Rowena Modesto-San Pedro.
The court added that based on the company’s records, it failed to prove that its foreign clients were not doing business in the Philippines.
A company may establish that its foreign clients are not doing business in the Philippines by submitting certificates of incorporation, memoranda of association, or any equivalent document, it added.
“In essence, petitioner’s sales to its alleged foreign clients fail to qualify for VAT zero-rating under the tax code, as amended,” it ruled.
Under the country’s revenue code, if a sale is subject to 0% value-added tax, the term “zero-rated sale” must be written or printed on the receipt.
The law also provides that “processing, manufacturing, or packing goods for other persons doing business outside the Philippines, and services other than those mentioned paid in an acceptable foreign currency” are transactions subject to a zero rating.
The private company is primarily engaged in business process outsourcing using computer-based information technology systems to service international clients.
The tribunal asserted that it was unnecessary to examine the company’s compliance with other requirements for a refund claim for to failing to qualify its sales for a zero rating.
“At this juncture, it is worthy to emphasize that tax refunds or tax credits, just like tax exemptions, are strictly construed against the taxpayers; hence, the taxpayer claimant has the burden to prove compliance with the conditions for the grant of the tax refund or credit,” said the tax court. — John Victor D. Ordoñez