THE Court of Tax Appeals (CTA) has granted a P9.6-million refund to Philex Mining Corp. that was part of its original refund claim worth P68.9 million representing its excess value-added tax (VAT) traced to zero-rated sales for 2017.

In a 28-page ruling dated Sept. 29 and made public on Sept. 30, the CTA full court said that of its original claim, the firm could only substantiate P9.6 million through documentary evidence.

“In fine, petitioner (Philex) has sufficiently proven its entitlement to the refund or issuance of a tax credit certificate in the amount of P9.6 million valid VAT attributable to valid zero-rated sales of P56.4 million less the P46.72 already refunded,” according to the ruling penned by Associate Justice Erlinda P. Uy.

Contrary to Philex’s original claim, the CTA noted that the mining company’s zero-rated sales could only amount to P56.42 million.

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

The court noted that taxpayers are only required to present VAT invoices to support a refund claim for VAT-registered entities.

“A VAT invoice is required only for domestic purchase of goods and properties, while an import entry or other equivalent document showing actual payment of VAT on the imported goods is required for importation of goods,” it said, citing the Bureau of Internal Revenue’s rules.

On Jan. 31, 2019, the commissioner of internal revenue (CIR) ruled that only P46.72 million of Philex’s original claim would be refunded due to a lack of documentary requirements.

A month after, Philex appealed the case to the CTA, seeking a refund worth 21.5 million after its claim was reduced. The tax court denied the petition due to lack of merit.

“It is clear that Sections 110 and 113 of the National Internal Revenue Code of 1997, as amended, are applicable only to VAT-registered persons and not to foreign sellers who are not subject to Philippine tax laws and are not VAT-registered,” said the tribunal.

These provisions within the country’s revenue code require taxpayers to present VAT invoices to prove creditable input tax subject to a refund. — John Victor D. Ordoñez