CTA.JUDICIARY.GOV.PH/

THE Court of Tax Appeals (CTA) has reduced the local business tax (LBT) liabilities of Lazada E-Services Philippines, Inc. to P8.17 million from P21.84 million for the years 2015 and 2017.

In a decision dated Nov. 23 and made public on Nov. 25, the CTA Special Third Division said the city treasurer of Makati City had the power to impose LBT on Lazada for those years.

The court ruled that the e-commerce platform was liable to pay the local government unit (LGU) P3.42 million for the taxable year 2015 and P4.75 million for 2017.

“Accordingly, petitioner Lazada E-Services Philippines, Inc. is ordered to pay the respondents City of Makati and City Treasurer of Makati City the reduced amount of P8,167,694.76,” CTA Associate Justice Erlinda P. Uy said in the ruling.

The tribunal also set aside the P13.67 million LBT for 2016 due to a lack of evidence.

Lazada transferred its main office to Taguig City in 2016 but retained its Makati office until it stopped doing business in Makati on Sept. 30, 2017.

The court said the firm failed to prove that the operations in the Makati office were not taxable or limited to non-revenue generating activities upon the retirement of its businessmen in Makati City.

“It is evident from the foregoing gross sales/receipts for 2017 that despite the transfer of the petitioner’s principal office to Taguig City, sales activities were still being conducted, generated, and recorded in the petitioner’s Makati office,” it noted.

Under the local government code, upon the termination of a business in the city, a taxpayer must submit a sworn statement of its gross sales or receipts for the current year to the LGU.

Taxpayers may also file a written protest with the local treasurer when contesting an assessment within 60 days.

The court noted that Lazada did contest the LBT assessment for 2015.

“The authority of local government units to impose LBT for taxable years 2016 and 2017 is not dependent on the procedural requirement of filing an application for the retirement of business but is conditioned on the business transactions conducted within their territorial jurisdiction,” it said.

“Accordingly, in view of petitioner’s (Lazada) failure to contest the LBT assessment for TY 2015, the same has become final, executory and unappealable.” — John Victor D. Ordoñez