CTA denies P81.6-M Maibarara tax refund claim

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Court of Tax Appeals

THE Court of Tax Appeals (CTA) denied for lack of merit the P81.6-million tax refund claim of a geothermal power generator, citing its failure to comply with the requirements for tax refund claims under the Tax Code.

In a 15-page decision dated March 4, the CTA special first division found that Maibarara Geothermal, Inc. did not have zero-rated sales in 2013, from which it claimed P81.6 million worth of refunds allegedly representing unutilized input value-added tax (VAT).

“Consequently, the subject Petitions for Review cannot be given due course because there were no zero-rated or effectively zero-rated sales during the subject periods,” the CTA said.

“In other words, the aggregate amount of P81,572,707.81 being claimed by petitioner, supposedly representing its unutilized input VAT for 2013, may not be refunded,” it added.

According to the Tax Code, in order to successfully obtain a tax credit or refund of input VAT, a taxpayer-applicant must be engaged in zero-rated sales and the input taxes claimed are attributable to it.

However, the CTA said that after examining Maibarara’s quarterly VAT returns for 2013, its accounting manager confirmed that it had no sales during the period as development and construction of its geothermal power plant and facilities were still ongoing. The company started selling only on the first quarter of 2014.

The CTA also noted that the accounting manager of Maibarara said that the income tax returns and audited financial statements during the taxable years 2010 to 2013 also showed no sales.

“Wherefore, in light of the foregoing considerations, the instant Petitions for Review are denied for lack of merit,” the CTA said.

The decision was written by Associate Justice Erlinda P. Uy and concurred in by Presiding Justice Roman G. del Rosario and Associate Justice Cielito N. Mindaro-Grulla. — Vann Marlo M. Villegas