Tax appeals court grants geothermal firm’s refund

THE Court of Tax Appeals partially granted the tax refund claim of the Philippine Geothermal Production Co., Inc. (PGPI) representing its excess and unutilized value-added tax (VAT) attributable to zero-rated sales for 2015.

In a 24-page decision dated Oct. 28, the court’s second division ordered the Bureau of Internal Revenue to refund or issue a tax credit certificate to the company worth P10 million out of its initial P24.5 million claim.

The court said that only P22.7 million out of the P24.5 million claimed represents valid input VAT. Of the said amount, only P13.6 million can be traced to zero-rated sales.

“Due to the BIR’s previous partial approval of petitioner’s claim up to the amount of P3,589,914.20, the excess input VAT attributable to valid zero-rated sales of P13,619,625.28 should be further reduced,” the courts said.

“Hence, petitioner is entitled to a lesser input VAT claim of P10,029,711.08 after taking into consideration the BIR’s partial grant of its claim,” it added.

PGPCI, a renewable energy developer, is entitled to zero-rated value added tax on purchases of local supply of goods, properties, and services needed for the development of plant facilities, according to Republic Act No. 9513 or the Renewable Energy Act of 2008.

The Tax Code also states that sale of power or fuel generated through renewable sources of energy are subject to zero-rated VAT.

The court said that of the P3.9-billion reported sales for 2015, the court-commissioned accountant verified that the zero-rated sales were attributed to steam sales. Only P3.4 billion were supported with receipts and qualified as valid.

Of the declared input VAT of P24.5 million, around P22.7 were valid, it said.

“Although petitioner has a total valid input VAT of P22,769,549.78, the same, however, is not entirely attributable to zero-rated sales since petitioner also had VATable sales,” the court said.

The court also said the input VAT claimed was not applied to any output VAT liability and the claim for refund was filed on time.

The company first filed its claim in March 2017 with the BIR and was granted P3.5 million. The claim was then elevated to the court. — Vann Marlo Villegas