Procter & Gamble (P&G) is not entitled to its refund claim of P23.84 million in excess and unutilized value-tax (VAT) liabilities covering July to September, 2014, according to a ruling by the Court of Tax Appeals (CTA).

In a 28-page decision dated Aug. 14 and made public on Aug. 17, the court en banc said the multi-national firm failed to prove that its clients were doing business outside of the Philippines, which would have entitled it to a 0% VAT rating and a subsequent refund.  

The case stemmed from the Bureau of Internal Revenue’s denial of the refund claim in 2017 after P&G failed to submit complete documents that it had 68 overseas clients in various countries. 

Sales that qualify for 0% value-added tax (VAT) include services other than processing, manufacturing, or repacking of goods; and services performed in the Philippines by VAT-registered persons and sales paid in acceptable foreign currency in line with the central bank’s rules.

In January, 2022, the CTA Third Division already decided to reject the refund claim.  

That decision was affirmed by the court en banc, citing, among others, that the firm’s services were categorized as manufacturing or repacking goods and that Securities and Exchange Commission documents to support its claim that it dealt with clients in a foreign country were incomplete.

“Considering all the foregoing, we find no compelling justification to disturb the ruling of the court in division (Third Division),” said the ruling penned by Associate Justice Lanee S. Cui-David. — John Victor D. Ordonez