EconomyForex

Tax court declines to review geothermal company’s P30.43-M refund claim

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THE Court of Tax Appeals (CTA) has affirmed a division ruling which had rejected Philippine Geothermal Production Company, Inc.’s (PGPCI) refund claim worth P30.43 million representing excess input value-added tax (VAT) paid on zero-rated sales dating back to 2013.

In an 11-page decision on June 14 and made public on June 17, the full CTA court said the company had failed to present a certificate of endorsement from the Department of Energy (DoE) to avail of tax incentives provided to renewable energy developers.

“In this case, petitioner (PGPCI) failed to produce the DoE certificate of endorsement relative to its alleged sales of renewable energy for the second and third quarters of the taxable year 2013 as mandated by the DoE,” according to the ruling, written by Associate Justice Marian Ivy F. Reyes-Fajardo. “Therefore, the court in division is correct in denying the petitioner’s refund of alleged excess and unutilized input VAT.”

PCPCI had argued that its certification as a renewable energy developer of geothermal sources proved its entitlement to VAT zero-rating on its sales.

The tax court ruled that despite its registration as a developer, the company failed to comply with the requirements set forth by the Energy department.

“A claim for unutilized input value-added tax is in the nature of a tax exemption,” the court said. “Thus, strict adherence to the conditions prescribed by the law is required of the taxpayer and petitioner failed in this regard.”

Under the DoE’s rules and regulations, renewable energy developers may avail of tax incentives only after securing a certificate of endorsement from the department.

In a dissenting opinion, Associate Justice Jean Marie A. Bacorro-Villena argued that the company did not need to secure the endorsement to apply for a refund.

“It is clear from the foregoing that the DoE certificate of endorsement is only required in order for the petitioner to enjoy the income tax holiday and the duty-free incentives; however, such requirement is not needed for VAT zero-rating purposes,” she said. “Hence, the non-presentation of the same should not bar petitioner from applying for a refund of its excess input VAT.”

Ms. Villena voted to remand the case to another division of the CTA for proper calculation of the excess input VAT due to the company. — John Victor D. Ordoñez

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