CTA orders refund of P235 M excise tax to Air Philippines Corporation

By Jun Ramirez

The Court of Tax Appeals (CTA) has ordered the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BoC) to return to Air Philippines Corporation (APC) more than P235 million it erroneously paid as excise tax.

Court of Tax Appeals (MANILA BULLETIN)
Court of Tax Appeals (MANILA BULLETIN)

The BoC collected the tax from the airliner on behalf of the BIR for importing aviation gas from May 2013 to December 2014 which is utilized in transporting passengers and cargoes.

The court en banc affirmed the decision of one of its divisions approving the APC’s refund claim.

It said APC like the Philippine Airlines is exempted from paying various tax types under Presidential Decree (PD) 1590, provided it remits regularly to the government franchise or income tax whichever is lower.

For one, the decree allows the two airline companies to bring in jet fuel tax-free “if the product is not available locally at reasonable quantity, quality, and price.”

The court disregarded the contention of the two collection arms of the government that the airliner was required to pay excise tax under Section 12 (a) of the Tax Code as well as the memorandum issued by the Department of Energy (DOE) that the Jet A-1 Fuel was available in the local market.

The court said the DOE is not the competent authority, but the Civil Aviation Authority of the Philippines (CAAP) whose mandate among others is “to take charge of technical and operational phases of aviation matters.”

It said the airliner was able to secure a certification from CAAP that the fuel was not “locally available at reasonable price, quantity, and quality,” thus exempted from paying excise tax.

The verdict described the consolidated petition for review filed by BIR and BoC as “without merit,” adding that the airliner has “sufficiently established its entitlement to a refund.”