The Court of Tax Appeals (CTA) has turned down the petition of a foreign cigarette company to get back from the Bureau of Internal Revenue (BIR) more than P305 million in advance excise tax payments due to its failure to submit complete tax refund documents.
The British American Tobacco (Philippines) Limited sought the refund of prepaid taxes it made in 2016 and 2017 after it decided to close its operations in the country.
The court's second division stated that the petition could not be granted because it lacked a tax clearance issued by the BIR.
It explained that a business contemplating dissolution must present a tax clearance certificate to show settlement of tax liabilities as mandated in the Tax Code.
This way, the court said, a "dissolving company does not renege on its tax liabilities and thereby deprive the government of much needed revenues."
The CTA also noted that the tobacco company did not present unused invoices and receipts for the cancellation of its registration, which is required under Revenue Regulations No. 7-2012.
The court added that tax refunds, like tax exemption, are strictly construed against taxpayers who are required to submit a complete set of evidence to entitle them to the refund.
"The petitioner failed to sufficiently prove that it is entitled to a refund...it has not satisfactorily complied with the legal requirements to effect it's dissolution," said Associate Justice Jean Marie Bacorro-Villena, who wrote the 16-page verdict.