The Court of Tax Appeals (CTA) has finally resolved in favor of the Bureau of Internal Revenue (BIR) the long-drawn controversy over the taxability of the salaries of Filipino employes of the Asian Development Bank (ADB).
The court en banc affirmed the decision of one of its divisions that "there is no law, or treaty sparing salaries (of Filipino ADB workers) from Philippine taxes."
In a joint petition for a multi-million peso tax refund claims, the more than 120 ADB Filipino workers stated that other member-states of ADB exempt their citizens from taxation.
The court, however, noted that then President Ferdinand E. Marcos reserved the government's right to tax its citizen when the regional headquarters of the bank was established here in 1965.
It said the President's decision was even supported by a Senate resolution based on Sections 23 and 24 of the Tax Code that stipulates the government's right to tax its citizens.
The court rejected the argument of the petitioner that the revenue memorandum circular issued by former BIR Commissioner Kim Jacinto-Henares imposing the tax was belatedly issued and covered only earnings starting 2012.
"The long practice of the BIR of non- collection would not ripen into tax exemption," said Associate Justice Marian Ivy F. Reyes-Fajardo, who wrote the 22-page resolution.
The petitioners had asked the CTA to compel the BIR for tax refunds totalling to P58.8 million after the Mandaluyong Regional Trial Court invalidated the BIR circular.
But the CTA declared that the regional trial courts have no jurisdiction to decide issues concerning taxation, but the tax court.