CTA denies P3.3M tax refund of Schaeffler Philippines
The Court of Tax Appeals (CTA) has denied the additional P3.3 million tax refund sought by Schaeffler Philippines, Inc. for its zero-rated sales for the first quarter of 2018.
Schaeffler is engaged in the business of wholesale, export, and import of parts and devices for automotive and other vehicles, railway, aircraft, general machineries, general machineries, high precision devices and other equipment.
On June 23, 2020, Schaeffler sought the refund of its unutilized input tax of P10,775,485 for its zero-rated sales for the first quarter of 2018.
The Bureau of Internal Revenue (BIR) approved Schaeffler's refund claim but only in the reduced amount of P5,625,739.78. On Sept 24, 2020, the firm filed a petition for review before the CTA and insisted on the refund for the remaining P3,332,237.
It told the CTA that it sold goods to certain manufacturers and exporters located in economic zones and registered with the Philippine Economic Zone Authority (PEZA), and sales made to ecozone entities are treated as export sales subject to zero percent VAT.
In denying the refund, the CTA said that Schaeffler failed to fully comply with its tax claim. It explained that a zero-rated transaction should have the "zero-rated sale" term written or printed prominently on the invoice or official receipt.
"In this case, all of petitioner's (Schaeffler) alleged zero-rated sales, evidenced by VAT invoices, do not bear the term 'zero-rated sale' written or printed prominently on such invoices. Thus, for failure of petitioner to comply with the invoicing requirements for all its alleged zero-rated sales, the refund claim should be denied," the CTA ruled in the decision written by Presiding Justice Roman G. Del Rosario.
"Here, all of petitioner's VAT invoices pertain to purely VAT zero-rated sales, yet the imprinting of the required phrase 'zero-rated sale' remained lacking," it said.
The tax court also said: “When transaction involves a purely VAT zero-rated sale, the VAT official receipt should prominently bear the term ‘zero-rated sale’ in accordance with Section 113(8)(2)(c) of the NIRC of 1997, as amended. However, when the transaction is mixed, i.e., it involves a combination of VATable, VAT-exempt or VAT zero-rated sales, the breakdown requirement under Section 113(8)(2)(d) may apply. Here, all of petitioner's VAT invoices pertain to purely VAT zero-rated sales, yet the imprinting of the required phrase ‘zero-rated sale’ remained lacking.”