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CTA junks P1.2M tax refund sought by home decors, furniture firm
CTA junks P1.2M tax refund sought by home decors, furniture firm
The Court of Tax Appeals (CTA) has denied the P1.2 million tax refund claimed by Williams-Sonoma Philippines, Inc. against the Bureau of Internal Revenue (BIR).
Williams-Sonoma is engaged in the sale and distribution of home accessories, furniture, and decorations. It filed with the BIR tax refund or credits for P1.3 million for its domestic purchases of services and goods attributable to zero-rated transactions from February 2018 to January 2019.
However, the BIR only allowed the refund of P123,313.25 and disallowed the amount of P1,276,574.80 due to violations of invoicing requirements.
Williams-Sonoma then filed a petition for review before the CTA on Aug. 20, 2020 and pleaded for the refund. It claimed that the BIR violated due process and the disallowance "has no substantive legal and factual basis."
In its response, the BIR said that the petition must be dismissed because Williams-Sonoma failed to show proof of remittances of foreign currency from export of sales services and to fully substantiate with documentary evidence all the services claimed to be rendered to its affiliate outside the Philippines.
In resolving the issue, the CTA said that Williams-Sonoma failed to prove that it was engaged in zero-rated or effectively zero-rated sales from February 2018 to January 2019.
The court pointed out that the Services Agreement between Williams-Sonoma and Williams-Sonoma Singapore Pte Ltd. (WSSPL), a non-resident foreign corporation (NRFC), does not bear any indication that the services rendered were performed by Williams-Sonoma in the Philippines.
"No other evidence was offered to show that the subject services were indeed performed in the Philippines," the CTA said.
"Verily, petitioner fell short in establishing that its sales of services qualify for VAT zero-rating under Section 108(b)(2) of the National Internal Revenue Code (NIRC), as amended," it ruled.
The 18-page decision was written by Associate Justice Maria Rowena Modesto-San Pedro with the concurrence of Associate Justices Ma. Belen M. Ringpis Liban and Corazon G. Ferrer-Flores of the CTA’s special third division.