The Court of Tax Appeals (CTA) has denied the petition of Zuellig Pharma Asia Pacific Ltd. Phils. ROHQ which sought a P59.8 million tax credit or refund from the Bureau of Internal Revenue (BIR).

Zuellig Pharma wanted the P59,809,336.79 refunded or credited as it reportedly represented its excess and unutilized input value added tax (VAT) on domestic purchases of goods and services attributable to its zero-rated sales for 2011.

The firm claimed that during the four quarters of 2011, it rendered services in the Philippines for its foreign affiliate, Zuellig Pharma Holdings Ltd., a non-resident foreign corporation engaged in business conducted outside the Philippines. For its services, Zuellig Pharma saidit was paid in acceptable foreign currency in accordance with the regulations of the Bangko Sentral ng Pilipinas (BSP).

In denying its petition, the CTA said that Zuellig Pharma failed to comply with all the VAT invoicing requirements to be able to file a claim for input taxes attributable to zero-rated sales. 

The tax court said that the supporting official receipts (ORs) provided by the company were not compliant with invoicing requirements under the VAT law and regulations. In particular, the nature of the services performed by Zuellig Pharma was not indicated in the supporting ORs, which the CTA said was in clear violation of Section 113(B)(3) of the National Internal Revenue Code (NIRC) of 1997.

"The invoicing and substantiation requirements should be followed because it is the only way to determine the veracity of the taxpayer's claims. More importantly, it must be emphasized that compliance with all the VAT invoicing requirements provided by tax laws and regulations is mandatory," the CTA said.

"Considering petitioner's failure to properly substantiate its reported zero-rated sales for the subject period of claim, the present Petition for Review must necessarily fail," it stressed.

The 20-page decision handed down by the tax court's special third division was written by Associate Justice Corazon G. Ferrer-Flores with the concurrence of Associate Justices Ma. Belen M. Ringpis-Liban and Maria Rowena Modesto-San Pedro.