The Court of Tax Appeals (CTA) has denied the P2.23 million tax refund sought by Avaloq Philippines Operating Headquarters from the Bureau of Internal Revenue (BIR).

Citing Section 112(C) of the National Internal Revenue Code (NIRC) of 1997, as amended by Republic Act No. 10963, the Tax Reform for Acceleration and Inclusion (TRAIN) Law, Avaloq said that it is entitled to a refund of P2,233,944.02 for its unutilized and excess input value added tax (VAT) attributable to zero-rated sales for the first quarter of 2020.

It told the CTA that on June 16, 2022 it received a letter from the BIR which denied its application for VAT refund from January to March 2020.

It pointed out the BIR’s denial lacked legal basis because it sufficiently established the fact that the provision of its services to foreign clients are rendered in the Philippines.

But the CTA did not agree. The tax court said that Avaloq was unable to prove that the services rendered to its non-resident foreign affiliates were paid for in acceptable foreign currency.

The CTA ruled: "All told, as petitioner was unable to prove compliance with the fourth and fifth requisites for the grant of a refund or tax credit of input VAT under Section 112(a) of the NIRC of 1997, as amended, the Court need not belabor petitioner's compliance with the other requisites. Indeed, it is clear that the present Petition for Review must fail.”

The 32-page decision was written by Associate Justice Lanee S. Cui-David with the concurrence of Presiding Justice Roman G. Del Rosario and Associate Justice Jean Marie A. Bacorro-Villena.