The Court of Tax Appeals (CTA) has denied the petition of Organisational Support Services, Inc. seeking a tax refund of P1.78 million from the Bureau of Internal Revenue (BIR).

Organisational Support filed with the BIR an application for tax credits/refund on Dec. 9, 2020. 

It claimed its refund is for excess and unutilized value added tax (VAT) for the third and fourth quarters of 2018 attributable to its zero-rated sales of services to a nonresident foreign corporation (NRFC) not doing business in the Philippines. 

However, the firm's plea was disapproved by the BIR on March 1, 2021. Organisational Support filed a petition before the CTA on May 21, 2021.

Organisational Support said it has an agreement with Therapeutic Case Management Services Limited (TCMS) to conduct call and administration services on its behalf for its international clients. 

It told the CTA that its services fall under the scope of "services other than processing, manufacturing or repacking of goods" under Section 108(B)(2) of the National Internal Revenue Code (NIRC) of 1997, and thus it has a VAT rate of zero percent.

In denying the petition, the CTA said the firm's witnesses did not testify as to where the said services were performed. Because of the lack of indication on location of the performance of service, it failed to establish that the services provided to TCMS were performed in the Philippines, the court said.

"The burden of proof rests upon the party claiming exemption to prove that it is, in fact, covered by the exemption so claimed, a burden which petitioner here failed to discharge," the court also said.

The 18-page decision 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.