CTA denies P3-M tax credit or refund of Avaloq PH
The Court of Tax Appeals (CTA) has denied the petition of Avaloq Philippines Operating Headquarters which sought from the Bureau of Internal Revenue (BIR) a tax refund of P3 million for its zero-rated sales for the 3rd and 4th quarters of 2017.
Avaloq Philippines is engaged in the sourcing and procurement of raw materials and components, among other related businesses.
It filed with the BIR an application for tax credits or refunds for its unutilized input value added tax (VAT) attributable to its zero-rated sale of services for Sept. 1, 2017 to Dec. 31, 2017 amounting to P3,055,913.90.
The application was denied on Dec. 18, 2019, with the BIR ruling that it lacked factual and legal basis. Avaloq Philippines then brought the case to the CTA on Jan. 17, 2020 via a petition for review.
Avaloq Philippines argued that the sales were paid for in acceptable foreign currency and the proceeds have been duly accounted for. It added that the input taxes due from the purchases of goods and services directly attributable to zero-rated sales of petitioner were duly supported by VAT invoices or official receipts.
On the other hand, the BIR contended that the petition should be denied for Avaloq Philippines' failure to prove and substantiate its claim for refund at the administrative level.
Siding with the BIR, the CTA's second division found that Avaloq Philippines failed to overcome the burden of proof required to establish the factual basis for its claim for tax credit or refund.
"At this point, petitioner (Avaloq Philippines) has already fallen short in establishing that its sales or supply of services qualify for VAT zero-rating under the said provision," the CTA said.
"To be sure, it is only when the sales of a VAT-registered person are zero-rated or effectively zero-rated that such person may have the option of applying for the issuance of a tax credit certificate or refund or creditable input tax due or paid attributable to such sales," it also said.
The 24-page decision dated Feb. 3 was written by Associate Justice Ma. Belen M. Ringpis-Liban with the concurrence of Associate Justices Maria Rowena Modesto-San Pedro and Corazon G. Ferrer-Flores.