CTA denies Citco International's P13.9-M tax refund
The Court of Tax Appeals (CTA) has denied the P13.9 million tax refund sought by Citco International Support Services Limited for its alleged input tax on zero-rated sales for the third and fourth quarters of 2018.
In denying Citco’s petition, the CA said the firm fell short in establishing that its sale or supply services qualify for value-added tax (VAT) zero-rating under Section 108(B)(2) of the National Internal Revenue Code (NIRC) as amended.
"Needless to state, 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 of creditable input tax due or paid attributable to such sales,” the CTA said.
The tax court also said: “Considering petitioner's (Citco) failure to establish its zero-rated or effectively zero-rated sales for the subject periods, the present Petition for Review must necessarily fail.”
Citco International wanted the Bureau of Internal Revenue (BIR) to issue a tax credit certificate for the amount of P13,971,397.52.
Its plea was denied by the BIR on Jan. 4, 2021 with a ruling that “no bank certification was submitted to prove inward remittance" of the proceeds from its export sales. It challenged the BIR’s ruling before the CTA.
Citco’s website states that it is “a global provider of fund services, corporate governance, and asset services.”
In denying Citco’s petition, the CTA said that the firm’s sale of services must be supported with a certificate of inward remittance or a bank certified credit memo to show that it was paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP).
Since there was no showing that the proceeds from its sale of services were inwardly remitted through the Philippine banking system and duly accounted for in accordance with BSP rules and regulations, the CTA said that Citco International failed to properly establish that it was engaged in zero-rated sales.
"At this juncture, petitioner has already fallen short in establishing that its sale or supply of services qualify for VAT zero-rating under Section 108(B)(2) of the NIRC of 1997, as amended," it ruled.
The 20-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.