THE Court of Tax Appeals (CTA) has denied the claim for value-added tax (VAT) refund by oil company Total (Philippines) Corp., amounting to some P120 million for alleged input VAT incurred in 2007.
In its petition for review with the CTA en banc, Total alleged that the CTA Special First Division had erred in disregarding its claim for VAT refund from alleged zero-rated sales of in 2007 to entities registered with the Philippine Economic Zone Authority (Peza).
Total argued that its P1.09-billion sales to entities registered with Peza in 2007 are considered as export sales, and were, therefore, zero-rated sales.
Total is then claiming the input VAT amounting to some P120 million that it incurred for those alleged zero-rated sales to Peza-registered entities.
But the CTA said Total was not able to substantiate its claims that the sales it made to the Peza-registered entities were, indeed, zero-rated VAT sales because of the lack of certain documents to prove such claim.
To prove that its buyers were registered with Peza, Total presented documentary evidence such as the certificates of registration with Peza of its buyers.
But the CTA said that mere proof of registration with Pezadoes not automatically make the sales to those Peza-registered entities as zero-rated VAT sales, because the certificates would have to prove that those entities are, indeed, Peza-registered as of the time that the transactions took place in 2007.
In this case, the certificates of registration presented by Total were issued by Peza before the transactions took place in 2007, and the CTA en banc agreed with the rationale of the Special First Division, which said that the certificates of registration do not prove that the buyers of Total were indeed Peza-registered at the time of the transactions in 2007. “Circumspection is called for in this instance, since the respective registration with the above-stated government agencies may already have been revoked or suspended, or is not yet effective or is no longer renewed, in 2007,” the CTA said.
“It must be emphasized that to be subject to zero-percent VAT, it is crucial that a transaction be classified as an export sale, which, in turn, is dependent on the requirement that the sale was, indeed, made to an enterprise, whose registration with any of the said government agencies is already effective or is still in effect,” it added.
The CTA also found that the invoices that Total presented to prove its input VAT on certain goods purchased did not comply with the strict invoicing rules required by the Bureau of Interal Revenue (BIR) to be complied with in applications for refund of input VAT incurred.
Under Revenue Memorandum Circular 42-2003, the requirements for an invoice to be valid to prove input VAT are that the invoice must show the following: name, tax identification number (TIN) and address of seller; the date of the transaction; the quantity, unit cost and description of the merchandise or nature of the service; name, TIN, business style, and address of the VAT-registered purchaser; the word “zero-rated” imprinted on the invoice covering zero-rated sales; and the invoice value or consideration paid.