THE Court of Tax Appeals (CTA) has ordered a P13.35 million refund on erroneously paid value-added tax (VAT) by PTT Philippines Trading Corp. covering its imports of petroleum products.
In a 19-page decision on Aug. 29, the CTA third division said PTT is entitled to a refund on amonts taxed when it imported fuel after Revenue Regulations No. 2-2012, which was the basis for the payment, was declared null and void by the Supreme Court (SC).
“Apparently, RR No. 2-2012 directly contravenes the tax exemptions granted to petitioner under RA No. 7227, amended by RA No. 9400. Since RR No. 2-2012 is of no force and effect, respondents’ imposition of VAT on petitioner’s importation of diesel is without valid basis,” the court ruled.
“Hence, the VAT payment made by petitioner on the importation of diesel is erroneous and illegal,” it added.
Section 12 of Republic Act No. 7227 or the Bases Conversion and Development Act of 1992, grants locators in the former Subic and Clark military reservations incentives such as tax and duty-free importation. PTT operates a fuel receiving terminal in the Subic Special Economic Zone.
RR No. 2-2012 which imposes taxes on Freeport and Economic Zone (FEZ) enterprises, has been declared unconstitutional by the Supreme Court for illegally imposing taxes on FEZs which enjoy tax–exempt status.
PTT imported diesel fuel from Sept. 20, 2013 to Jan. 20, 2014 and paid VAT worth P13.35 million to the Bureau of Customs.
“In view of the foregoing, petitioner is entitled to the refund of the illegally collected or erroneously paid VAT on the importation of diesel in the amount of P13,347,275.20,” it added.
Under Section 24 of the Republic Act No. 7916, or the Special Economic Zone Act of 1995, no taxes shall be imposed on business establishment within economic zones.
The court noted that laws mentioned considers FEZs as foreign territories and when goods are brought to these zones, the goods remain in foreign territory and are not subject to Philippine customs and tax laws. — Vann Marlo M. Villegas