MANILA – The Court of Tax Appeals (CTA) has denied for lack of merit a petition for review filed by the local business process outsourcing (BPO) arm of American firm Wells Fargo Enterprise Global Services Inc. seeking a refund of PHP17.24 million in unutilized input value-added taxes (VAT) it paid in 2014.
Associate Justice Maria Rowena Modesto-San Pedro of the CTA's Third Division, in a decision dated Oct. 26 and released Thursday, said the firm may instead claim a refund from its supplier of goods, properties, and services that charged input VAT in its purchases.
The court explained that as an entity registered with the Philippine Economic Zone Authority (PEZA), the petitioner’s local purchases of goods, properties, and services destined for consumption within the PEZA ecozone are subject to zero percent VAT.
The court then noted that a portion of the input VAT sought to be refunded by the petitioners corresponds to input VAT paid for its purchase of capital goods from Wells Fargo Philippines Solutions Inc. (WFPSI), another PEZA-registered IT enterprise.
The court explained that since Revenue Memorandum Circular 74-99 states that the sales of goods or properties by a PEZA-registered enterprise to another PEZA-registered entity are exempt from VAT, the petitioner in the case can claim a refund from its supplier that charged input VAT in its purchases.
The court cited that the predicament falls under the principle of “unjust enrichment” under Article 22 of the Civil Code which says that a person or entity who acquires or comes into possession of something at the expense of another without just or legal ground, shall return the same to him.
“This doctrine applies in this case, considering that petitioners were made to bear the burden of taxation when the Tax Code, administrative issuances, and judicial pronouncements particularly exempt it from such,” the court said. “Hence, the petitioner is not without recourse. It may still recover the amount it paid for input VAT from its supplier of goods and services who imposed the same in its purchases.” (PNA)