MANILA – The Court of Tax Appeals (CTA) denied a petition filed by Filipino workers of the Asian Development Bank (ADB) seeking refund of income tax collected from them from 2012-2013.
In its 23-page decision dated October 7, the CTA en banc said the more than 100 Filipino petitioners "failed to show that they fall within the coverage of those entitled to tax exemption under the ADB charter."
On April 12, 2013, the Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular (RMC) No. 31-2013, which among other things said while officers and staff of the international organization who are not Philippine nationals shall be exempt from Philippine tax, Filipinos who are employed there are not exempt and subject to income tax.
The circular was given retroactive effect and ordered the Filipino workers to declare and pay income taxes for income received in 2012 and 2013.
The tax court said a 2014 decision by the Mandaluyong regional trial court (RTC) which invalidated portions of the revenue circular "does not bind" the CTA "as only decisions of the Supreme Court constitute binding precedents forming part of the Philippine legal system."
The case initiated by two ADB workers is pending appeal before the SC.
"Tax refunds, like tax exemptions, are construed strictly against the taxpayer and liberally in favor of the taxing authority, and the taxpayer bears the burden of establishing the factual basis of his claim for a refund," the CTA said. (PNA)
