Court of Tax Appeals grants part of Halliburton Worldwide’s refund claim

THE COURT of Tax Appeals (CTA) has granted part of Halliburton Worldwide, Ltd.’s refund claim in the amount of P7.67 million representing its excess input value-added tax (VAT) traced to zero-rated sales for the calendar year 2017.

In a decision dated July 26 and made public on July 28, the CTA Special Second Division said the firm complied with invoicing requirements under the Tax Code for the amount granted.

Halliburton Worldwide initially sought a P12.24 million refund claim for the period.

“Thus, for purposes of, and with regard to the petitioner’s (Halliburton Worldwide) compliance with the input taxes being attributable to zero-rated sales… only the amount of P7.67 million represents the petitioner’s valid input VAT attributable to its valid zero-rated receipts for the calendar year 2017,” Associate Justice Lanee S. Cui-David said in the ruling.

The firm is engaged in oil field services and the development of equipment and technology related to the oil and gas industries. It is the Philippine branch office of the Cayman Islands-based firm.

Under the law, taxpayers that engage with foreign firms doing business outside the Philippines are entitled to zero-rated sales that do not translate to output tax.

The term “zero-rated sale” must be written on the company’s official invoices.

Sales that qualify for 0% VAT include services other than processing, manufacturing, or repacking of goods; services performed in the Philippines by VAT-registered persons, and sales paid in acceptable foreign currency in line with the central bank’s rules.

In April, the CTA upheld granting only P55,610.63 out of P11.6 million of its excess VAT for the year 2015, for failing to prove that the remaining amount qualified for 0% VAT.

Under the country’s law on renewable energy developers, a VAT-registered entity’s sales to renewable energy developers are subject to 0% VAT, which does not translate to output tax.

“Tax refunds in relation to the VAT are in the nature of such exemptions,” the tax tribunal said. “It is a claimant’s burden to prove the factual basis of a claim for refund or tax credit.” — John Victor D. Ordoñez