CTA affirms Cebu Light Industrial Park’s canceled tax liabilities

THE Court of Tax Appeals (CTA) has affirmed its decision to set aside Cebu Light Industrial Park, Inc.’s tax liabilities worth P5.57 million representing its deficiency income tax, expanded withholding tax, and documentary stamp tax for the year 2005.

In a 10-page decision made public on March 9, the CTA en banc upheld the canceled taxes saying its First Division had jurisdiction over the disputed tax assessment.

“The CTA shall exercise exclusive appellate jurisdiction to review by appeal decisions of the commissioner of internal revenue (CIR) in cases involving disputed assessments, refunds… or other laws administered by the Bureau of Internal Revenue,” Associate Justice Marian Ivy F. Reyes-Fajardo said in the ruling citing the law creating the tax court.

The CIR argued that the firm was still liable to pay documentary stamp tax stemming from advances to stockholders which are considered loans based on the country’s tax code.

The tribunal disagreed saying Cebu Light Industrial Park need not pay the said tax since it is registered with the Philippine Economic Zone Authority, which provides an exemption from national taxes.

It added that said deficiency tax had already been paid for by the firm’s shareholders Science Park of the Philippines, Inc. and Beacon Property Ventures, Inc.

The respondent is a domestic firm that engages in real estate by managing houses, buildings, apartments and other structures. Its main office is in Makati City.

“[Cebu Light Industrial Park] is a duly registered PEZA entity enjoying a special tax of 5% on gross income in lieu of national and local taxes,” the court said.

“Therefore, the CIR may not hold respondent liable for documentary stamp tax.” — John Victor D. Ordoñez