CTA partially grants marketing analytics firm’s VAT refund claim

THE Court of Tax Appeals (CTA) has partially granted the appeal of MSCI Hong Kong Ltd. to the modified amount of P9.89 million of its P10.95 million representing its unused input value-added tax (VAT) traced to zero-rated sales for 2017.

In a 34-page decision on Nov. 2, the CTA Special Third Division said that the firm was able to establish that it engaged in zero-rated sales in 2017.

“In conclusion, petitioner (MSCI Hong Kong) has sufficiently proven its entitlement to the refund or issuance of a tax credit certificate in the reduced amount of P9.89 million,” according to the ruling penned by Associate Justice Maria Belen M. Ringpis-Liban.

The petitioner is the Philippine branch of a Hong Kong-based firm engaged in index benchmarking, portfolio risk and performance analytics, and research support services.

The firm argued that it paid or incurred input VAT which was properly substantiated as zero-rated sales.

The commissioner of internal revenue (CIR), the respondent, said that the marketing analytics company failed to establish that it had zero-rated sales.

Under the law, zero-rated sales are transactions made by VAT-registered taxpayers that do not result in any output tax.

If a sale is subject to 0% VAT, the term “zero-rated sale” must also be written on the company’s official invoices.

The tribunal noted that the firm was able to file its administrative claim for refund on time within the 30-day period mandated under the law.

Under the country’s tax code, when the CIR denies or fails to act on a claim for refund, the taxpayer is given a 30-day period from the receipt of an adverse decision or ruling to file a petition for review with the CTA.

“Compliance with the invoicing and substantiation requirements is necessary because it is the only way to determine the veracity of the taxpayer’s claims,” said the tax court.

“The absence of any of the requisites is a valid ground to deny the refund claim.” — John Victor D. Ordoñez