CTA upholds denial of Sumitomo unit’s VAT refund claim

THE Court of Tax Appeals (CTA) has upheld its ruling rejecting Pilipinas Kyohritsu, Inc.’s claim for P7.87 million representing its unused input value-added tax (VAT) related to zero-rated sales for the period covering July 1 to Sept. 30, 2016.

In a 16-page decision dated Feb. 6, the CTA full court said that the firm failed to prove that its sales had qualified for 0% VAT or that its input taxes had been paid.

The firm manufactures wiring harnesses for cars and is a unit of Japan’s Sumitomo Electric Group.

“All told, petitioner (Pilipinas Kyohritsu) failed to establish the factual basis for its claim for refund or credit before the Court in Division; hence, the Court En Banc is left with no recourse but to sustain the Court in Division’s (Third Division) denial of petitioner’s claim,” CTA Associate Justice Lanee S. Cui-David said in the ruling.

It noted that the firm had submitted its BIR certificate of registration, letter of application for VAT refund, and an audited financial statement, among others.

In 2018, Pilipinas Kyohritsu sought a P13.39-million VAT refund claim for the same period, which the Bureau of Internal Revenue (BIR) partially granted in the amount of P3.39 million.

“None of the above evidence proves that petitioner is engaged in zero-rated or effectively zero-rated sales,” the tribunal said.

Under the country’s tax code, zero-rated sales are transactions made by VAT-registered taxpayers that do not translate to 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. — John Victor D. Ordoñez