Philip Morris Philippines Granted Partial Tax Refund on VAT

According to a report by the Philippine media outlet "Business World Online," Philip Morris International (PMI) Philippines has been granted approval for a partial tax refund application by the Philippine Court of Tax Appeals (CTA). The approved refund amounts to PHP 320.4 million (approximately $560,000 USD) and corresponds to the unused input value-added tax on zero-rated sales for the year 2015.

The court ruling stated that PMI was able to prove its entitlement to the funds, as evidenced by its sales invoices indicating the actual goods were exported from the Philippines to foreign countries for sale.

Zero-rated sales refer to transactions carried out by value-added tax (VAT) registered taxpayers that do not generate any output tax. Taxpayers must present official receipts for a specific financial period and indicate the phrase "zero-rated" on the receipt in order to qualify for tax exemption.

Previously, PMI requested a refund of 90 million Philippine pesos (approximately 1.58 million US dollars) for excess input value-added tax for the year 2015. This request was partially approved by the CTA's third division at the time. As per the directive, the domestic tax commissioner (CIR) was supposed to refund 31.18 million Philippine pesos to PMI.

In relation to this case, the Philippine Tax Court (CTA) and the Commissioner of Internal Revenue (CIR) hold opposing views. The CIR believes that the CTA should dismiss PMI's appeal and argues that PMI's export sales fail to prove that the company's goods were paid for in officially designated foreign currency. On the other hand, the CTA contends that the CIR's arguments are insufficient to support the dismissal of the case.