Intel Technology Phils. Inc. vs. CIR
GR No. 166732 | April 27, 2007
Facts:
·
Intel Tech
-
domestic corporation
engaged primarily in the business of designing, developing, manufacturing and
exporting advanced and large- scale integrated circuit components
-
registered with the
BIR as VAT entity
-
registered with PEZA
·
As a VAT-registered entity, Intel file
its monthly VAT declarations and quarterly VAT return
·
During the 2Q of 1998, Intel declared
zero-rated export sales of 2.5Mn and VAT input taxes from domestic purchases of
goods and services of 11.7Mn
-
Zero-rated export sales were paid in
acceptable foreign currency and were inwardly remitted
·
On 1999, a claim for tax refund/credit
of VAT input taxes was filed by Intel
·
Prior to the lapse of 2-year
prescriptive prd and due to inaction by the CIR, a petition for review was
filed with the CTA and prayed for the issuance of a tax credit certificate amtg
to 11.7Mn
-
for the period
covering April 01, 1998 to June 30, 1998, having generated zero-rated sales and
paid VAT input taxes in the course of its trade or business, which VAT input
taxes are attributable to the zero-rated sales and have not been applied to any
VAT output tax liability for said period or any succeeding quarter or quarters
nor has been issued any tax credit certificate, it follows that it is entitled
to the issuance of a tax credit certificate for VAT input taxes in the amount
of PhP11,770,181.70
·
CTA decision: denied the claim for tax
refund or issuance of a tax credit certificate since the export invoices
offered as evidence could not be considered as
competent evidence to prove its zero-rated sales of goods for VAT purposes and
for refund or issuance of a tax credit certificate because no BIR authority to
print said invoices was indicated
·
A petition for review was filed before
the CA, arguing that the info (seller’s TIN, statement that seller is
VAT-registered) required to be printed in the invoice or receipt do not apply
to its export sales since no input VAT may be claimed and that the absence of BIR authority to print its TIN-V in some of
the invoices is not fatal to its claim for refund or issuance of a tax credit
certificate as to invalidate the documents used to prove its export sales
·
CA decision: since Intel issued invoices with the BIR’s authority
to print, it must be concluded that these invoices were not registered as they
did not comply with the invoicing requirements under Section 113, and the
requirements for issuance of receipts or sales or commercial invoices under
Section 237. Thus, an unregistered receipt could not be used as supporting
document for input tax
Issue: W/N Intel is not entitled to a tax
refund/credit for failure to comply with the invoicing requirements?
Ruling:
·
a taxpayer engaged in
zero-rated or effectively zero-rated transactions may apply for a refund or
issuance of a tax credit certificate for input taxes paid attributable to such
sales upon complying with the following requisites: (1) the taxpayer is engaged
in sales which are zero-rated (like export sales) or effectively zero-rated;
(2) the taxpayer is VAT-registered; (3) the claim must be filed within two
years after the close of the taxable quarter when such sales were made; (4) the
creditable input tax due or paid must be attributable to such sales, except the
transitional input tax, to the extent that such input tax has not been applied against
the output tax; and (5) in case of zero-rated sales under Section
106(A)(2)(a)(1) and (2), Section 106(B), and Section 108(B)(1) and (2), the
acceptable foreign currency exchange proceeds thereof had been duly accounted
for in accordance with BSP rules and regulations.
·
The docu evid submitted by Intel such
as summary of export sales, sales invoices,
official receipts, airway bills and export declarations, prove that it is
engaged in the "sale and actual shipment of goods from the Philippines to
a foreign country." Hence, Intel is
considered engaged in export sales (a zero-rated transaction) if made by a
VAT-registered entity
·
the certification of
inward remittances attests to the fact of payment "in acceptable foreign
currency or its equivalent in goods or services, and accounted for in
accordance with the rules and regulations of the BSP
·
Therefore, Intel’s
evidence, juxtaposed with the requirements of Sections 106 (A)(2)(a)(1) and
112(A) of the Tax Code, as enumerated earlier, sufficiently establish that it
is entitled to a claim for refund or issuance of a tax credit certificate for
creditable input taxes.
·
while entities
engaged in business are required to secure from the BIR an authority to print
receipts or invoices and to issue duly registered receipts or invoices, it is
not required that the BIR authority to print be reflected or indicated therein.
Only the following items are required to be indicated in the receipts or
invoices:
a.
a statement that the
seller is a VAT-registered entity followed by its TIN-V;
b.
the total amount
which the purchaser pays or is obligated to pay to the seller with the
indication that such amount includes the value-added tax;
c.
date of the
transaction;
d.
quantity of
merchandise;
e.
unit cost;
f.
description of
merchandise or nature of service;
g.
the name, business
style, if any, and address of the purchaser, customer or client in the case of
sales, receipt or transfers in the amount of P100.00
or more, or regardless of the amount, where the sale or transfer is made by a
person liable to VAT to another person also liable to VAT, or where the receipt
is issued to cover payment made as rentals, commissions, compensations or fees;
and
h.
the TIN of the
purchaser where the purchaser is a VAT-registered person.
·
while the pertinent
provisions of the Tax Code and the rules and regulations implementing them
require entities engaged in business to secure a BIR authority to print
invoices or receipts and to issue duly registered invoices or receipts, it is
not specifically required that the BIR authority to print be reflected or
indicated therein. Indeed, what is important with respect to the BIR authority
to print is that it has been secured or obtained by the taxpayer, and that
invoices or receipts are duly registered.
·
Intel, as a VAT-registered entity, is engaged
in export sales of advanced and large-scale ICs and, as such, under Section 106
(A)(2)(a)(1) of the Tax Code, its sales or transactions are subject to VAT at
0% rate. Further, subject to the requirements stated in Section 112(A), it is
entitled to claim refund or issuance of a tax credit certificate for input VAT
taxes attributable to its export sales. As the Court had the occasion to
explain since no output VAT was imposed on the zero-rated export sales, what
the government reimburses or refunds to the claimant is the input VAT paid –
thus, the necessity for the input VAT paid to be substantiated by purchase
invoices or official receipts. These
sales invoices or receipts issued by the supplier are necessary to substantiate
the actual amount or quality of goods sold and their selling price, and, taken
collectively, are the best means to prove the input VAT payments of the
claimant
·
In a claim for refund
or issuance of a tax credit certificate attributable to zero-rated sales, what
is to be closely scrutinized is the documentary substantiation of the input VAT
paid, as may be proven by other export documents, rather than the supporting
documents for the zero-rated export sales. And since petitioner has established
by sufficient evidence that it is entitled to a refund or issuance of a tax
credit certificate, in accordance with the requirements of Sections 106
(A)(2)(a)(1) and 112(A) of the Tax Code, then its claim should not be denied,
notwithstanding its failure to state on the invoices the BIR authority to print
and the TIN-V.
The incentives offered to PEZA enterprises, among which are tax
exemptions and tax credits, ultimately redound to the benefit of the national
economy, enticing as they do more enterprises to invest and do business within
the zones, thus creating more employment opportunities and infusing more
dynamism to the vibrant interplay of market forces
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