THE COURT of Tax Appeals (CTA) has stood by its ruling that rejected Melco Resorts Leisure Corp.’s P81.12-million refund claim allegedly representing illegally collected excess input value-added tax (VAT) for the first quarter of 2016.
In a 29-page decision dated July 11 and made public on July 17, the CTA full court said the firm failed to prove that it filed a timely claim for a refund, despite finding it entitled to tax privileges under the law.
“The records are miserably bereft of any proof of the date of the filing of VAT returns and payment of the VAT purportedly passed on the petitioner by its suppliers,” according to the ruling written by Associate Justice Lanee S. Cui-David.
“Hence, this court cannot determine whether a petition for review praying for a refund or credit of erroneously or illegally collected taxes under the Tax Code is timely and properly filed.”
Citing the Tax Code, the tribunal said taxpayers must file their claim for a refund or tax credit within two years after the alleged payment of the tax, which Melco Resorts failed to prove.
The two-year period would start from the day the firm supposedly paid the taxes.
The petitioner is a domestic corporation that handles the operation of the City of Dreams Manila resort and casino in Parañaque City.
The CTA full court agreed with its Third Division’s conclusion that the firm was entitled to tax incentives under Philippine Amusement and Gaming Corp.’s charter and Presidential Decree 1869.
Under the decree, companies licensed by the agency are exempted from paying taxes besides a 5% franchise tax of the gross revenue derived from its operation under its franchise.
The Bureau of Internal Revenue (BIR) had informed the firm that its application for a tax refund could not be considered.
The agency cited a 2013 BIR memo that said income related to gaming activities is subject to 12% VAT and not entitled to the tax credit.
Melco Resorts argued that it was exempted from paying taxes based on the presidential decree.
The tribunal also said the firm failed to prove that it was engaged in zero-rated sales that did not result in any output tax.
It said the firm’s failure to establish that it timely filed its refund claim did not allow the CTA to gain authority to rule over the tax dispute.
“Strict compliance with the mandatory and jurisdictional conditions prescribed by law to claim such tax refund or credit is essential and necessary for such a claim to prosper,” the tax court said. — John Victor D. Ordoñez
