TAKING the Bureau of Internal Revenue (BIR) to court is still an option that stakeholders may take, according to local and foreign business groups, which hit the agency anew on Wednesday for its new policy that is seen to make the process of claiming value-added tax (VAT) refunds more difficult.
In a news conference held on Wednesday morning, 20 business organizations aired their sentiments on BIR Revenue Memorandum Circular (RMC) 54-2014, which prescribes new rules for VAT-refund claims.
The circular mandated a “120+30-day rule” on processing VAT refunds and credits of investors, wherein if a claim for refund is not acted upon by the commissioner in 120 days, it is deemed denied, and the claimant has 30 days within receipt of the denial notification to take the case to the Court of Tax Appeals (CTA).
Rina Reyes Manuel, president of the Tax Management Association of the Philippines, said their legal option needs to get the backing of all the concerned stakeholders and must undergo review by all the business groups.
She maintained that it is still an option for the groups, especially with the impact of the retroactive application of the 120+30 rule under the RMC.
The groups are contesting the fact that the said rule was applied retroactively to all pending VAT refund-claim applications—essentially an automatic denial for the said applications, the groups said.
They said the input VAT-refund claims have already run into the billions of pesos, including those that are still not acted upon by the BIR, or are pending with the CTA.
“At the very least, we estimate it to be about P15 billion because that’s what the government actually provided in the national budget for issuance of refund. But the figure could be much higher given it has accumulated for all these years; so that’s not the exact figure but that’s the least estimation,” Manuel said.
The retroactive application of the strict 120+30 rule on all pending VAT applications is confiscatory since it will result in a large-scale automatic denial of all pending applications, the business groups said in their statement.
Manuel added in a text message that the amount represents pending claims to be processed by the government, which include those affected by the new rule. “Actual value of total pending claims to date would be higher.”
Through the RMC, the BIR is removing the taxpayer’s right to an administrative appeal process, said the groups, as the BIR’s inaction after 120 days would lead to a denial that is “deemed final unless appealed before the CTA.”
The groups also said the BIR’s decision to forfeit jurisdiction and halt processing of an administrative claim after it has been appealed to the CTA runs contrary to a Supreme Court ruling.
Previously taxpayers may elevate the claim to the CTA after the 120+30-day period, or continue to wait for the BIR’s final decision before elevating the claim to the CTA.
The groups want the finance department to revert to this system, which, the groups said, has been upheld by previous administrations. The groups are also against retroactive application of any new rule on pending claims.
The groups also asked the BIR to expedite the processing of all pending VAT-refund applications within a definite time frame for affected zero-rated taxpayers and investors.
The said letter was signed by the Japanese Chamber of Commerce and Industry of the Philippines, European Chamber of Commerce of the Philippines, American Chamber of Commerce of the Philippines, Philippine Association of Multinational Companies Regional Headquarters, Inc., Canadian Chamber of Commerce of the Philippines, Korean Chamber of Commerce of the Philippines, Australian-New Zealand Chamber of Commerce of the Philippines, Philippine Exporters Confederation Inc., Pilipino Banana Growers and Exporters Association, Philippine Coconut Oil Producers Association, United Coconut Associations of the Philippines, Philippine Chamber of Commerce and Industry, IT and Business Process Association of the Philippines, Philippine Independent Power Producers Association, Employers Confederation of the Philippines, Chamber of Mines of the Philippines, Tax Management Association of the Philippines, Management Association of the Philippines, Financial Executives of the Philippines and the Association of Certified Public Accountants in Public Practice.