THE Court of Tax Appeals (CTA) has denied gold mining company the petition of Oceanagold Philippines Inc. for a refund or tax credit amounting to P142.2 million representing excise taxes allegedly collected wrongfully by the Bureau of Internal Revenue (BIR) for the period July to December 2017.
In a 31-page ruling, the CTA’s Special First Division held that Oceanagold failed to prove that it is entitled to the refund claimed despite its excise tax exemption during the recovery period pursuant to the Financial or Technical Assistance Agreement (FTAA) dated June 20, 1994, to Section 81 of Republic Act (RA) 7942 (Philippine Mining Act) and to Section 236 of the Department of Environment and Natural Resources Administrative Order 95-23.
The CTA noted that during the so-called “recovery-period” or the five contract years beginning from the date of commencement of commercial production, the government cannot collect excise tax from the petitioner. But, the tax court explained that despite its excise-tax exemption, Oceanagold failed to prove that it is entitled to the refund claimed.
It noted that the FTAA states that all taxes, including excise tax, collected during the recovery period is recoverable during the years they were incurred, provided that the amount collected is detrimental to petitioner’s recovery of pre-operating and property expenses.
“Petitioner, however, failed to prove that the payments of the subject excise taxes, during the said 5-year period, were detrimental to its recovery of the said pre-operating and property expenses. There is no specific evidence which shows such fact,” the CTA said in a decision penned by Associate Justice Catherine T. Manahan. “In sum, we see no valid ground to grant the present claim,” the CTA said.
Prior to the filing of a case, Oceanagold made a formal claim for refund or tax credit with the BIR for the excise taxes it paid for 2017 and the first quarter of 2018, on its removal of copper concentrates and gold bars amounting to P455.4 million.
In October 2019, the petitioner received a letter from the BIR dated October 10, 2019, denying its claim for refund of excise tax in the amount of P455.4 million paid for the period from February 6, 2017, to March 23, 2019. Citing the BIR’s alleged inaction, Oceanagold decided to file a petition for review with the CTA, asking to direct the BIR to grant a refund or tax credit in the amount of P69.38 million, representing excise taxes that the firm said the BIR “wrongfully collected” from July to September 2017.
On October 8, 2019, Oceanagold filed another petition for review with the CTA, seeking to direct the BIR to grant its claim for refund in the amount of P72.85 million, representing excise taxes the BIR illegally collected for the period from October to December 2017.
The two cases were subsequently consolidated by the CTA.