Commissioner of Internal Revenue Kim S. Jacinto-Henares, in a phone interview, said “no” when asked if she would withdraw Revenue Memorandum Circular (RMC) 54-2014 based on an appeal to reconsider such issuance contained in a seven-page letter from 16 business groups.
Under RMC 54-2014 issued last June 17 the BIR chief has 120 days from the date of submission whether to grant or deny a refund claim. If the tax chief fails to act within the given period, the claim is “deemed denied” and the taxpayer has 30 days to elevate its refund request before the Court of Tax Appeals (CTA).
“That’s the law. It’s a Supreme Court decision,” Ms. Henares said.
Ms. Henares and Finance Secretary Cesar V. Purisima had met business groups last Oct. 14 to tackle the latter’s position on the VAT refund claim.
Rina-Lorena R. Manuel, President of the Tax Management Association of the Philippines (TMAP), said in a telephone interview the discussion had mixed results.
“In terms of the technical issues, we were not able to resolve that,” Ms. Manuel said, referring to the period in filing tax claims.
“But at least on the administrative side, they committed to involve the group in reviewing the documents for the processing of VAT refund claims,” Ms. Manuel said.
In a draft letter dated Sept. 12, the business groups pointed out that RMC 54-2014 “effectively created new rules and interpretation” which gave taxpayers a hard time to recover VAT refunds owed by the government.
“With its interpretation that BIR inaction on VAT refund applications is ‘deemed denial’, said RMC effectively encourages the BIR to abdicate its administrative duty to process refund claims by compelling taxpayers to pursue judicial claims with the CTA,” the letter read.
Taxpayers, they said, would lose the right to await the BIR’s final ruling on the tax claims, bear additional costs in litigation fees and clog CTA’s dockets.
Further, the business groups claimed the BIR issuance was against the Supreme Court decision which allowed BIR to rule over the administrative claim even as the refund request already reached the tax appellate court.
“Instead of streamlining the VAT refund application process, RMC 54-2014 makes compliance more burdensome to taxpayers by imposing impractical and unrealistic requirements that are very difficult to comply with, or by prescribing additional requirements not found under the law,” the business groups said.
Thus, the business groups asked the BIR to “withdraw RMC 54-2014 and uphold the taxpayer’s right to an administrative appeals process.”
The groups likewise urged BIR to “define service standards for the processing of VAT refund applications to enable the BIR to adhere to the 120-day period.”
“This should be done upon prior consultation with affected zero-rated taxpayers and investors,” the letter stated.
Signatories include five leaders of chambers of commerce in the Philippines: Ebb Hinchliffe, Executive Director (American), Julian Payne, President (Canadian), Michael Raeuber, President (European), Tetsuo Tomino, President (Japanese) and Edward Eun-Gap Chang, President (Korean).
The letter was likewise signed by Sergio R. Ortiz-Luis (Philippine Exporters Confederation President and Philippine Chamber of Commerce and Industry Honorary Chair) and Dean A. Lao, Jr. (United Coconut Associations of the Philippines Chairman), among others.
Other signatories to the business groups’ letter were Donnies T. Alas, President of the Association of Certified Public Accountants in Public Practice; Edgardo G. Lacson, President of the Employers’ Confederation of the Philippines; Jose Mari Mercado, President of the IT and Business Process Association of the Philippines; Gregorio S. Navarro, President of the Management Association of the Philippines; and Ms. Manuel, TMAP President.
As a general rule, the Supreme Court said, Section 112 (C) of the Tax Code gives the BIR chief 120 days to act on a refund request. If the tax chief fails to act within the given period, a taxpayer is given 30 days to raise its tax claim before the CTA.
However, claims filed from Dec. 10, 2003 to Oct. 6, 2010 can be exempted from this general rule since BIR issued a ruling which states that a “taxpayer-claimant need not wait for the lapse of the 120-day period before it could seek judicial relief with the CTA by way of petition for review.”
In 2010, the high court also ruled that the 30-day period to raise the tax refund claim is mandatory. It reiterated its ruling in a decision dated Feb. 12, 2013. -- Mikhail Franz E. Flores
source: Businessworld
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