THE Court of Tax Appeals (CTA) has declined the appeal of OceanaGold (Philippines), Inc. to review its erroneously paid excise tax worth P136.4 million for the period covering June to December 2014.
In a 27-page decision on May 31, the CTA full court affirmed its ruling in 2020, as it said the mining company was exempted from paying its excise tax during its recovery period as part of a financial assistance agreement but failed to prove the amount paid to be detrimental to recovering its pre-operating expenses.
OceanaGold argued that based on the financial and technical assistance agreement (FTAA) it signed with the government, it should have been exempted from excise tax payments because it had not recovered its pre-operation expenses in 2014.
Under the Philippine Mining Act of 1995, the government can only start collecting its share in the financial agreement after the FTAA mining contractor has fully recovered its pre-operating, exploration, and development expenses.
The petitioner is a Canadian-Australian multinational gold producer that has a regional office in Makati City.
“In sum, under the terms of the FTAA, the respondent (commissioner of internal revenue) has no authority to collect excise taxes as the government’s right to have a share in net revenue of petitioner during the recovery period is not accrued,” according to a copy of the ruling written by CTA Associate Justice Roman G. Del Rosario.
The mining company added that the payment of excise taxes made it difficult to recover its pre-operating expenses and the amount it paid was not due to the government. It added that it had up to five years from its start of production to recover the expenses.
The tribunal noted that taxes collected during an FTTA contractor’s recovery period can only be deducted if it is proven to be recoverable by the company.
“Review of the evidence formally offered by petitioner (OceanaGold) shows that the Court in Division correctly ruled that there is no specific evidence to show that its payment of excise tax during the recovery period resulted in loss or harm in the person or property of petitioner,” said the CTA.
“Petitioner failed to present evidence that its payment of excise tax had an adverse effect on its financial performance and/or position.”
The court said that simply alleging the amount paid could have been recovered as part of OceanaGold’s pre-operating expenses could not be considered proof for its refund claim. — John Victor D. Ordoñez