Tax court grants P6-M refund to tech firm

THE COURT OF Tax Appeals partially granted the tax refund claim of Microchip Technology Ireland Limited of its unused input value-added tax (VAT) traced to zero-rated sales for the second and fourth fiscal quarters of 2016.

In an eight-page ruling dated Feb. 24, the court’s third division ordered the Bureau of Internal Revenue (BIR) to refund or issue a tax credit certificate to the technology company in the amount of P6 million representing its unused input VAT.

The appellate court earlier partially granted the claim of the company for a refund of P957,300.81 for the period July to September 2015.

The company asked the court to reverse its ruling as it said that the certificate of non-registration of Microchip Technology Ireland Limited issued by the Securities and Exchange Commission (SEC) was sufficient compliance to qualify for VAT zero-rated sales to Microchip Technology Ireland.

Microchip Technology Ireland Limited is engaged in developing and distributing power management circuit boards and semiconductors.

However, the incumbent commissioner of the BIR asked the court to deny the petitioner’s claim of refund.

The BIR commissioner argued that services rendered by the company to its customer Microchip Technology Incorporated is not VAT zero-rated, since the customer is doing business in the Philippines.

Microchip Technology Ireland Limited argued that both parties are the same entity, as Microchip Technology Ireland re-registered as a limited company and is a foreign entity.

Documentary evidence of the original certification of non-registration of Microchip Technology Ireland issued by the SEC was presented by the petitioner, which the court found as sound evidence.

The court said that the certificate attached by the company was sufficient documentary evidence to show that it is a foreign corporation.

“All these, taken together, remove any doubt in the Court’s mind that ‘Microchip Technology Ireland’ and ‘Microchip Technology Ireland Limited’ are the same entity and that the latter, similar to the former, is a non-resident foreign corporation,” the court concluded.

The court ruled that the sales of both Microchip Technology Ireland and Microchip Technology Incorporated would be considered the same, which qualified the company for VAT zero-rating and claim for a refund.

“Proceedings before the Court of Tax Appeals are not governed strictly by technical rules of evidence,” it said in the ruling. “The paramount consideration remains the ascertainment of truth.” — John Victor D. Ordoñez