Intel Technology Phils vs.

CIR
Intel Technology Phils. Inc. vs. CIR GR No. 166732 | April 27, 2007 Facts: Intel Tech domestic corporation engaged primarily in the business of designing, developing, manufacturing and exporting advanced and large- scale integrated circuit components registered with the BIR as VAT entity registered with PEZA As a VAT-registered entity, Intel file its monthly VAT declarations and quarterly VAT return During the 2Q of 1998, Intel declared zero-rated export sales of 2.5Mn and VAT input taxes from domestic purchases of goods and services of 11.7Mn Zero-rated export sales were paid in acceptable foreign currency and were inwardly remitted On 1999, a claim for tax refund/credit of VAT input taxes was filed by Intel Prior to the lapse of 2-year prescriptive prd and due to inaction by the CIR, a petition for review was filed with the CTA and prayed for the issuance of a tax credit certificate amtg to 11.7Mn for the period covering April 01, 1998 to June 30, 1998, having generated zero-rated sales and paid VAT input taxes in the course of its trade or business, which VAT input taxes are attributable to the zero-rated sales and have not been applied to any VAT output tax liability for said period or any succeeding quarter or quarters nor has been issued any tax credit certificate, it follows that it is entitled to the issuance of a tax credit certificate for VAT input taxes in the amount of PhP11,770,181.70  CTA decision: denied the claim for tax refund or issuance of a tax credit certificate since the export invoices offered as evidence could not be considered as competent evidence to prove its zero-rated sales of goods for VAT purposes and for refund or issuance of a tax credit certificate because no BIR authority to print said invoices was indicated  A petition for review was filed before the CA, arguing that the info (seller’s TIN, statement that seller is VA Tregistered) required to be printed in the invoice or receipt do not apply to its export sales since no input VAT may be claimed and that the absence of BIR authority to print its TIN-V in some of the invoices is not fatal to its claim for refund or issuance of a tax credit certificate as to invalidate the documents used to prove its export sales  CA decision: since Intel issued invoices with the BIR’s authority to print, it must be concluded that these invoices were not registered as they did not comply with the invoicing requirements under Section 113, and the requirements for issuance of receipts or sales or commercial invoices under Section 237. Thus, an unregistered receipt could not be used as supporting document for input tax Issue: W/N Intel is not entitled to a tax refund/credit for failure to comply with the invoicing requirements? Ruling:  a taxpayer engaged in zero-rated or effectively zero-rated transactions may apply for a refund or issuance of a tax credit certificate for input taxes paid attributable to such sales upon complying with the following requisites: (1) the taxpayer is engaged in sales which are zero-rated (like export sales) or effectively zero-rated; (2) the taxpayer is VAT-registered; (3) the claim must be filed within two years after the close of the taxable quarter when such sales were made; (4) the creditable input tax due or paid must be attributable to such sales, except the transitional input tax, to the extent that such input tax has not been applied against the output tax; and (5) in

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These sales invoices or receipts issued by the supplier are necessary to substantiate the actual amount or quality of goods sold and their selling price. then its claim should not be denied. and accounted for in accordance with the rules and regulations of the BSP Therefore. notwithstanding its failure to state on the invoices the BIR authority to print and the TIN-V. airway bills and export declarations. Further. rather than the supporting documents for the zero-rated export sales. commissions. Indeed. b. g. and that invoices or receipts are duly registered." Hence. the total amount which the purchaser pays or is obligated to pay to the seller with the indication that such amount includes the value-added tax. customer or client in the case of sales. receipt or transfers in the amount of P100. is engaged in export sales of advanced and large-scale ICs and. in accordance with the requirements of Sections 106 (A)(2)(a)(1) and 112(A) of the Tax Code. Intel. Intel’s evidence. f.00 or more. c. the name. and address of the purchaser. Only the following items are required to be indicated in the receipts or invoices: a. juxtaposed with the requirements of Sections 106 (A)(2)(a)(1) and 112(A) of the Tax Code. As the Court had the occasion to explain since no output VAT was imposed on the zero-rated export sales. e. a statement that the seller is a VAT-registered entity followed by its TIN-V. prove that it is engaged in the "sale and actual shipment of goods from the Philippines to a foreign country. while the pertinent provisions of the Tax Code and the rules and regulations implementing them require entities engaged in business to secure a BIR authority to print invoices or receipts and to issue duly registered invoices or receipts. what is important with respect to the BIR authority to print is that it has been secured or obtained by the  taxpayer.  rentals. Section 106(B). if any. and. as may be proven by other export documents. or where the receipt is issued to cover payment made as h. it is not required that the BIR authority to print be reflected or indicated therein. subject to the requirements stated in Section 112(A). taken collectively. d.  The docu evid submitted by Intel such as summary of export sales. its sales or transactions are subject to VAT at 0% rate. business style. official receipts. sufficiently establish that it is entitled to a claim for refund or issuance of a tax credit certificate for creditable input taxes. what the government reimburses or refunds to the claimant is the input VAT paid – thus. unit cost. as a VAT-registered entity. date of the transaction. and Section 108(B)(1) and (2). as enumerated earlier. sales invoices. Intel is considered engaged in export sales (a zero-rated transaction) if made by a VATregistered entity   the certification of inward remittances attests to the fact of payment "in acceptable foreign currency or its equivalent in goods or services. where the sale or transfer is made by a person liable to VAT to another person also liable to VAT. or regardless of the amount. are the best means to prove the input VAT payments of the claimant  In a claim for refund or issuance of a tax credit certificate attributable to zero-rated sales. the necessity for the input VAT paid to be substantiated by purchase invoices or official receipts. it is not specifically required that the BIR authority to print be reflected or indicated therein.  . compensations or fees. the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with BSP rules and regulations. and the TIN of the purchaser where the purchaser is a VAT-registered person. as such. it is entitled to claim refund or issuance of a tax credit certificate for input VAT taxes attributable to its export sales. what is to be closely scrutinized is the documentary substantiation of the input VAT paid. And since petitioner has established by sufficient evidence that it is entitled to a refund or issuance of a tax credit certificate. while entities engaged in business are required to secure from the BIR an authority to print receipts or invoices and to issue duly registered receipts or invoices.case of zero-rated sales under Section 106(A)(2)(a)(1) and (2). description of merchandise or nature of service. quantity of merchandise. under Section 106 (A)(2)(a)(1) of the Tax Code.

The CTA En Banc eventually reiterated the ruling of the Second Division that San Roque’s claim based on Section 112(A) of the NIRC should be denied since it did not present any records of any zero-rated or effectively zero-rated transactions. Commissioner of Internal Revenue. hence. However. November 25. According to the Second Division. (5) the input taxes have not been applied against output taxes during and in the succeeding quarters. (2) the taxpayer is engaged in zero-rated or effectively zero-rated sales. during the same period. (3) the input taxes are due or paid. G. petitioner must comply with the following criteria: (1) the taxpayer is VAT registered. The main issue before the Supreme Court is whether or not San Roque may claim a tax refund or credit for creditable input tax attributable to zero-rated or effectively zero-rated sales pursuant to Section 112(A) of the NIRC or for input taxes paid on capital goods as provided under Section 112(B) of the NIRC. San Roque did not make any commercial sale of electricity to National Power Corporation (NPC) during the period in question as San Roque was still constructing its power plant. The Supreme Court found San Roque’s petition meritorious and reversed the CTA.R. San Roque produced and transferred electricity to NPC in exchange for P42. The CTA’s Second Division rendered a decision denying San Roque’s claim for tax refund or credit. (6) the input taxes claimed are attributable . enticing as they do more enterprises to invest and do business within the zones. No. and while the power plant was being tested. thus creating more employment opportunities and infusing more dynamism to the vibrant interplay of market forces San Roque Power Corporation vs. San Roque filed a claim for refund with the Bureau of Internal Revenue (BIR). San Roque did not make any zero-rated or effectively-zero rated sales for the taxable year 2002. ultimately redound to the benefit of the national economy. 180345. which prompted San Roque to file a petition for review with the Court of Tax Appeals (CTA).5 million. (4) the input taxes are not transitional input taxes.The incentives offered to PEZA enterprises. San Roque’s claim must be denied. among which are tax exemptions and tax credits. 2009. It laid out the requirements for claiming a tax refund or credit: To claim refund or tax credit under Section 112(A). The BIR failed to act on San Roque’s claim for refund.

The Supreme Court ruled that there was a “sale” of electricity by San Roque to NPC in 2002: . The fourth quarter return for the year 2002. After carefully examining this provision.500.e. reported a zero-rated sale in the amount of P42. Section 106(B) of the NIRC. which was uncontroverted by respondent. does not limit the term “sale” to commercial sales. . . the input taxes shall be proportionately allocated on the basis of sales volume.500. which deals with the imposition of the VAT. it appears that on 2002. and 108(B)(1) and (2). (7) for zero-rated sales under Section 106(A)(2)(1) and (2). rather it extends the term to transactions that are “deemed” sale. Section 112(A) of the NIRC does not limit the definition of “sale” to commercial transactions in the normal course of business.000.00. Moreover. the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with BSP rules and regulations. The Supreme Court noted that the issue pertains to compliance with the sixth requirement. which petitioner filed.00 . The Supreme Court noted that while the sale was not a commercial sale. petitioner produced and transferred electricity to NPC during the testing period in exchange for the amount of P42.. these same transactions . to which creditable input taxes may be attributed. whether the input VAT claimed are attributable to zero-rated or effectively zero-rated sales: The main dispute in this case is whether or not petitioner’s claim complied with the sixth requirement—the existence of zero-rated or effectively zero-rated sales. In the Affidavit of Echevarria dated 9 February 2005 (Exhibit “L”). it was a deemed sale transaction: The Court is not unmindful of the fact that the transaction described hereinabove was not a commercial sale. i. petitioner’s Vice President and Director for Finance. and (9) the claim is filed within two years after the close of the taxable quarter when such sales were made. upon closer examination of the records.000.” stating that petitioner made no sale of electricity to NPC in 2002. marked as Exhibit “J-2. In granting the tax benefit to VAT-registered zero-rated or effectively zero-rated taxpayers. .to zero-rated or effectively zero-rated sales. contained an admission that no commercial sale of electricity had been made in favor of NPC in 2002 since the project was still under construction at that time. the affidavit of Echevarria (Exhibit “L”). (8) where there are both zero-rated or effectively zero-rated sales and taxable or exempt sales. The CTA in Division and en banc denied petitioner’s claim solely on this ground. The tax courts based this conclusion on the audited report. . and the input taxes cannot be directly and entirely attributable to any of these sales. the affiant stated that although no commercial sale was made in 2002. . . this Court finds it an equitable construction of the law that when the term “sale” is made to include certain transactions for the purpose of imposing a tax. Conspicuously. 106(B). petitioner carried out a “sale” of electricity to NPC.

With its finding that the petition is meritorious. representing unutilized input VAT for the period 1 January 2002 to 31 December 2002.610.131.should be included in the term “sale” when considering the availability of an exemption or tax benefit from the same revenue measures. the Supreme Court order the BIR to refund. . petitioner transferred to NPC all the electricity that was produced during the trial period.40. or in the alternative. The fact that it was not transferred through a commercial sale or in the normal course of business does not deflect from the fact that such transaction is deemed as a sale under the law. to issue a tax credit certificate to San Roque in the amount of P246. It is undisputed that during the fourth quarter of 2002.