From: Jan Kriezl M Catipay

Sent: Wednesday, September 21, 2016 7:12 PM

To: RUSSELL RACELIS - NIDEC PHILIPPINES CORPORATION
Cc: LORENZO MICHELLE - NCFL; DECASTRO VILMA - NCFL; MANALO RAQUEL - NCFL; Josenilo G
Mendoza; Karla Kathrina D Balita; Lanie Grace S Lim
Subject: RE: Claims for Excise Tax Refund Inquiry
Attachments: RMO No. 19-06 with annex.pdf

Hi Russell,

This is in reply to your query on the process of claiming for excise tax refund paid by NCFL (the “Company”) to
the Bureau of Customs (BOC) on its importation of petroleum products, as well as the documents required to be
submitted.

We understand that the Company, a PEZA-registered entity, has importations of petroleum products (lubricating
oil) and pays the corresponding excise taxes to the Bureau of Customs (BOC) in relation to such importations.
The imported products serve as raw materials used in the production process of the Company. We further
understand that a Permit to Operate was issued by the Bureau of Internal Revenue (BIR) LTS-Excise Large
Taxpayers to the Company in relation to its importation last February 2014.

The Company is planning to claim an excise tax refund in relation to the said importations. In this regard, you
would like to know the procedures and list of requirements necessary in applying for refund of the excise tax
initially paid to the BOC.

We reply as follows:

Pursuant to Rule XIV Section 1 of RA No. 7916, also known as “The Special Economic Zone Act of 1995”, An
ecozone developer/operator shall, to the extent of its construction and operation, be exempt from payment of all
national internal revenue taxes and all local government impost, fees, licenses or taxes, including Internal
revenue taxes such as gross receipts tax, Value Added Tax, ad valorem and excise taxes. Rule XV Section 2 of
the same Act provides that the same incentives shall likewise apply to ecozone export and free trade enterprises.

Moreover, Section 135 (c) of the Tax Code also provides that petroleum products sold to entities which are by law
exempt from direct and indirect taxes are exempt from excise tax.

Based on the foregoing, it appears that the Company, being a PEZA registered entity availing incentives granted
under special laws, is exempt from payment of excise taxes on its importations of petroleum products used in the
production. Hence, the Company may claim for refund the excise taxes on such importations which appear to be
erroneously paid to the BOC.

Process in claiming for excise tax refund

As a rule, the Company can file a claim for excise credit/refund pursuant to Sections 204 and 229 of the NIRC.
Section 229 pertains to the recovery of taxes erroneously or illegally assessed and collected. In this case, since
the petroleum was imported and used in production by the Company, a tax-exempt entity, the payment of excise
taxes can be considered as erroneously made. Pursuant to Section 229, the Company must file the administrative
and judicial claim within two years from the time the erroneous payments were made. The claim under this
section refers to the following:

a. Administrative claim which the taxpayer must file within two years with the BIR; and
b. Judicial claim which must commence with the CTA within the two year period, in case the BIR fails to act
on the action for refund

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Moreover, under Sect ion 204 of t he Tax Code, t he Commissioner of I nt ernal Revenue has t he power t
ref und t axes erroneously or illegally received or penalt ies imposed wit hout aut horit y, provided t hat t he t
f iles a writ t en claim f or credit or ref und wit hin t wo years af t er t he payment of t he t ax or penalt y.

I f t he CI R act ually denies t he claim wit hin t he t wo year period, t he t axpayer should f ile his judicial cl
wit h t he CTA, wit hin 30 days f rom t he receipt of t he denial. Should t he t axpayer f ail t o f ile t he jud
t he period prescribed under Sect ion 229, t he t axpayer loses t he right t o appeal t o t he CTA. Not e t ha
erroneous payment of t axes, no specif ic period is given t o t he BI R t o decide t he claim, t hus it appea
BI R has t he ent ire t wo year period t o process such claim.

I n t he applicat ion f or claim of excise t ax ref und, t he law does not provide f or specif ic guidelines. How
f ollowing are t he general procedures t hat t ake place in a claim f or ref und:

First , once t he t axpayer has already applied f or ref und wit h t he RDO having jurisdict ion over t he t axpa
revenue of f icer is assigned f or t he processing of t he claim. Af t er t he recommendat ion of t he revenue
review process will be undergone.

Next , t he process of claiming a ref und would involve a document at ion process and t he BI R will check a
whet her t he document at ion complies wit h t he requirement s under t he law.

Finally, t he BI R will conduct an audit on all int ernal revenue t axes of t he t axpayer and not only on t h
in which t he t axpayer has claimed f or a ref und. Not e t hat t he audit of t he int ernal revenue t axes, in
would give rise t o assessment s of def iciency t axes. The payment on t hese def iciency t axes may f irst
f rom t he t axpayer bef ore t he t ax ref und/ credit is grant ed.

Moreover, based on our inf ormal inquiry wit h Ms. Anna Asis of BI R LT Audit Division 1, t here may be
procedures f or claiming excise t ax ref und as t his may be based on a case t o case basis (e. g. , t hese m
depending on t he nat ure/ t ype of excise t ax subject f or ref und).

List of Requirement s

RMO No. 19-06 provides guidelines and procedures f or t he processing of pending claims f or t ax credit / re
excise t ax paid on pet roleum product s. Though t he said RMC specif ically pert ains t o pending claims, t he
RMC also at t ached Annex A which is a checklist of document ary requirement s f or t he processing of pe
claims f or t ax credit / ref und of excise t ax paid on pet roleum product s sold t o int ernat ional carriers and
ent it ies or agencies pursuant t o Sect ion 135 of t he Tax Code. I n t his case, t he Company may consid
t he said list of document s in processing it s applicat ion f or claim of excise t ax ref und. Please see belo
t he said Annex. We have also at t ached RMO No. 19-06 f or your f urt her ref erence.

Cl ai m Type Document To Be Submi tted Purpose

Withdrawal Certificates (WCs) To determine the volume of petroleum

products withdrawn from which the petroleum
products sold subject of the claim were
Sale and delivery of tax- sourced.
paid petroleum products
Excise Tax Return, Bank Official To confirm payment of excise tax due on the
by a local
Receipts (in the case of a local volume of petroleum products withdrawn as
manufacturer/producer or
manufacturer/producer) or IEIRD (in reflected in the corresponding WCs.
importer to exempt from
the case of an importer)
direct and indirect taxes
Duplicate original of delivery a. To determine the volume of petroleum
pursuant to Section
135(c) receipts products delivered to the exempt entity.

b. To confirm fact of delivery of petroleum

products to the exempt entity.
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 Duplicate original of sales invoice a. To ascertain if the amount billed by the
issued in the name of the exempt claimant for the sale and delivery of
entity or agency petroleum products to the exempt entity or
agency is net of excise tax.

b. If it cannot be determined from the invoice

In the case of sales and deliveries
to entities duly registered with
PEZA, SBMA, etc., copy of
Certificate of Registration
that the amount billed is net of excise tax,
other supporting documents, such as, but not
limited to, computer system-generated print
out of pricing, if applicable, certification under
oath from claimant as to the pricing,
certification under oath from the buyer that
the amount billed is net of the corresponding
excise tax, an invoice bearing the notation
"no excise tax", and a contract stating that
the price is net of excise tax, etc. may be
submitted for evaluation.
To confirm registration of the exempt entity
with the appropriate or relevant government
agency or office, which entitles it to the direct
or indirect tax exemption.

Moreover, based on our informal inquiry with Ms. Anna Asis, below are the documents necessary in the
application of excise tax refund:

· Written Request for Application

· BIR Form 1914- Application for Tax Credits/Refunds
· Statement from the Company that it did not claim or file an application for refund from other offices or
government agencies
· Schedule of transactions that will be claimed for refund
· Proof of excise tax payment (e.g. Excise Tax Returns files and details of payment of such)
· Bank Inward Remittance
· Proof of zero rated tax transaction (e.g. certified true copy of bill of lading, certified true copy of sales
invoice, and other proof)
· Any additional documents that may be deemed necessary by the officer in charge of the Company’s
application based on the transaction

In this regard, the Company may also opt to prepare the above documents in processing its application for claim
of excise tax refund. The Company may also consider inquiring for any additional requirements in applying for
excise tax refund with its concerned RDO.

Should you need assistance in the processing of the application, we will be glad to submit a proposal for such
purpose.

We hope that the foregoing meets your requirement. Should you have any further questions or clarifications,
please do not hesitate to inform us.

Thank you.

Best Regards,

Jan
--

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 Jan Kriezl M Catipay | Associate Director | Global Compliance Reporting (GCR)

SGV & Co.

6760 Ayala Avenue, Makati City, Philippines
Office: 891 03 07 loc 6313 | jan.kriezl.m.catipay@ph.ey.com
Mobile No: 09498876762
Website: http://www.ey.com
In providing our comments in this communication, we have relied upon our understanding of current Philippine tax laws, regulations, rules, and issuances of the relevant tax
authorities as of this date. Should these laws, regulations, rules, and issuances change, some of the issues/conclusions discussed in this communication may change as well. We will
not be responsible for updating the information herein, unless we are specifically requested to do so.

This communication is solely for your needs and is not to be relied upon by any other person or entity (other than the tax authorities). Hence, if you wish to disclose copies of this
communication to any other person or entity, you must inform them that they may not rely upon our work for any purpose without our written consent.

Any U.S. tax advice contained in the body of the e-mail was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be
imposed under the Internal Revenue Code or applicable state or local tax law provisions.

=================================

From: RACELIS RUSSELL - NCFL [mailto:russell.racelis@nidec.com]

Sent: Wednesday, August 31, 2016 10:06 AM
To: Jan Kriezl M Catipay
Cc: LORENZO MICHELLE - NCFL; DECASTRO VILMA - NCFL; MANALO RAQUEL - NCFL; Karla Kathrina D Balita
Subject: Claims for Excise Tax Refund Inquiry

Dear Ms. Jan,

The NCFL has transactions relevant to the importation of excisable product, particularly petroleum product
(Lubricating Oil). A Permit to Operate from Bureau of Internal Revenue (BIR) LTS-Excise Large Taxpayers was
granted to the NCFL in line with the importation in February 2014. Part of the amount being paid to the Bureau of
Customs (BOC) is payment for the Excise Taxes.

Being registered in the Philippine Economic Zone Authority in Laguna Technopark, the NCFL enjoys incentives
granted to it through the Special Economic Zone Act of 1995, more specifically, Rule XV - Incentives to Ecozone
Export and Free Trade Enterprises, Section 2:

SECTION 2. Exemption from National and Local Taxes and Licenses - The same incentives as provided for under Section 1(A) of the Rule XIV and Rule
XX of these Rules shall likewise apply to ECOZONE Export and Free Trade Enterprises. (Rule XIV Section 1.A.1. Internal revenue taxes such as gross
receipts tax, Value Added Tax, ad valorem and excise taxes; xxx)

Along with this, Section 3 of Revenue Regulations No. 2-2012 issued by the BIR mandates the tax treatment of all
petroleum and petroleum products imported and its subsequent sales to economic zone locators, as well as
the refund of the taxes paid.

The NCFL accounted the transaction as a debit to an asset account, which accumulates starting 2014, with the
prospect of refunding from the BOC the excise taxes paid by the NCFL to the bureau. In line with this, we would
like to seek for your expertise to clarify the process of refunding the paid amount to BOC, as well the required
documentations necessary to support the process.

If you have any queries or more information regarding the matter, you may contact the undersigned, or Ms.
Michelle "Lala" Lorenzo, Accounting and Finance Division Manager, currently handling the process, with
telephone number (049)541-1671 loc. 419.

Thank you very much and we hope to hear from you soon.

Very respectfully yours,

RUSSELL N. RACELIS

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Nidec Philippines Corporation Tel: (049)541-1111

Accounting & Finance Division Fax: (049)541-1671

136 North Ave., SPEZ, LTI Email: russell.racelis@nidec.com
Biñan, Laguna webside: http;//www.nidec.com