CIR VS.

AIG SHARED
SERVICES CORP. GR
256195, NOV. 22, 2021
BOCO, CEDRICK S
RESPONDENT:
[FORMERLY: CHARTIS TECHNOLOGY AND
OPERATIONS MANAGEMENT CORPORATION (PHILIPPINES)],

 AIG SHARED SERVICES

CORPORATION
 Petitioner AIG Shared Services
Corporation is a foreign corporation
organized and existing under the laws of
New York, U.S.A., which was duly
licensed since September 13, 1977 under
SEC No. 152 to operate a regional
headquarters in the Philippines.
 VAT Registered
PETITIONER:
COMMISSION OF INTERNAL REVENUE
CIR VS. AIG SHARED SERVICES CORP. GR
256195, NOV. 22, 2021
 The Respondent AIG Shared Services Corporation filed a Petition for Review pursuant to the
revised rules of the court of tax appeals against CIR.
 The Respondent is a foreign corporation duly registered and authorized by SEC with principal
address at Alabang, Muntinlupa City. It is registered with the BIR as VAT taxpayer.
 In February 2015, Petitioner filed with BIR-RDO No. 126 and application for refund/ tax
credit of its excess and unutilized input VAT for the four quarters of FYT 2013.
 AIG Shared Services Corp. filed with the petitioner, through BIR Revenue District Office, an
application for refund/ tax credit certificate (TCC) of its excess and unutilized input VAT for
the first to fourth quarters of fiscal year 2013.
CIR VS. AIG SHARED SERVICES CORP. GR 256195,
NOV. 22, 2021
 CIR failed to act on the said application for refund/ Tax credit thus respondent filed prior
petition for Review ( CTA Case No# 9100). In the said Petition for Review AIG prayed for the
court to order the CIR to refund or issue TCC in its favor the amount of 67,976,449.16
 In the same Petition for review, respondent claimed that in 2013, it rendered services to its
non-resident foreign affiliate-clients registered under the laws of their respective foreign
jurisdictions and they are not registered with the Philippine Sec. as doing business in the
Philippines either as a branch or a subsidiary.
 According to AIG, its services to them generated VAT zero-rated sales for 2013 that were paid
in USD inwardly remitted to the Philippines and accounted for in accordance with BSP’s rules
and regulations.
CIR VS. AIG SHARED SERVICES CORP. GR 256195, NOV.
22, 2021
 The special 3rd div. ordered a decision to partially grant the petition of the AIG to refund or to
issue a tax credit certificate representing the latter’s unutilized input VAT. 
 Disagreeing with the special 3rd division.
 Hence, This petition.
ISSUE:
CIR VS. AIG SHARED SERVICES CORP. GR 256195, NOV. 22, 2021

WHETHER OR THE PETITIONER AIG SHARED

SERVICES CORP IS ENTITLED TO REFUND OR
ISSUANCE OF A TAX CREDIT CERTIFICATE FOR ITS
UNUTILIZED/ EXCESS INPUT VAT PAYMENTS FOR THE
FIRST TO FOURTH QUARTERS OF FISCAL YEAR 2013
 CIR VS. AIG SHARED SERVICES CORP. GR 256195, NOV. 22,
2021
 Yes. In ruling, the Court laid down the essential elements for a supply of services to be subject to VAT rate of
zero percent under Section 108(B)(2) of the 1997 Tax Code.

 Among others, Section 108(B)(2) of the 1997 Tax Code provides that the recipient of the services is a foreign
corporation doing business outside the Philippines or is a no-resident person not engaged in business who is
outside the Philippines when the services were performed and that the services must be performed in the
Philippines. As held by the Supreme Court in the case Commissioner of Internal Revenue (CIR) vs. Deutsche
Knowledge Services Pte. Ltd., to sufficiently establish that foreign clients are foreign corporations doing
business outside the Philippines, an SEC Certification of Non-Registration and Articles of Association or
Certificates of incorporation of the foreign clients must be presented. Perusal of the pieces of evidence
showed that Petitioner has sufficiently established only five (5) out of its 48 clients which are non-resident
foreign corporations doing business outside the Philippines. As to the services being performed in the
Philippines, only one of the service agreements presented contain a provision that the services are to be
performed by Petitioner in the Philippines. Lastly, some of the invoices and receipts supporting the input VAT
contain defects in invoicing leading to the partial disallowance of the input VAT claimed