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Tax Court Grants P24-M Refund To BPO Firm

Tax Court Grants P24-M Refund To BPO Firm

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The Court of Tax Appeals (CTA) has ruled in favor of a tax refund to business process outsourcing (BPO) firm Wells Fargo Philippines Solutions Inc., amounting to PHP24.116 million for excess payment of creditable withholding taxes (CWT) for 2014.

The excess taxes were in connection with the deed of absolute sale of its assets to Wells Fargo Enterprise Global Services LLC (Wells Fargo), amounting to PHP931.323 million that year.

On Apr. 15, 2015, Wells Fargo Philippines filed its annual income tax return (AITR), claiming CWT credits in the total amount of PHP33.066 million, to which it claimed to have utilized the amount of PHP7.57 million to pay its income tax liability for 2014.

Wells Fargo Philippines claimed that it still has excess CWT credits of PHP25 million.

On November 3, 2016, Wells Fargo Philippines filed with BIR Revenue District Office No. 44 Taguig Pateros an application for refund of excess CWT.

On January 10, 2017, the firm got a letter dated December 29, 2016, from Revenue Officer (RO) Grace Manuel, requiring it to submit additional documents in connection with its application for refund. The firm complied on January 17, 2017.

On January 27, 2017, the firm received another letter from Manuel, requiring submission of additional documents pertinent to its application for refund. It complied on March 3, 2017.

On April 17, 2017, Wells Fargo Philippines filed the petition for review before the tax court, alleging inaction on the part of the BIR on its application for refund.

In its June 22, 2017 answer filed to the tax court, the BIR claimed the company’s application for refund was still subject to investigation and that as a rule, taxes paid and collected are presumed to be made in accordance with the laws and regulations, hence, not refundable.

“Besides, in an action for tax credit/refund, the burden is upon the taxpayer to prove that he is entitled thereto, and failure to discharge is fatal to the claim,” the BIR said.

Citing compliance with legal requirements on the filing of a tax refund claim, the CTA Special Third Division in its 18-page decision through Associate Justice Esperanza R. Fabon-Victorino directed the refund.

Associate Justice Ma. Belen M. Ringpis-Liban concurred. (PNA)