THE Court of Tax Appeals (CTA) has partially granted Philippine Airlines, Inc.’s (PAL) refund claim ordering the internal revenue commission pay the flag-carrier P3.47 million for its wrongly paid excise taxes on imported liquor and wine from July 2018 to April 2019.
In a 17-page decision dated Feb. 11, the tribunal said PAL proved that most of the alcohol products it imported during the period were not locally available in reasonable number, quality, or price. The company had sought a total refund claim of P4.33 million for the imported liquor products.
“Carving out those liquor and alcohol whose importation costs are lower than purchasing them locally, the excise taxes paid by petitioner thereon, to the extent of P3,472,366.86, should be refunded or credited in favor of the latter,” according to the ruling penned by Associate Justice Marian Ivy F. Reyes-Fajardo.
Under the Tax Code, an entity is entitled to a refund or a tax credit certificate on excise taxes if the cost of the imported alcohol products is lower than buying them locally.
“This requires us to determine the cost of importation thereof, followed by comparison of said cost, with the cost of such alcohol products’ local purchase,” the CTA said in the ruling.
Presidential Decree No. 1590 exempts PAL from the payment of excise tax on its tobacco and alcohol if they are not locally available in a reasonable quantity, quality, or price, and if the supplies are important for the use of the franchisee in its transport and other incidental operations.
The case stemmed from the Bureau of Customs in 2020 billing the flag-carrier P4.33 million in excise taxes, which the company protested two years later. — John Victor D. Ordoñez
