Case Digest (G.R. No. 190102)
Facts:
In Accenture, Inc. v. Commissioner of Internal Revenue (G.R. No. 190102, July 11, 2012), petitioner Accenture, Inc., a duly registered VAT taxpayer under the 1997 Tax Code, filed its monthly and quarterly VAT returns for the periods July 1 to August 31, 2002 (first period) and September 1 to November 30, 2002 (second period). Its returns showed zero-rated sales amounting to P316,113,513.34 and P545,686,639.18, respectively, and generated total input VAT credits of P9,355,809.80 (first period) and P27,682,459.38 (second period). Of these, P35,178,844.21 represented input VAT on domestic purchases of taxable goods and services not directly attributable to zero-rated transactions. Accenture carried these unutilized credits forward, then on July 1 2004 filed with the Department of Finance an administrative claim for refund or issuance of a Tax Credit Certificate (TCC) for P35,178,844.21. When the claim remained unacted upon, Accenture petitioned the Court of Tax Appeals (CTA) DivisiCase Digest (G.R. No. 190102)
Facts:
- Parties and Nature of Business
- Accenture, Inc. is a corporation duly registered as a VAT taxpayer, engaged in management consulting, business strategy development, and software licensing.
- The Commissioner of Internal Revenue (CIR) denied Accenture’s claim for refund or issuance of a Tax Credit Certificate (TCC) for unutilized input VAT.
- VAT Returns and Input VAT Credits
- For the period July–August 2002 (first period) and September–November 2002 (second period), Accenture filed monthly and quarterly VAT returns (and later amended returns in June 2004) showing:
- Zero-rated sales of ₱316,113,513.34 (1st period) and ₱545,686,639.18 (2nd period).
- Input VAT credits of ₱9,355,809.80 (1st period) and ₱27,682,459.38 (2nd period), totaling ₱37,038,269.18; of which ₱35,178,844.21 pertained to domestic purchases not directly attributable to zero-rated services.
- Accenture carried forward these excess input VAT credits to its subsequent quarterly returns instead of applying them against output VAT liabilities.
- Administrative Claim and Court Proceedings
- On July 1, 2004, Accenture filed an administrative claim with the Department of Finance (DoF) for refund or issuance of a TCC in the amount of ₱35,178,844.21; the DoF did not act on the claim.
- On August 31, 2004, Accenture petitioned the Court of Tax Appeals (CTA) First Division for review, seeking issuance of a TCC. CIR contended that Accenture failed to prove its services to foreign clients qualified as zero-rated under the Tax Code.
- CTA Decisions and Appeals
- CTA First Division (November 13, 2008) denied the petition for failing to prove that the foreign clients were doing business outside the Philippines, citing Commissioner v. Burmeister & Wain Scandinavian Contractor Mindanao, Inc.
- CTA En Banc (Decision dated September 22, 2009; Resolution dated October 23, 2009) affirmed the Division’s ruling and denied Accenture’s motions for reconsideration.
- Accenture filed a Petition for Review under Rule 45 of the Rules of Court before the Supreme Court.
Issues:
- Whether Section 108(B)(2) of the 1997 National Internal Revenue Code requires that the recipient of services be engaged in business outside the Philippines for the transaction to qualify as zero-rated.
- Whether Accenture sufficiently proved that its clients were entities doing business outside the Philippines.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)