CTA: Alcohol, tobacco imported by Duty Free are VAT-free

The Court of Tax Appeals (CTA) has granted a P93.36-million refund for erroneous value-added taxes (VATs) on alcohol and tobacco products imported by the state-owned Duty Free Philippines (DFP) for the second half of 2013.

In a decision dated Dec. 12, the CTA Second Division said the Sin Tax Reform Law, or Republic Act (RA) No. 10351, repealed Duty Free’s exemption only from paying excise taxes on its imports of alcohol and tobacco.

However, the court ruled that Duty Free’s exemption from VAT under the Tourism Act of 2009, or RA 9593, remained and was not affected by the amendment introduced by the sin tax law in 2012.

Even the Bureau of Internal Revenue’s own Revenue Regulation No. 17-2012 provided only for the imposition of excise tax on Duty Free’s alcohol and tobacco products, without mentioning VAT.

“The court finds that only excise taxes are withdrawn from petitioner’s tax exemption under RA 9593. Accordingly, respondent erroneously collected VAT from petitioner’s importation of tobacco and alcohol for taxable year 2013,” read the court decision.—VINCE F. NONATO