Irrevocability rule, services within ecozone, ticket sales

Irrevocability

rule

Shell Services International Sendirian Berhad vs. CIR

CTA EB No. 196

Facts

Petitioner filed a claim for refund on the ground of excess creditable withholding taxes for the year 2000. This claim was however denied by respondent on the ground that the excess taxes has already been carried over to the succeeding year (2001) thus covered by the irrevocability rule under Section 76 of the Tax Code.

Issue

Whether or not the claim of refund by petitioner is valid

Ruling

Although petitioner has opted to carry-over its 2000 excess tax credits against its 2001 tax liability, petitioner incurred a net loss on the year 2001 and has ceased operations on the year 2002. Thus, the tax refund is a valid remedy as there will be no more instance for the tax credits to be utilized or applied.

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Services within ecozone

BIR Ruling No. DA-032-0823 January 2008

Facts

JGC Philippines Inc. (JGC), a PEZA-registered company, sold engineering, procurement, and construction services to Coral Bay Nickel Corporation (CBNC), another PEZA-registered company within the special economic zone.

Issue

Whether or not JGC’s income derived from its registered activity, the sale of services, is covered by the Income Tax Holiday (ITH) incentive.

Ruling

The income is covered by the ITH incentive. So long as JGC continued to be engaged in its registered activity, all its income derived from such sale of services shall be covered by the ITH incentive.

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Ticket

sales

United Airlines vs. CIRCTA EB No. 227

Facts

United Airlines (“UA”) is an on-line carrier which eventually discontinued its passenger flights to and from Manila. UA, however, appointed Aerotel Corp. (“Aerotel”) as its general sales agent for ticket sales outside the Philippines. After the stoppage of its flights of passengers in and out of the Philippines, UA continued to pay the 1.5 percent income tax on revenues from tickets sold in the Philippines covering passenger/cargo flights originating outside of the Philippines. UA then filed a claim for refund.

Issue

Whether or not UA is still liable for the Gross Philippine Billings (“GPB”) 1.5% income tax on ticket sales of flights originating outside the Philippines.

Ruling

Being an off-line carrier and having no passenger flights originating from the Philippines, UA cannot be held liable for the GPB tax. Section 28(A)(3)(a) defines “Gross Philippine Billings” as the amount of gross revenue derived from carriage of persons, excess baggage, cargo and mail originating from the Philippines in a continuous and uninterrupted flight. However, UA is still liable to the GPB tax on its cargo flights, which it did not discontinue.

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