TMAP urges removal of term limit for refund, tax credit claims

MANILA, Philippines - Aside from revising income taxes, tax professionals also want the Bureau of Internal Revenue (BIR) to remove a time limit for taxpayers seeking refund and tax credit claims.

“What we want to advocate is for the BIR...to allow taxpayers to continue claiming their refunds at the administrative level,” said Benedict Tugonon, president of the Tax Management Association of the Philippines (TMAP).

“If a taxpayer would like to claim their input VAT (valude-added tax) refund purely at the administrative level, then this should be allowed,” he told reporters in a briefing last Thursday.

Companies such as export firms are usually entitled to VAT refund or tax credit certificates (TCCs) since the goods supplied go to foreign customers who pay in foreign currencies.

In this case, VAT charged to them by suppliers can be redeemed from the BIR.

But in 2014, the agency issued Revenue Memorandum Circular 54-2014 limiting the time for the processing of VAT refunds and TCCs to 120 days from their submission.

If no action is granted during the period, it will be “deemed a denial” of the application, the memorandum said.

Tugonon said this leaves taxpayers with “no choice” but to go to the Court of Tax Appeals to question the decision.

“Sometimes, the cost of litigation is really very high and your claim is only very small,” he said, adding that “the amount will not justify the cost of going to the CTA,” he said.

He added this also gives the BIR a leeway to just “simply deny your claim” or not process it during the said three-month period.

But Internal Revenue commissioner Kim Jacinto-Henares disproved this, staying pat on her issuance which she said was legally sound.

“It was not something I made up. If they want it revised, then go pass a law, but what I’m saying is what I issued was based on the law and jurisprudence,” Henares said in a phone interview.

She said the 120-day period should actually benefit the refund claimants since “it is sure that the court will also deny them anyway.”

Last Thursday, the TMAP also said it would revive the proposal to reform income taxes “as an election issue,” and seek the re-filing of the bill in the next Congress.