Tax court orders Colgate to settle P39-M deficiency

MANILA, Philippines – The Court of Tax Appeals (CTA) has ordered Colgate-Palmolive Philippines Inc. (CPPI) to pay over P39 million in tax deficient taxes and duties from 2003 to 2006.

In a 24-page decision dated Jan. 26, the CTA First Division partially granted the petition for review filed by CPPI against the assessment of the Bureau of Internal Revenue (BIR).

The tax court reduced the initial P204 million claim by the BIR to only P39 million following a verification of records submitted by the company.

CPPI contested the initial assessment of the BIR, saying part of the net sales taken into account by the tax agency were for locally manufactured products which are not subject to customs duties and taxes.

It also questioned the imposition of penalties, amounting to P135.6 million, saying it is a violation of their right to due process.

Following a review of documents, the CTA said the CPPI is only liable to pay P39.373 million, which covers various deficiencies and surcharges.

The tax court also sided with the company on the issue of the imposition of penalties, saying there was no proof that would show the administrative procedures for the matter were duly followed.

“Truth to tell, even in the administrative proceedings, due process may not be ignored because it is not merely a statutory right but a constitutional right,” read the ruling.