CTA: PAL entitled to P27-M tax credit certificate

THE COURT of Tax Appeals (CTA) has ordered the Bureau of Internal Revenue to refund or issue a tax credit certificate to Philippine Airlines, Inc. (PAL), amounting to over P27 million, representing the airlines’ erroneously paid excise tax on its wine and liquor importations for its international flights.

In its decision penned by Associate Justice Corazon G. Ferrer-Flores and released on June 27, the CTA’s Second Division ruled that PAL incorrectly paid excise taxes totaling P27,275,640.48, which is refundable under the National Internal Revenue Code of 1997.

The tribunal said that PAL’s exemption from excise taxes on alcohol and tobacco imports for its transport operations, granted under Presidential Decree No. 1590, remains valid and was not repealed by RA No. 9334.

“[PAL] remains exempt from taxes, duties, royalties, registrations, licenses, and other fees and charges, provided it pays corporate income tax as granted in its franchise agreement; the payment of which shall be in lieu of all other taxes, except VAT, and subject to certain conditions provided in its charter,” it said.

The CTA acknowledged PAL’s compliance with two of the three conditions for excise tax exemption: payment of corporate income tax and importation of supplies for transport operations and related activities.

However, PAL failed to substantiate the third condition regarding the non-availability of locally sourced tobacco products at reasonable quantity, quality, or price.

“Petitioner failed to submit, at the very least, price lists of tobacco products which indicate the local market prices of the said products,” the decision said, explaining why PAL was only eligible for a P27-million refund.

PAL initially sought a P43,667,566.35 refund. — Chloe Mari A. Hufana