Toyota Financial Services PHL wins tax appeal vs Davao

THE Court of Tax Appeals (CTA) overturned a lower court’s ruling holding Toyota Financial Services Philippines Corp. liable for over P4 million in alleged deficiency of local business taxes, fees, and charges assessed by Davao City from 2009 to 2018.

“While [Toyota Financial] has been found to have been doing business in Davao City, the Court, nevertheless, finds that it should not be made to pay the assessed taxes against it, Davao City not being the situs of the taxes payable,” the 10-page ruling of the tax court’s Second Division read.

The ruling penned by Associate Justice Maria Rowena Modesto-San Pedro determined that the firm’s activities prior to 2017 were not “doing business” in the legal sense as the company only had a “lending desk” in the city, which only accepted loan applications while the processing and approval occurred at the company’s office in Makati City.

Under both the Local Government Code and Davao’s Revenue Code, the location of business taxes should be where the sales are made and recorded.

The tribunal added that loan application acceptance is not tantamount to a completed business transaction, thus, Davao City had no authority to assess taxes for years before 2017. — Chloe Mari A. Hufana