BIR Ruling [DA-031-04]

January 19, 2004 BIR RULING [DA-031-04] Rio Tuba Nickel Mining Corporation 2nd Floor, Solid Mills Building Dela Rosa Street, Legaspi Village Makati City Attention: Mr. Norberto R. Reyes Vice-President Finance Gentlemen : This refers to your letter dated December 17, 2003 relative to your request for reconsideration of your claim for tax credit/refund of the value-added tax filed on June 9, 1998, covering the taxable years 1997, 1998, 1999 including 2001 in the aggregate amount of P49,807,149.90, which has already been processed and is still pending with the One-Stop Shop Inter Agency Tax Credit and Duty Drawback Center, Department of Finance (OSS-DOF). DaEcTC It is represented that your claim for the tax credit/refund for the years with their corresponding amounts, to wit: 1997 P15,641,354.76 1998 10,112,214.18 1999 12,045,313.86 2001 12,008,267.60 P49,807,149.90 ============ was denied on the ground that your company had claimed as an expense the input VAT sought to be refunded; that you would like to explain that such practice was not meant to attain double tax benefit but only as a conservative measure for financial accounting purposes, given a uncertainty of and length of time for the issuance of the Tax Credit Certificate (TCC); that this practice was adopted by you in the previous years upon professional advice; that you did not realize that this was wrong because you were receiving your tax credit refunds from the BIR; that the case in point is your tax credit/refund claim for 1996 which was released to you in 1999 in the amount of P7,699,551.31; that this amount was entered in your books as income and was subjected to income tax; that the same treatment was adopted to your tax credit/refund claim for 1995 and earlier years; that unfortunately, your 1997, 1998, 1999 tax credit/refund claims, suffered so much delay in the processing that lagged until the issuance of Revenue Memorandum Circular (RMC) No. 42-2003; and that you requested that you be allowed to pay the necessary taxes due thereon and allow you to benefit from the difference. DSEIcT In reply thereto, please be informed that while Revenue Memorandum Circular clarifies merely the provisions of the Tax Code and other issuances of the BIR, it cannot on the guise of its implementation, deny the right of the taxpayer to claim whatever benefits that may be granted by law, by providing for additional documentary requirements relative to its claim for tax credit/refund which was filed prior to its implementation. As can be gleaned from the aforesaid stand of the OSS-DOF relying upon the implementation of RMC No. 42-2003 which in effect modified, reversed or even nullified the claim of Rio Tuba Nickel Mining Corporation, for tax credit/refund, it would run counter to Section 246 of the National Internal Revenue Code, on the non-retroactivity of rulings, to the prejudice of the latter, which provides that "Sec. 246. Non-retroactivity of rulings . Any revocation, modification or reversal of any of the rules and regulations promulgated in accordance with the preceding sections of any of the rulings or circulars promulgated by the Commissioner shall not be given retroactive application if the revocation, modification or reversal will be prejudicial to the taxpayer. . . ." Thus, the RMC No. 42-2003 shall not be a ground to suspend the processing and/or release of the check, if at all, in favor of the Rio Tuba Nickel Mining Corporation relative to its request for the tax credit/refund of value-added tax in the amount of P49,807,149.90, for the taxable years 1997, 1998, 1999 including 2001 as the claim for tax credit/refund was filed within the two (2) year period required by law. However, the amount which was previously claimed as expense by Rio Tuba Nickel Mining Corporation shall be deducted from the gross amount of P49,807,149.90. Moreover, since Rio Tuba Nickel Mining Corporation is a BOI-registered enterprise, the processing of tax credit/refund shall be within the jurisdiction of the OSS-DOF as what was done before in several claims filed by Rio Tuba Nickel Mining Corporation. WHEREFORE, IN VIEW OF THE FOREGOING, this will therefore serve as an authority for the OSS-DOF to process the claim of RIO Tuba Nickel Mining Corporation relative to its claim for tax credit/refund of the value-added tax paid. Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group