Tax Credit or Refund of Creditable Input Tax

December 23, 1993 BIR RULING NO. 509-93 104 06 (c) 00-00 09-93 Marcopper Mining Corporation 6th Floor, V. Madrigal Bldg. 6793 Ayala Avenue Makati, Metro Manila Attention: Mr . Jose E . Reyes Treasurer This refers to your letter dated May 21, 1993, in effect, requesting for a ruling on whether as a VAT-registered company, you can claim a tax refund or tax credit for the input tax paid on your purchase or importation of goods and services used in the rehabilitation, reconstruction and/or replacement of the fire-damaged building, machinery and equipment which, as represented, were used in your trade or business. cdll In reply, please be informed that pursuant to Sections 104 and 106(c) of the Tax Code stating: "Sec. 104. Tax Credits . (a) Creditable input tax . Any input tax on the (1) Purchase or importation of goods: "(A) For sale or for conversion into or intended to form part of a finished product, for sale or for use in the course of business; or "(B) For use as supplies in the course of business; or "(C) For use as materials supplied in the sale of service; or "(D) For use in trade or business for which deduction for depreciation is allowed under Section 29(f) of the Tax Code; xxx xxx xxx "Sec. 106. Refunds or Tax Credits of input tax. xxx xxx xxx "(c) Capital goods A VAT-registered person may apply for the issuance of a tax credit certificate or refund of input taxes paid on capital goods imported or locally purchased, to the extent that such input taxes have not been applied against output taxes. The application for refund may be made only after the expiration of 2 succeeding quarters following the quarter in which the importation or local purchase was made: . . ." your importation and/or local purchases of goods and service to reconstruct, rehabilitate and/or replace your building, machinery and equipment used in trade or business shall generate creditable input tax which could be claimed as refund or tax credit after the expiration of two succeeding quarters following the quarter in which the importation or local purchase was made, provided that at the time of such importation or purchase, you are already registered as a VAT taxpayer. In other words, generated input tax on purchases of capital goods/services prior to your VAT registration cannot be claimed as refund or credit against your output tax (VAT Ruling No. 2-93). On the other hand, in accordance with VAT Ruling No. 1-92 dated January 2, 1992, input tax on purchases of raw materials lost by fire which is indemnified by insurance cannot be claimed as tax refund or credit. LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue