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Php 3 million refund erroneously paid percentage tax gross revenue tax of 5% imposed on non-bank financial intermediaries is based on receipts

The BIR partially granted the taxpayer’s refund of erroneously paid tax from P3.9M to P3.4M arising from overpaid percentage taxes.

The following are the requirements in order to prove a claim for refund of taxes erroneously paid or illegally collected.

  • The taxpayer should file a written claim for refund with the BIR within 2 years from the date of payment of tax or penalty;
  • If denied or not acted upon within the 2-year period, the petition for refund should be filed with the CTA within 30 days from receipt of the denial AND within said 2-year period from the date of payment of tax or penalty regardless of any supervening clause
  • The claim for refund must be a categorical demand for reimbursement; and
  • There must be proof of payment of erroneously or illegally collected taxes.

In this case, the taxpayer was able to prove the foregoing requirements.The taxpayer is a non-bank financial intermediary subject to 5% percentage tax on its gross receipts (Gross receipt tax or GRT). Under the rules, GRT shall only apply to income actually or constructively received during a taxable period, and the claim of refund is based on error of computation in computation of gross receipts.

  • The Court confirmed that the tax base for GRT purposes should be the income actually or constructively received. Considering that the income subjected to GRT was on accrual basis, the taxpayer erroneously computed its GRT (Aeon Credit Service (Philippines), Inc.  v. CIR, CTA Case No. 9770, July 15, 2020).
Bureau of Internal Revenue - Dumlao & Co.
Senate of the Philippines - Dumlao & Co.
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Tax Management Association of the Philippines - Dumlao & Co.
House of Representative - Dumlao & Co.
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