Philippine tax court rejects Foundever’s tax refund claim
MANILA, PHILIPPINES — The Court of Tax Appeals (CTA) of the Philippines upheld the Bureau of Internal Revenue’s (BIR) denial of a PHP13 million (US$763,000) tax refund claim by Business Process Outsourcing (BPO) firm Foundever.
Foundever, registered with the Philippine Economic Zone Authority (PEZA) as an IT enterprise, sought a refund of unused input value-added tax (VAT) credits.
However, its Puerto Princesa branch was only registered with the BIR as a “facility,” not with PEZA. This made the branch ineligible for VAT refunds under PEZA’s fiscal incentives program.
Foundever initially filed for the tax refund last 2018 but was rejected by the BIR. The CTA sided with the BIR, ruling that Foundever failed to meet the VAT registration requirements, which are “indispensable” for refund claims.
In its en banc decision dated December 13, the CTA stated the burden lies with taxpayers like Foundever to prove strict compliance with conditions to receive tax refunds. As taxes are “the lifeblood of government tax laws must be strictly implemented and not liberally construed,” the CTA ruled.
The decision reinforces that PEZA-registered companies must meet all administrative and technical requirements to claim incentives like VAT refunds. Even minor issues like improper facility registration can invalidate otherwise legitimate refund claims and result in denials.
The decision clarifies the need for proper PEZA registration to obtain VAT refunds. It underscores the high evidentiary bar set by authorities to prevent fraudulent claims. For BPOs and other businesses, ensuring technical compliance remains key to realizing tax incentives.
