Tax court orders Makati to refund P4-M to MPTC

MANILA -- The Court of Tax Appeals (CTA) ordered the Makati City government to refund over PHP4 million in local business taxes (LBT) paid by the Metro Pacific Tollways Corp. (MPTC) to Makati City.

In its 21-page decision dated October 9, the tax court's Third Division through Associate Justice Ma. Belen M. Ringpis-Liban ordered then-City Treasurer Jesusa Cuneta to refund or issue a tax credit certificate in favor of MPTC the amount of PHP4.128 million representing erroneously or illegally paid LBT for the years 2014 and 2015.

Associate Justice Maria Rowena Modesto-San Pedro concurred while Associate Justice Erlinda P. Uy filed a concurring and dissenting opinion.

The tax court reversed and set aside the decision of the Makati Regional Trial Court Branch 145 which dismissed MPTC's complaint about a refund for lack of merit. A subsequent order by the Makati court on April 23, 2018, denied MPTC's motion for reconsideration prompting them to bring the case to the tax court.

The case started in 2015 when the Makati City Business Permits Office and the Makati Business Tax Division assessed MPTC for local business taxes, prompting MPTC to make corresponding payments computed by the Makati government on the firm's dividend income amount to PHP558.53 million and PHP1.151 billion for the years 2013 and 2014, respectively. MPTC filed an administrative claim for a refund.

MPTC claimed that the Makati government erred in taxing it similar to banks and other financial institutions under a provision of the Revised Makati Revenue Code (RMRC). It added the local government erred in arbitrarily interpreting the RMRC provision (Sec. 3A.02 (p)) to include dividends, interests and other items of passive income in the holding companies' taxable gross receipts.

MPTC argued that it is a holding company, not a bank or financial institution, hence, it should not be taxed as such. It also cited prior rulings by the CTA that have categorically ruled that dividend income received by holding companies is not subject to LBT.

"(A)fter a careful review of the evidence presented.. there is no showing that petitioner (MPTC) falls under the category, or can be considered as within the purview . of the term 'Banks and other financial institutions' as defined under ...the Local Government Code and the... RMRC, to justify the collection fo LBT by respondents on the dividends which were earned by the respondent," the CTA ruled. (PNA)


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https://www.pna.gov.ph/articles/1083098
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